Care Funding Plan. Product guide

Transcription

1 Care Funding Plan Product guide

2 Just Retirement Care Funding Plan Just Retirement at a glance Founded in Over 6.0 billion of assets under management. A market leading provider of enhanced lifetime annuities in the UK in One of the largest providers of equity release in the UK in Over 150,000 customers. About Just Retirement As our name suggests, Just Retirement Limited is a specialist company, completely focused on meeting the needs of people approaching retirement or in retirement. We do this by working with financial advisers to help them help their clients understand the options and choices at different stages of retirement. You can be assured that when you take out a Care Funding Plan with Just Retirement, you are dealing with a company which is a trusted name in providing retirement solutions. Just Retirement Limited is covered by the Financial Services Compensation Scheme. For further information about Just Retirement, please visit 2

3 Helping you decide Choosing the right option for funding your care costs is a big decision. With this in mind, it is important that you speak to a specialist financial adviser. They will spend time talking to you to gain a proper understanding of your circumstances and needs, which will help them provide the right advice on the most appropriate way to pay for your care fees. It is also important to weigh up your options with someone you can trust to act in your best interests, so many clients ask a family member or a trusted friend to be involved in the decision-making process. Contents The Just Retirement Care Funding Plan 5 How does the Just Retirement Care Funding Plan work? 5 Income payment options 6 Protecting your payment 8 Case studies 10 About this brochure This brochure gives you an overview of what the Just Retirement Care Funding Plan does and whether it may be suitable for you. Please note that we use you and your to refer to the person whose care costs are partially or fully met through the Plan, but the Plan can be purchased for the person receiving care by somebody else, or on their behalf by a legal representative. When you speak to your financial adviser, they will help you understand the Plan and how it can help, as well as making sure you understand the risks involved and the alternatives that are available. Your adviser will provide you with the Key Features document and a detailed personal quotation which will outline the costs of your Plan. If you want to go ahead, your adviser will also help you with the application process. If you decide to buy a Just Retirement Care Funding Plan, you will pay a one-off purchase price for the Plan and you may also be charged for the advice you have received. You can choose to pay your adviser direct, or, if you prefer, the adviser charge can be added to your personal quotation and paid at the same time as your purchase price. If you purchase a Plan there will be a period of 30 days after purchase during which you can change your mind. We ll tell you when this period starts and ends. 3

4 Just Retirement Care Funding Plan

5 The Just Retirement Care Funding Plan The Just Retirement Care Funding Plan is designed to reduce the financial uncertainty associated with care costs. In exchange for a one-off payment, it provides an income for life that can help safeguard you against running out of money and not being able to afford to pay for your care needs in the future. The Plan is an insurance policy, because it guarantees that the income will continue to be paid for life, however long you live. The income from a Just Retirement Care Funding Plan is paid monthly in advance and is normally paid direct to registered care providers, in which case it will be free of tax. You can either choose for the income to be fixed, or to increase each year to reduce the impact of future increases in care costs. How does the Just Retirement Care Funding Plan work? The Just Retirement Care Funding Plan is a straightforward Plan that provides an income for life in exchange for a one-off purchase price. The Plan is designed to help you meet your care costs, so it enables you to tailor your income to your requirements. The purchase price will depend on your age and health, as well as the choices you make when you purchase your Plan. 1. Firstly, you can choose the level of income you need. The higher the level of income you select, the higher your purchase price will be. 2. You can also decide whether you want the income to start immediately or after a number of years. The earlier the income starts, the higher the cost. Please see the Income payment options section on page 6 for further details. 3. You can opt for a level income or an increasing ( escalating ) income. An escalating income will cost more than a level one. Again, please see the Income payment options section on page 6 for further details. 4. Finally, you can choose whether you want your payment to be protected, which ensures that the total benefits paid by your Plan will not be less than a guaranteed minimum amount. Adding protection will increase the cost of your Plan. Please see the Protecting your payment section on page 8 for further details. The income is paid monthly in advance and is normally paid direct to your care provider, in which case it will be free of tax as long as the care provider is registered with the relevant authority. Any payments that are made to yourself or a non-registered care provider may attract tax. Your financial adviser will be able to help you decide the level of income you need and which of the Plan options are suitable for you. 5

