Also known as Care Fees Annuities, Immediate Needs Annuities, Immediate Care Plans, Deferred Care Plans, Lifetime Care Plans, they are long term insurance products which are designed to pay a regular income to help meet the cost of care. From now on we will refer to these simply as Care Plans.
There are several specialist insurers who provide Care Plans. You can only buy such plans through Specialist Financial Advisers.
The amount payable (the benefit) is agreed at outset and is guaranteed for life.
Income is usually paid directly to a Registered Care Provider where it is paid tax free. If, for whatever reason care no longer needs to be paid for, the income can be paid directly to the plan owner but will be taxable.
Immediate Care Plans pay the benefit immediately. Deferred Care Plans commence paying the benefit after a waiting period which can be selected between 1 - 5years.
An increase in the benefit can be included each year to help protect against the impact of inflation.
Protection can be included to pay a lump sum if the plan owner dies soon after the Plan is purchased.
Utilising a Care Plan to help fund care may provide the following benefits:
Care Plans provide a guaranteed income for life, they put people in control of their care funding, reducing the uncertainty of meeting long-term care costs.
Care Plans reduce the risk of the remaining estate being further eroded by future care costs providing increased certainty as to what assets will remain for the beneficiaries.
At what is a difficult time for those needing care and their families, Care Plans can help provide 'peace of mind' knowing that a benefit calculated to meet the selected quality of care is secured for life.
What are the risks?
Care Plans do not guarantee to cover the full cost of care, but instead are normally set up to meet difference between your income and expenditure, including your care costs. If your future expenditure increases by more than the benefit from the care plan, your remaining assets may be depleted.
The premium paid for a care plan is non-returnable and you or your estate may be disadvantaged by the purchase of a plan if you die early.
Which Care Plan is right for you depends on your own circumstances. A Specialist Care Fees Adviser can help you find the best care plan with the least risk to your capital. Read about the Care Advice Service here