Money: John, 68, feels fine. But what if...

The Fixers

"WHO WILL organise my future care?" John and I discussed this issue at a review of his financial affairs.

John, 68, is a retired company director. He is a bachelor who enjoys a comfortable retirement from his pension income of about pounds 50,000 a year. He has substantial other savings, which are invested for growth.

He is in excellent health, but is concerned should he fall ill and need long-term care. An estimated two in five people in retirement will need some form of care. John had read about the costs of care in a nursing home and wondered how it would affect him.

Surveys indicate that the average cost of nursing home accommodation is pounds 17,800 a year, but this hides much local variation. Our firm, in the Colchester area of Essex, surveyed local nursing care homes last year and found an average cost of about pounds 20,800 a year.

It was decided that John was in a fortunate position in that should he require care, he could comfortably afford the costs from his pension income without resorting to his savings. Because of his financial resources, both in terms of income and savings, he would not qualify for local authority assistance.

John explained that should he require some form of care, he would wish to remain in his own home as long as possible.

We had established that financing the cost of care was not an issue, but who would organise it? This is not an eventuality that most people plan for. Consequently, when it occurs, most people are ill-prepared and don't know where to get help. For many, this burden falls to their children. As John does not have children, or close family, it was an issue that concerned him.

To solve this problem we implemented a long-term care insurance policy, on a minimum cover basis, with PPP Lifetime Care, a leading provider of long-term care plans. Its premier level of cover was chosen. This starts to provide funds towards the cost of care should John either fail two "activities of daily living", or suffer mental impairment. This cover could be funded either by a regular premium or by a one-off lump sum. John chose the lump sum option, costing pounds 4,620.

"Activities of daily living"(ADLs) form the basis of an objective means of measuring frailty. These tests usually include mobility, washing, dressing, feeding, toileting and continence. The level of cover provided by John's plan is a partial long-term care benefit of pounds 200 a month payable on the failure of two ADLs, and full benefit of pounds 400 a month on the failure of three ADLs.

In John's case, the financial benefits provided by this arrangement are of secondary importance to the Care Support Service that is integral to the cover. The benefits provided through this service are essentially threefold.

First, John now has immediate telephone access to specially trained staff who can provide information and advice on care-related issues. This service is available 24 hours a day.

Second, if John's health should deteriorate to a point where he qualifies for benefit, he will be assigned a "personal care counsellor" to create a package of care which suits his individual needs. The counsellor will visit John's home and spend as much time as it takes to understand his particular wishes and concerns. This will enable the counsellor to devise and implement a package of care services that meet his requirements. The care can be brought to John, to enable him to live in his home for as long as is practical. For example, if John's condition requires physiotherapy, the counsellor will organise a qualified therapist to visit him.

Should John require specialist equipment to help him to live in his own home more easily, the counsellor will source and organise that. In short, practical help and support.

Finally, the support service will review the care continuously to ensure that it remains appropriate and of high quality.

As a result of this action John can get on with enjoying his busy and active retirement. He has the reassurance that if future care is required, it will be organised for him.

James Bruce is a senior financial planner at Corporate and Personal Planning, fee-charging independent financial advisers in Colchester, Essex (01206 853888).