Long Term Care Insurance

Long term care can be very expensive and to avoid it consuming all of your hard earned savings you may want to look at long term care insurance.

So what options are there?

Long term care insurance broadly fall into two totally different types; -

• Pre funded long term care insurance to insure against the possibility of ever needing care in the future and
• Immediate Need products which are called Immediate Need Annuities or Care Fee Annuities.

Pre funded Long Term Care Insurance

The availability of true long term care insurance designed to insure against the possibility of ever needing care effectively ceased years ago due to escalating costs - both of the care itself and correspondingly premiums and also due to increasing life expectancies. However a few companies have recently begun to re-introduce some limited cover - either as an additional benefit to a more traditional critical illness policy or as one Friendly Society has launched - a specific limited benefit Assisted Living Insurance which provides a specified “pot of money” (either £20,000 or £30,000) to the insured if they lose mental capacity or fail two or more activities of daily living.

These are:-

• Washing
• Dressing
• Mobility
• Transferring (from a bed to a chairs etc)
• Continence

This money can then be used by the insured (or Power of Attorney) to pay for either some additional care at home, pay for respite care or to buy equipment to help maintain as much independence as possible.

The advantage of these is that from the age of 50 you can start to pay a monthly premium which would help provide for some of your initial needs you may have. The premiums which will be calculated on age , health and the amount of money you want available at time of need (20,000 or £30,000) will increase each year and the monthly benefit paid at time of claim could affect any entitlement to means tested benefits. One thing it certainly won’t do is to provide an indefinite annual income to meet the ongoing cost of care. If you already need such care and need to make good a shortfall in income – then you need to consider a Long Term Care Annuity.

Long Term Care Annuities

These immediate need plans are very simple and very tax efficient single premium investments offered by specialist insurance companies who provide a guaranteed and indefinite income for life.

These plans are available for anyone over the age of 60 providing they already need care. The benefits they provide can be paid either monthly, quarterly or annually and providing the income is paid directly to a registered care provider the income is paid TAX FREE although tax rules are liable to change.

By paying a little more, you can also arrange for the benefits to increase annually to help offset future increases in care fees.

As you only pay once, they not only give you the reassurance and peace of mind that money will never run out, but help cap the lifetime cost of care. However as the premium is calculated based on medically underwritten life expectancies they are a gamble and should you die earlier you will lose money but this can partially be protected against by paying an additional premium to receive some limited capital protection.

You can read more about these immediate long term care annuities by visiting immediate need annuities or by calling us on

FREEPHONE 0800 180 4336.