Care Fees Planning

Long term care insurance provides the financial support you need if you have to pay for care assistance for yourself or a loved one. Long term care insurance can cover the cost of assistance for those who need help to perform the basic activities of daily life such as getting out of bed, dressing, washing and going to the toilet.

The cost of care is rising fast, with limited care home availability and people living longer, long term care fees can become a life changing issue.

You can receive long term care in your own home or in residential or nursing homes.  Regardless of where you receive care, paying for care in old age is a growing issue. 

How it works 

Government state benefits can provide some help, but may not be enough or may not pay for the full cost of long term care.

In England, care costs are means tested, this means that if you have savings above a certain level, you will need to deplete these before the state steps in to help out. With the rising cost of care this can often see inheritances and lifelong savings wiped out.

The UK Government is currently changing how long term care is funded. Some of the detail has yet to be decided. The changes are based on the recommendations of the 2011 Dilnot Commission on Funding of Care and Support.

Types of long term care plans

Immediate needs annuities

These are designed to pay a guaranteed level of income in exchange for a lump sum payment. They have specific tax advantages if they are paid directly to a care provider

Pre-funded care plans

These policies were designed to give you the option of insuring for future care needs before they develop. With the rising and erratic costs of care coupled with the sensitive nature of the insurance, most insurers have pulled out of the market.

Other options

Enhanced annuities

You can use your pension to buy an enhanced annuity (also known as an impaired life annuity) if you have a health problem, a long-term illness, if you are overweight or if you smoke. Annuity providers use full medical underwriting to get a more accurate individual price. People with medical conditions including Parkinson’s disease and multiple sclerosis, or those who have had a major organ transplant are likely to be eligible for an enhanced annuity. These annuities will pay a higher level of income due to the shorter related life expectancy.

When planning for your future care needs think about:

·    who (in your family) most needs long term care and for how long

·    whether you need a care plan now

·    whether you should be planning ahead for yourself or a loved one 

·    whether you have the money to pay for long term care

·    how long you might need to pay for a care plan

·    whether home care or a nursing home is required

·    what kinds of things would be required of the help.  

      For example, help with dressing,  using the toilet,

       feeding or mobility

·    whether you find that your home requires additional

      features such as a stair lift, an opening and closing

     bath or a bath chair, and / or home help

Care Fees Planning | IFA | Bigmore Associates

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