The aim is to maximise your income for meeting care costs whilst, as far as possible, preserving your original capital.
Options to Long Term Care Planning
1. Immediate needs annuity works
An immediate needs annuity is designed to cover the shortfall between your income and the cost of your care for the rest of your life. The price of a plan is based on how much income you need and the insurance company’s assessment of how long you’re likely to need it for.
How much you pay upfront will depend on:
- Your age
- Current annuity rates
- The level of income you need
- Your health and life expectancy (the poorer your health or shorter your life expectancy, the cheaper the plan will be)
The income from the plan is tax free if it is paid directly to the care provider.
If you’re worried about future fee price increases, you can build the cost of covering them into your care plan.
For an extra cost, you can also put in a ‘capital protection’ clause. This allows your family to get some of the lump sum payment back if you were to die early
Selling your existing home and buying a smaller, less expensive one instead could free up money to pay for your care costs.
It could also provide you with the opportunity to live somewhere that might better cater for your needs now and in the future.
Apart from a smaller house you could consider other options, for example a bungalow, retirement property or sheltered and extra care housing.
3. Equity Release
It is important to always get financial advice before committing to an equity release scheme. Your individual circumstances need to be assessed and this is why financial advice is a must in the process and a regulatory requirement. An adviser will explain what is involved, discuss the options and alternatives available to you and any implications regarding state benefits, local authority support and tax obligations.
4. Investment bonds
These are medium- to long-term investments that are designed to produce capital growth. Depending on the size of your investment, the returns could also be used to provide a regular income to pay for care fees.
For more information on Long Term Care Planning, please contact us.