Long Term Care Fees Insurance
Long term care insurance (sometimes mistakenly referred to as Care Fees Annuities) is an in insurance policy taken out by someone normally below the age 70- 75 before they need care, which will help meet the cost of long term care should it ever be required.
These policies pay an agreed income for the remainder of your life or until you recover, once you fail a certain agreed number of Activities of Daily Living (ADL’s);-
- Washing yourself
- Feeding yourself,
- Continence,
- Being able to transfer from bed to chair
- Mobility
- Dressing yourself
or become mentally incapacitated.
Should this happen if the income is paid to a registered care provider the benefits are tax free.
Long term care insurance premiums are based on age, sex and health as well as the amount you want to insure for and can be paid either by regular monthly premiums or a single premium or combination of both.
How do they differ from Care Fees Annuities?
Care fees annuities are designed to pay an income towards care fees, but are only available at the time of needing care. Care fees annuities are usually taken out to help fund the shortfall between known care costs such as care home fees and your income, and are paid for by a lump sum (such as from savings or sale of your home) whereas long term care insurance, just like car or home insurance, is taken out to help healthy people insure against the possible cost of needing care in the future.
This is why Long Term Care Insurance is often described as Pre funded care insurance, where Care Fees Annuities are referred to as Immediate Needs Annuities.
Should you or someone you care for need care now, please refer to our care fees page for more information.
Benefits of buying Long Term Care Insurance
- By helping meet future care costs, long term care fees insurance can help preserve more of your capital assets to pass on to future generations.
- Such plans will normally provide an agreed amount to meet the cost of obtaining assistive devices to maintain your independence in your own home after failing just one (ADL)
- You can select the amount of cover the insurance plan provides and how soon it starts to meet care fess (whether it is after failing just two ADL’s or three). This can help keep the premiums down.
- Benefits when paid out are currently tax free if paid to a registered care provider.
Disadvantages
- You may never need care when the premiums paid would be lost, just like other insurances such as health insurance or car insurance.
- The plan once started cannot be cashed in.
- Benefits and premiums are reviewable, so if the insurance company incurs much higher number and cost of claims, your premium can rise or alternatively your insured benefits (prior to claiming) can be reduced.
- When starting to fail activities of daily living you entitlement to claim will have to be assessed by independent care assessors.
- Whilst benefits when paid to care providers are currently tax free, the laws governing taxation are subject to regular review and could change in the future.
- There is currently only one insurer offering a specialist pre funded care fees insurance plan.
How to obtain a Long Term Care Insurance quote
Premiums are based on age sex and health as well as the amount you want to insure for and are therefore individual quotes which will require medical underwriting. If you would like to obtain a Long Term Care pre funded quote, please complete our enquiry form and we will call you back to discuss your needs further.
Alternatively if you or a person you care for needs care now please click through to our care fees annuity page where you can find out more about immediate needs annuities and request a care fees annuity quote.