Capital Protection in immediate needs annuities

1. A client is considering the long term security of a care annuity and wishes to have some protection from the financial consequences of early death. Please select either Partnership or Aviva/Friends Life and state which you have chosen:

     a. Please provide a brief summary of the main features of long term premium protection.

     b. On the basis that a deferred care plan might be suitable for the client, highlight the key considerations.

2. The following is a Schedule of Care Plan Terms from Partnership based on policies with start dates of 1st April 2015. The initial benefit for each policy is £1,100 per month with the first benefit payment being on 1st April 2015. Increases apply on the poli anniversary.

Terms Immediate Care Plan 24 Month Deferred Care Plan
Level benefit only 123.863 69,801
5% escalation of benefit only 139,974 85,912
50% death benefit and 5% escalation 158,576 N/A

On the basis of the above terms, how much would the estate receive if:

      a. The client purchased the Immediate Care Plan with the 5% escalation of benefit option and died on 5th August 2015?

     b. The client purchased the 24 Months Deferred Care Plan with Level Benefit only and died on 16th March 2016?

     c. The client purchased the Immediate Care Plan with 50% Death Benefit and 5% escalation of benefit option and died on 2nd June 2016?

 

Please show all calculations and workings out.