Care home fees – the difficult questions

When are planning care for a loved family member or possibly yourself, the financial demands of Care Fees can feel incredibly daunting and emotional. Not least if you need to start making those payments today.

Alongside covering the cost of care through personal savings or pensions, there are policy products that you can invest in that cater specifically to care costs.

Today, the HWIFM blog is exploring the what’s, whys, and how’s of one of the most popular care plan products: immediate needs annuity.

Do we need to fund care? 

If a person’s assets or income push them outside the means-test limits they will be responsible for funding their own care fees. Most homeowners will be required to pay for their own care, as cash investments and assets valued over £23,350 will be classed as Private Funders.

How much are the fees?

This is very much down to the unique circumstances and location. In Cheshire and South Manchester, residential care fees average £900 per week and nursing care £1,300 per week. Private care at home will often exceed £50,000 per year. This means that personal assets will be depleted quickly to pay for the care.

How can we help?

Here at HWIFM, we can provide advice on Care Fees planning, whether it would be from creating a sustainable income stream from investments or from a specialist immediate care annuity.

What is an immediate needs annuity?

Also known as an immediate care plan or an immediate need care fee payment plan, an immediate needs annuity is, essentially, a type of insurance policy.

In exchange for an upfront lump sum investment, it provides a guaranteed lifetime payment (known as ‘an income’) that’s specifically for long-term care.

The UK Care Guide reports that prices and policies can differ. On average, a 70-year-old might expect to pay £135,000 for an annuity of £10,000, whereas an 85-year-old may pay £55,000 for the same annuity.

How does an immediate needs annuity work?

Typically taken out after retirement age, immediate needs annuity functions as a long-term care payment solution.

A one-off lump sum is paid to the insurance provider and in exchange, they pay an income directly to your care home or provider for the rest of their life. The amount is designed to cover the shortfall between income (such as a pension) and the cost of your care.

The price of the annuity policy, which you pay upfront, depends on several factors including the level of income required, age, health and life expectancy.

Similarly, if you only need care temporarily or believe you might be entitled to NHS Continuing Care funding, an immediate needs annuity may not be suitable, but here at HWIFM, we can direct you to this funding if appropriate.

What are the benefits of an immediate need’s annuity?

Depending on whether this kind of long-term care solution, there are advantages to taking out an immediate need’s annuity.

From a personal point of view, there’s a real sense of security that comes with knowing that family will never have to pay for care. Some other benefits include:

• Income is guaranteed to be paid to your chosen registered care provider for life.
• The payments are direct to the care home and free of personal taxation.
• Indexation can be included with the plans to further protect the remaining assets.
• A capital protection clause can be included, so the beneficiaries may receive a percentage of the capital back on death.

Like every investment, there is some risk involved. After a 30-day cooling-off period, the plan cannot be canceled or get that full lump sum back, even if you were to die unless it was included in the plan at outset.

When to seek advice?

Long-term care planning and its associated products are complex. It’s advisable (but by no means mandatory) that you seek professional financial help to make your decision. Attorneys have a duty of care to ensure that are managing the money appropriately and it is wise to seek independent advice.

However, not every financial adviser is qualified to help. Often referred to as specialist Care Fees Advisers, these experts are regulated by the Financial Conduct Authority and must secure qualifications like the CertLTCP.

Paying for care can often be more of a tricky subject than choosing it. As such it is important for you to select the right type of adviser. Here at HWIFM, we have been advising on Long Term Care funding for several years.

As members of Symponia, advice is very much on respect and care, with the fundamental objective of enabling people to choose where they are cared for, with the peace of mind that they will be able to meet rising care costs indefinitely.

There’s a lot to think about when it comes to planning long-term care. First and foremost, our specialists will be able to help you figure out whether this product is best for you – because if it isn’t, we won’t recommend it.

Simply put, we can help you make a decision that reflects your needs and no one else’s. Speak to one of the team and let’s talk about how you can secure your future today.

Please call our team on 01606 338914 or email hello@hwifm.co.uk 

Please be aware that by clicking on any of the links in this article you may be leaving the HWIFM website. Please note that HWIFM is not responsible for the accuracy of the information contained within the linked site(s) accessible from any of the pages linked to from this article.