6 Just Retirement Care Funding Plan Income payment options The income from a Just Retirement Care Funding Plan is meant to help pay for some or all of your care costs, so the Plan has the flexibility to enable you to choose when to start receiving your income and the level of income that will be paid. 1. When the income payments start income deferment If you decide to purchase a Just Retirement Care Funding Plan, the income payments will normally start straight away. However, if you prefer to maintain flexibility in the short term, you can choose to defer your income payments by a number of whole years (between one and five). This is known as income deferment. This will decrease the cost of your Plan, but it will mean that you will have to meet your costs of care in full until the income starts. If you die before the income payments start then you may receive nothing back from your Plan, unless you have Plan Protection (see page 8). 2. The level of income that will be paid by your Plan income escalation The cost of your care may go up in the future, so the Plan offers the option to increase the level of income each year with the aim of helping to keep pace with your care costs. This is known as income escalation. This will increase the cost of your Plan, but it will help you meet any future increases in your care costs. You can choose for your income to increase by any amount between 0% and 10% each year. Alternatively, you can elect for your income to increase in line with the Retail Price Index (RPI), or at a fixed rate of up to 3% above the RPI. If you select the income escalation option, your income will increase every year, including during any deferred period, on the anniversary of your first payment due date (which will normally be on the first day of the month following your policy start date). If you choose to link your income to the RPI, we will calculate the increases by measuring the index three months before each anniversary date and comparing this with the level of the index at the same time the previous year. This will allow us to inform you of the increases before your anniversary date. Please note that your income cannot go down we will not change your level of income if the sum of the annual change in the RPI plus your chosen percentage (if applicable) is negative. 6

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8 Just Retirement Care Funding Plan Protecting your payment If you die in the first month of your Plan, we will pay your estate the purchase price less any income payments we have already made. However, if you die after the first month, no further payments will normally be made from your Plan. If you are concerned that you may not get value for your purchase price, you can reduce this risk by choosing one of the three additional Plan Protection options outlined in the table below. Plan Protection Option 1 If you die after the end of the first month of your Plan but before the end of the third month we will pay your estate 50% of your purchase price less the total value of the income payments we have already paid. If you die after the end of the third month of your Plan but before the end of the sixth month we will pay your estate 25% of your purchase price less the total value of the income payments we have already paid. Plan Protection Option 2 If you die after the end of the first month of your Plan but before the end of the sixth month we will pay your estate 50% of your purchase price less the total value of the income payments we have already paid. If you die after the end of the sixth month of your Plan but before the end of the twelfth month we will pay your estate 25% of your purchase price less the total value of the income payments we have already paid. Plan Protection Option 3 If you die at any time and the value of your income payments has not reached a percentage of the purchase price chosen by you (between 25% and 75%) we will pay the difference to your estate. 8

9 To demonstrate how these Plan Protection Options may work in practice, please see the diagram below. Please note that Plan Protection will increase the cost of your Plan, and the additional cost of each option is ignored for simplicity. Purchase price 96,000 Monthly income 2,000 Year one Year two On death in the first month (after the first payment) the amount returned on death would be 94,000. On death in the third month (after the third payment) the amount returned on death would be: No Plan Protection selected: 0. Option 1: 42,000 (50% of the purchase price is 48,000 from which we deduct the three income payments already paid). Option 2: 42,000 (the same level of protection as Option 1 for the first three months). Option 3: 51,600 if a 60% protection level is selected (60% of the purchase price is 57,600 from which we deduct the three income payments already paid). On death in the seventh month (after the seventh payment) the amount returned on death would be: No Plan Protection selected: 0. Option 1: 0 (as Option 1 expires after six months). Option 2: 10,000 (25% of the purchase price is 24,000 from which we deduct the seven income payments already paid). Option 3: 43,600 if a 60% protection level is selected (60% of the purchase price is 57,600 from which we deduct the seven income payments already paid). On death in the eighteenth month (after the eighteenth payment) the amount returned on death would be: No Plan Protection selected: 0. Option 1: 0 (as Option 1 expires after six months). Option 2: 0 (as Option 2 expires after twelve months). Option 3: 21,600 if a 60% protection level is selected (60% of the purchase price is 57,600 from which we deduct the eighteen income payments already paid). Please note that if a Just Retirement Care Funding Plan is purchased for you by someone else in order to provide income for your care costs, any payments on death will be paid to your estate and not to the person purchasing the Plan. Any payment made to your estate will be included in your estate for Inheritance Tax purposes. Please note the purchase price used in determining the amounts payable does not include the adviser charge, even if it is added to your personal quotation and paid at the same time as your purchase price. 9

