Power of attorney - why and when

Sharing your health with a protection insurance adviser can sometimes change their approach to advising you, for example if you disclose having alzheimers, or another condition that can affect your cognitive abilities and memory. 

There’s a perfectly good reason behind that, in that we need to enact safeguarding procedures, as they want to make absolutely sure that you know what policy you’re arranging and that it is entirely your choice and the right thing to do to suit your needs.

As an adviser we have your best interests at heart and that means that if we are concerned about your ability to understand the policies that are being arranged, we will likely ask if there is someone that has a lasting power of attorney to support you, or if you have an advocate that can work on your behalf.

Here are some situations where we have needed to ask for proof of power of attorney to help people wanting insurance:

• A son wanting to insure a parent that has Alzheimers.
• A person that has themselves been diagnosed with dementia.
• A parent that has a child over the age of 18 that is living with autism, who cannot communicate with us.
• A parent that has a child over the age of 18 that is living with Down’s syndrome.

   

Unfortunately without a power of attorney there are times where we cannot provide advice, as we need to be confident that everyone within the situation is acting in the correct way.

A power of attorney is a legal document allowing the chosen attorneys to help make decisions on another person’s behalf, if they’re not able or don’t want to make the decision themselves. Having a power of attorney can at times be hugely beneficial, it gives more control over what might happen to you in certain situations, such as if you were to have an accident and be unable to communicate. This can be a temporary measure, or can be made permanent. You can also have multiple people as a power of attorney.

There are different types of power of attorney depending on your situation and needs. In our industry, it’s more usual to come across a lasting power of attorney. The types are:

Ordinary power of attorney (OPA)

• This allows the selected person to make decisions regarding financial affairs and is only valid where a person has mental capacity, it can also be known as a General Power of Attorney. This is most suitable for if a person would need temporary help such as during a hospital stay. If said person was to lose their mental capacity to make decisions, the power of attorney would come to an end.

   

Lasting power of attorney (LPA)

• There are two types of lasting power of attorney and these can cover decisions about financial affairs or health and care. The powers of the attorney would usually be implemented once a person loses their mental capacity to make their own decisions, or if they wish to no longer make the decisions for themselves. Whilst this is the case it is important to make sure to arrange this before a person has lost their mental or cognitive capacity, otherwise the process to set this up becomes much harder.

   

How to set up a power of attorney

Setting up a power of attorney can be quite straightforward if you are confident with completing forms and reading some technical legal information, don’t worry it’s not huge scripts to read. It can take a little while (on average around 9 weeks) to set this up as there are some safeguarding steps that are taken to protect the person named in the document, and there is a cost involved. The cost can change depending on certain things, such as if you’re on a low income or receive benefits.

There are three key people in a lasting power of attorney

• Donor – person named to get support.
• Attorney – one or multiple people that will legally act on the donor’s behalf either immediately or once mental and cognitive capacity has significantly reduced.
• Certificate Provider – this is a person who acts as an independent witness and verifies that they have known the Donor for some time, and that the LPA is being arranged legitimately.

   

You can visit the government website to appoint a lasting power of attorney. You may want to arrange both types of LPA or just the one, but make sure to read everything and make sure that what you are paying for will give you what you want. It can also be a good idea to speak with an attorney to get advice on arranging an LPA, to make sure that you complete everything correctly, and also to be confident that it will be accepted depending upon the donor’s current health.

If you wish to set up an ordinary power of attorney, you should get in touch with your local Citizen’s Advice or seek the advice from a solicitor. 

One thing to bear in mind when appointing any type of power of attorney is that there are many websites and companies that might not be doing best by the applicant, for example by charging much more money than expected or not correctly registering the LPA. It’s always best to do this through the proper channels, such as on the government website or using a solicitor.

How can a power of attorney help with protection insurance?

Depending upon your circumstances, or that of the person you are wanting to arrange insurance for, you could be asked to provide proof of power of attorney before advice is given to you. There could also be extras that are needed such as proof of identity if you are paying for the insurance from a bank account that does not belong to the person that is being insured.

This is all quite technical and something that our advisers can help you to understand.

A power of attorney is used with your best interest at heart, and even with this in place if an adviser feels that the insurance that is being asked for is not appropriate, then you can find that you will be given an alternative acceptable option to consider. Our advisers will help you to find the insurances that are right for you, that match our compliance and regulatory requirements, when a lasting power of attorney is in place. 

Whilst this might all sound a bit intense, it is because we take the care of our clients incredibly seriously. This is a very extreme example but the last thing we would want to happen is for someone to insure their parent for £300,000 who has an LPA enacted now that they have lost their mental capacity, for the parent to then have an ‘accidental fall’ soon after that triggers the payment of a claim. You might think that this is unlikely to happen or that the insurers would not pay the claim which could be right, but ultimately as the adviser we need to do everything we can to make sure that we do not arrange a life insurance policy that might lead someone to take a serious action against another individual.

We are more than happy to answer any questions that you have about this process, so that we can all make sure that we are confident that insurances are being set up in the right way.

References and useful links

Ordinary powers of attorney | The Law Society

Make, register or end a lasting power of attorney – Gov.uk

Power of attorney – Lasting, enduring and ordinary | Age UK

Giving someone power of attorney – NHS

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