Re: Impaired Life Annuities


"Rob graham" <rttgrahamwow@xxxxxxxxxxxxxx> wrote in message
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"Pat Gardiner" <patgardiner@xxxxxxxxxxxxxx> wrote in message
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The advice given to me recently on Capitals Gains was so helpful, that I
dare come back again with a different question.

I have a friend, who is approaching 65, let's call him "Bill."

Bill has a pension payable in September, actually from Axia, who do not
do impaired life annuities. He is waiting for an estimate now of the lump
sum due. His wife is almost exactly the same age. Everyone involved is
determined to refer him back to the original insurance agent, but Bill is
an independent spirit that likes to do his own thing.

He is also a dead man walking. His health is terrible and, nobody
including himself, expects him to live more than a few months at best.

It is a bad form of cancer, the worst, so there is no mistake. As you can
imagine, he wants to do the best thing for his wife.

He hopes to make it to the pension date in late summer. He also wants to
make decisions and sign the papers if he can. He has had long periods in
intensive care and is well aware that he may be alive but unable to do
anything.

He understands that he can take a proportion as a lumpsum, but that will
be taxable. It seems sensible to take that and invest it to provide an
income for his wife.

Is he broadly right? Is there any chance of dispensation from the
revenue to take the wole as a capital sum?

The balance which has to go into an annuity, is a problem.

He thinks it should go to an impaired annuity, he thinks, but not one of
those "sales gimmick" ones where all you have to do is smoke 40 fags a
day and claim you drink a bottle of whisky. He thinks he could and should
get very much better terms.

He can produce documentation and the survival rates for this form of
cancer are well known and documented - at about 1 percent at five years.
Bill somehow has survived four, but with lots of ops and is now disabled.
The situation is reminiscent of a Regency tontine, with him hanging on
with enthusiasm.

I think the main question is, "Has he got the pension situation broadly
right?"

Are there companies that specialise for annuities in such cases ? Is
there a list? Are there any published esimates of figures?

Sorry to present such a dismal case, but Bill is far from depressed about
it all, although not anxious to spend his energies fighting off over
enthusiastic salesmen and women.

Thanks
GPG




This seems to me to be a no-brainer. If someone dies before they have
turned their personal pension pot into an annuity then the whole of the
pension fund goes to their beneficiaries (normally without an IHT
liability). I assume this pension is a personal pension, not an
occupational one.

I would suggest that he does not take any annuity, impaired life or not.
His wife can take the pension fund and do what she likes with it -
including buying an annuity if she wants. If the husband buys one then
he's likely to die before the full value of what he could have got is paid
to him, even with guarantees.

Check with Axa (not Axia) that the trust situation of this policy is as it
should be to enable the beneficiaries to get the fund free of IHT.

If this is an occupational scheme, not a personal one, let me know because
there may be a better way to do this.

Incidentally, your question has technical errors and incorrect
assumptions, so I would be careful what you do.

It is not Bill's field and he is exercising due caution. I'm sure there are
technical errors and a wide gap in comprehension. I'm trying to fix that.

Last year, Bill finished up in intensive care, in the middle of selling a
house, right at the top of the market. Totally zonked, he played up and
refused to sign the contract. It took the combined efforts of the rest of
the family to get him to do something he had agreed and wanted.

It is the cause of much family humour now, but not a pantomime to be
repeated.

He can't remember a thing about it, but fears a repetition and may have to
get a power of attorney to his wife. He was hoping to have got this sorted
out in principle, so his wife could act on prearranged agreement. There are
no family problems or disputes.

It is, according to the documents, an "assigned occupational pension." with
guaranteed annuity rates.

Bill has made good provision elsewhere for his wife, who incidentally has an
impaired life with cancer twice although many years ago.

Both are careful and capable with money, but not hot in this field.

They feel they were very badly advised some years ago, as were so many. They
suspected as much at the time, and feel rather stupid at being talked into
something they considered risky, so are being extra careful now.

They both favour instinctively National Savings rather than anything else.
If they can take the cash without penalties and extra tax burdens, that
seems logical. Is it?

If they do buy any annuities, they would want to know the protection was in
place in the event of a failure.

Thanks you for your help - all information is very welcome and of course,
without any responsibility.

GPG






Rob Graham



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