Take the worry out of funding long term care


Paying for care in later life is a huge concern for many yet, for those already in a care home or about to make this move, there is an option that can provide peace of mind.

The National Friendly Long Term Care Annuity, is a timely addition to our National Friendly product range. It could be of interest to yourself or someone you know, as many people are looking for solutions to later life care funding.

Does a property have to be sold to pay for care?

If you have funds of less than £23,250 in England (£50,000 in Wales)* then, following a 12-week disregard period, you can ask your Local Authority for a Deferred Payment Agreement. They should agree to lend you the difference between your existing income, including any rental income from the property, and the cost of your chosen care home.

The money is repaid to them out of your estate if you sell your home, leave the care home or after your death. In the event of you living in care for several years, the debt could end up offsetting most of the equity in the property. There are tax considerations and the Local Authority will charge a fee and interest on the debt.

What about investing money to pay for care?

If you have a significant amount of capital, investing it wisely may produce the income you need to meet the ‘shortfall’ between your care fees and your pension(s) and Attendance Allowance but in the current economic climate this is becoming a less viable option unless you are prepared to invest in higher risk funds. The money could still run out if you live in care for several years.

Why might someone consider buying a Care Fees Annuity?

As both the Deferred Payment Agreement and ‘pay as you go’ options carry a degree of uncertainty, some people prefer the option of buying a Care Fees Annuity. You invest a single lump sum and the insurer pays a monthly income, tax-free, to your registered care provider until your death. You can protect some of the money spent on a plan in the event of an early death by choosing the capital protection option – without this, a significant sum could be lost in the event of early death.

You can make provision for fee increase and take the plan with you if you move. Any money spent on the plan will immediately reduce your estate for the purpose of Inheritance Tax. The Financial Services Compensation Scheme covers these types of plan, guaranteeing 100% of the income with no maximum cut-off point.

Where can I find out more?

We recommend advice is taken before buying any financial product and advice on the National Friendly Long Term Care Annuity is available from a firm of independent care funding specialists Eldercare Solutions.

They will offer a free initial telephone consultation to assess whether the product is affordable and appropriate. They can be called on 0800 082 1155 or emailed at advice@eldercaregroup.co.uk.

Data Source: https://www.moneyadviceservice.org.uk/en/articles/local-authority-funding-for-care-costs-do-you-qualify