Long-Term Care Insurance

This training guide has been prepared as a reference guide only, covering the material that was discussed within todays training session and should only be used in conjunction with what was discussed.

It has been established that a private client has the following protection needs:

1.health, incapacity or accident;
2.income, mortgage and other debt;
4.death;
5.asset protection;
6.business protection.

We have in turn looked at each of these needs and discussed which protection products would assist the client in achieving these. This guide providing a brief outline of the main features of each of these products and why the products would be suitable for a client.

1. health, incapacity or accident:
The protection products that are available
The types of long-term care insurance products available are immediate care insurances, enhanced annuities and equity release plans.

Immediate Care Insurance is where a “A lump sum is paid in return for guaranteed future payments towards the cost of care, for as long as is required” http://www.integritypi.co.uk/our-services/long-term-care/. “If the insured makes a recovery, the benefit will continue to be paid, however if the insured dies prematurely then the capital lump sum paid for the annuity would be lost in its entirety” http://www.integritypi.co.uk/our-services/long-term-care/. Any benefits will be treated as a return of capital and therefore tax free (http://www.integritypi.co.uk/our-services/long-term-care/). In order to obtain the policy, the individual will need to be medically assessed and will not be able to cancel or be able to receive the lump sum premium back except during the cooling off period. If the individual dies earlier than expected, the family does not benefit from the funds, though some policies offer the opportunity to “safeguard the capital in the event of early death” (https://www.abi.org.uk/Insurance-and-savings/Products/Long-term-care/Immediate-needs-annuities). If the individual dies later than expected the policy will pay
It was a plan where the individual payed a “lump sum or regular premium in advance, on the basis that maybe one day in the future, the policy will pay out in order to cover some, or all the costs associated to long-term care” http://www.integritypi.co.uk/our-services/long-term-care/.

1.3 Personal Accident and Sickness Insurance (PAS):
Main Features:
The policy pays a lump sum if the individual suffers an accident or is off work due to sickness. The policy covers death; permanent total disablement; and loss of, or loss of use of, a specified body part (such as a limb) as a result of an accident or unforeseen event (http://www.financial-ombudsman.org.uk/publications/technical_notes/personal-accident.htm).

Normally a deferral period of 30 days will be applicable to the claim where no benefit is payable to the individual. After which the policy will start to pay weekly sickness benefits to the individual along with paying any medical expenses incurred as a result of suffering an accident, to a specified percentage of costs. The benefit is normally paid for a maximum period, either 26, 52 or 104 weeks, most likely a fixed sum that is not related to earnings. There is no tax relief on premiums or taxation on the benefits the individual