10 Just Retirement Care Funding Plan Case studies These example case studies have been based on real life scenarios, and are designed to help illustrate how the Just Retirement Care Funding Plan can help. Mrs Brown Scenario: Mrs Brown is a widow, aged 83. Her general health has been in decline for some time, and she is finding it increasingly difficult to get around. After a lot of discussion with her daughter, she has decided that the time is right to sell her house and move into a care home. Mrs Brown is apprehensive the care home she has chosen is expensive, and she is concerned that her money might run out. She is worried that if she can no longer afford the fees for her chosen care home, she may be forced to move to a different care home further away from her family. Key benefits: Choice. Mrs Brown has the freedom to choose a care home that suits her. Certainty. She has the peace of mind that her care fees will continue to be covered for her entire lifetime. Reassurance. She is safe in the knowledge that the remaining money from the sale of her house can be passed to her daughter as an inheritance. Mrs Brown s daughter finds a specialist care financial adviser by searching on the internet, and arranges an appointment to discuss the options for paying her mother s care home fees. They are both reassured to learn that she could take out a care funding plan which would provide a guaranteed income towards her care fees for her entire lifetime. She is able to reach an agreement with her chosen care home that the fees will only increase by a set amount each year, so by choosing a Just Retirement Care Funding Plan with an escalating level of income Mrs Brown has the peace of mind that her care fees will continue to be covered. This means that she will be able to stay in her chosen care home close to her daughter, and the remaining money from the sale of her house can be passed to her daughter as an inheritance. 10

11 Mr Smith Scenario: Mr Smith is a widower, aged 79. He sold his house and moved into a care home several months ago, and has been paying for the care home fees out of the proceeds. When he first moved into the care home, he did some research into the options for paying the fees but was reluctant to take out a care funding plan because he decided it would probably be better to pay for the fees himself. However, the fees for the care home are more than 2,000 per month, and he is now worried about eroding his children s inheritance. Key benefits: Peace of mind. Mr Smith no longer has to worry about eroding his children s inheritance. Control. He is able to select a Plan Protection Option that suits his needs. Value. He is satisfied that the Plan will provide value for money no matter how long he needs his care home fees to be covered for. He is referred to a specialist care financial adviser by his care home, and arranges a meeting to discuss the different ways he could pay the fees. He is surprised to discover that he could take out a Just Retirement Care Funding Plan with a Payment Protection Option that will pay the difference to his estate if he dies before the value of his payments has reached 50% of the purchase price. The Plan helps to protect his children s inheritance and reduces the uncertainty over the amount of money he will spend on his care fees. Although the Plan Protection Option increases his purchase price, it gives Mr Smith the peace of mind that the total benefits from his Plan (either paid to his care home or returned to his estate) will not be less than a guaranteed amount. 11

12 Further information on the Just Retirement Care Funding Plan can be found in the Key Features document. Address and registered office: Just Retirement, Vale House, Roebuck Close, Bancroft Road, Reigate RH2 7RU Tel: Lines are open 8.30am to 5.30pm, Monday to Friday. Calls may be monitored or recorded. Just Retirement Limited. Registered Office: Vale House, Roebuck Close, Bancroft Road, Reigate, Surrey RH2 7RU. Registered in England Number Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Please contact us if you would like this document in an alternative format. 12/