Also known as Care Fees Annuities, Immediate Needs Annuities, Care Plans, 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 a Care Plan.
There are two 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 deferred 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 futurecare 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 the financial side of their care requirements is taken care of and their selected quality of care is secured for life.
What are the risks?
Care Plans do not guarantee to cover the full cost of care, they are usually set up to meet the initial shortfall in care costs which may increase in the future by more than the benefit from the care plan
The total income payments received over a lifetime from a Care Plan may be less than the purchase price, and may be considerably less if the plan owner dies shortly after the start of their plan.
Which Care Plan is right for you depends on your own circumstances. A Specialist Care Fees Advisers can help you find the best care plan with the least risk to your capital. Read about the Care Advice Service here