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Insuring against getting too old.

  • 21-08-2005 1:25am
    #1
    Zaph0d
    Closed Accounts Posts: 756 ✭✭✭


    I have a relative who is 72yo male.

    He has about 400K now in savings and an after tax pension of about 30K. All rosy but what if he goes on living till he's 100? a number of members of my family have done this and I'm worried about the costs of full time carers etc.

    I would say he is spending all his pension plus about 50K of his capital per year. He is enjoying life to the full to say the least and fair play to him.

    I would like to insure against him living past say 85. When I rang a few brokers they were totally clueless and couldn't offer me any helpful advice. I felt they thought I was nuts.

    What I would like is to buy a product for a lump sum that would pay a good size annuity starting from the age of 85 to supplement his pension and meet the costs of a high standard of nursing home in Dublin. I am told this can cost 50K/year so I want to ensure that he gets an inflation compensated 20K extra from the age of 85 until death.

    Alternatively, maybe a product that paid out a large lump sum should he reach the age of 90.

    Is this possible? Anyone know who I could contact?


Comments

  • #2
    ck1
    Registered Users, Registered Users 2 Posts: 123 ✭✭ck1


    Your not nuts, the type of contract you discribed is known as a Purchase Life Annuity (PLA) whereby you buy a life time annutiy with a personal capital sum. The capital sum is not taxed on periodic drawdown however it grows in a tax free enviroment only the growth is taxed. I used to do a lot of them in the UK but never had any call for them over here. Don't even know if any of the Companies here do them.

    The other contract you could look at is a "Long Term Care" policy. Not too sure here if anyone does them but I would suggest starting with phoning BUPA as I don't beleive any of the mainstream assurance companies do these either.

    Don't know of any contract that pays out a large lump sum at a certain age, but what you could do is look at some secure investment whereby the capital sum he has could be invested with annual or monthly withdrawls, most will give you up to 7% drawdown p.a. with no penalties. Not many secure funds out there anymore, but maybe a property/Gilt fund might suit. THe monies would not be locked away and upon death the value of the fund gets paid out with no tax deduction. Makes more sense than just having the money in the bank going down in real terms.


  • #3
    RainyDay
    Closed Accounts Posts: 6,925 ✭✭✭RainyDay


    Is his 30k pa pension guaranteed? Is it inflation-proofed? Does he have a property which can be sold or rented to provide income if required?


  • #4
    Zaph0d
    Closed Accounts Posts: 756 ✭✭✭Zaph0d


    Thanks to ck1 for your advice, I'll check out BUPA to see if they do long term care and I'll enquire about PLAs
    RainyDay wrote:
    Is his 30k pa pension guaranteed? Is it inflation-proofed? Does he have a property which can be sold or rented to provide income if required?
    It's a gold-plated civil service pension. He owns no property but he has the use of a house at no cost untill he dies.


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