BR report 2018

36 37 LATER LIFE CARE PLANNING AND BR INSURANCE DISCUSSION HOW ADVISERS SHOULD APPROACH SHOULD INSURANCE BE BUNDLED WITH BR? CATRIONA LUMISTE SOLLA ACCREDITED LATER LIFE ADVISER AND CARE FEES PLANNING SPECIALIST, FINANCIAL CARE SOLUTIONS LTD It is no secret that our Adult Social Care system is under increasing pressure. LaingBuisson reported a combined care market value for care for older people, including local authority funded, voluntary and private expenditure, estimated to be worth £22.2bn (2013/14). 40 • £13.4bn residential care and • £8.8bn to non-residential care The number of clients reaching later life is increasing year on year, working in the later life market requires a different approach when it comes to financial planning. Cognitive impairments, confidence issues and feeling vulnerable are not unusual at this time, as is feeling concerned about what the future may hold. The areas of pensions, long-term care planning and estate planning have undergone huge change in recent year; it is fundamental that clients seek the most appropriate financial advice to meet their later life planning needs. FACTORING IN THE WIDER FAMILY (OR NOT) Generally, the wider family will also have concerns about planning for inheritance tax and long- term care. Involving the family in these conversations is not always desirable for clients, which is often a generational viewpoint. However, it is important that these issues are addressed as the longer they are left, the fewer options may be available to put effective planning in place. Clients are worried about losing access and control of their wealth and perhaps not being able to pass on some wealth to their loved ones. They also have real concerns about not being able to afford the cost of long term care (should they require it) or indeed have fears that their lifetime of wealth will be spent on long-term care needs with nothing left to pass on. ADVISERS AS BR EDUCATORS Investments qualifying for BR will be an area that many clients are not aware of. It is our job as later life advisers to educate clients on these solutions. Planning for a potential long-term care need in later life can be a challenge; it may or may not be needed and could potentially have a huge impact on a client’s financial position. BR solutions can provide a good balance between keeping an appropriate amount of money readily available, should clients require some form of later life care, together with an effective IHT planning strategy. This gives clients the peace of mind that they have made provisions to fund a long-term care need should it arise, and if not required, they have prudently managed their wealth to minimise any potential IHT bill for their loved ones. “Clients don’t want to go through an underwriting procedure and consider medicals. If they can just tick a few boxes to say - I’m not terminally ill, there is a huge benefit to them.” — JERRY GOODMAN, DIRECTOR, OCULUS WEALTH THE DIFFERENT TYPES OF BR INSURANCE PRODUCTS Some BR providers are offering an insurance option to their clients at an additional cost. The protection tends to fall into two categories: INVESTMENT : Insurance products that secure the investment protect against poor performance of the BR investment. MORTALITY: Insurance products that protect against death within the two year qualifying holding period for IHT exemption. “Investments qualifying for BR will be an area that many clients are not aware of. It is our job as later life advisers to educate clients on these solutions.” — CATRIONA LUMISTE, ACCREDITED LATER LIFE ADVISER AND CARE FEES PLANNING SPECIALIST, SOLLA The following details some of the industry arguments for including an insurance product with a BR proposition: PEACE OF MIND FOR INVESTORS From the client’s perspective, there may not be any immediate disadvantage to having access to an insurance option. For the individual that sees the need, having complete cover against mortality in the first two years and beyond gives them great peace of mind. Providing access to life cover is simply about convenience as investors have the option to source this independently in conjunction with their adviser. Providing insurance against investment performance, however, could be seen as contentious. Andrew Tustin, Partner at Partners Wealth Management, said: “To overcome those issues for clients that are concerned about their health and longevity is a big positive, even if the costs are going to be slightly higher. “Some clients going into the BR world may be in their 70s or 80s. They’ve got to a point where they say - I can afford to use BR, but the seven year clock is a concern. When you’re in later life, it’s a lot more difficult to find anyone who will provide you with that niche protection. “The fact that some BR providers are coming in with a packaged proposition does allow you to get around the age aspect. I see it as a positive step to assist us with providing solutions that are comfortable and workable for our clients.” SHOULD INSURANCE BE PURCHASED SEPARATELY? Some assert that, in many instances, where BR is appropriate, the cost of a two year term assurance policy would be the same, if not more, than the cost of the bundled solutions currently available. But there is a need for sensible eligibility criteria to ensure that providing cover without full medical underwriting is sustainable in the long term without the need for price increases. Clearly it’s important that advisers assess the most effective route for individual investors. Jeremy Goodman, Director at Oculus Wealth, said: “In the majority of cases we’re dealing with clients who are 75+, and probably have two or three health issues that aren’t going to kill them over a couple of years, but may well have an impact on insurance premiums. As a result, its hard to say whether insurance options that are included with BR propositions are more expensive than those available independently. “Clients don’t want to go through an underwriting procedure and consider medicals. If they can just tick a few boxes to say - I’m not terminally ill, there is a huge benefit to them.” IS THERE A DIFFERENCE BETWEEN BR INSURANCE PRODUCTS? Many of the life insurance options available today look quite similar, although on closer inspection there are subtle but clear differences in the eligibility criteria, and advisers need to be very aware of this. Investors need to be absolutely sure that they meet the criteria before proceeding. This is an area which is likely to evolve over time, as insurers refine their models and providers innovate further in attempt to gain market share. THE CASE FOR INSURANCE