A care plan can help financially support the cost of long-term care needed in later life. If an illness, condition, or disability leaves you needing care, and you are over 60, you would be able to consider lifetime care plans which allow you to purchase a plan with a one-off lump sum, in return for support with the costs of care.
In return for a one-off lump sum payment, you will be entitled to monthly payments to cover towards the care costs for the rest of your life.
The care costs can arise as a result of costs incurred from in-home care, or from care home fees.
Care plan benefits aren't taxed when paid to a registered care provider.
Care plans have no cash in value but will guarantee a monthly benefit for the rest of your life. Payments can start straight away, or they can be deferred.
If you have more than £23,250 in savings, you may have to pay your care fees in full. If your capital is less than £23,250, the local council may help you, but you may still have to pay some of the fees.
It will be your responsibility to pay for your care if it is deemed affordable for you. However, a care plan can help cover some of the costs of paying for Care
You can consider Immediate lifetime care policies, which allow payments for care to start straight away, and continue for the rest of your life. Immediate lifetime care plans are available with inflation-protected options as well as long, or short-premium protection.
Another option is a Secured lifetime care policy, with Secured lifetime care policies you are able to defer payments by up to 5 years.
A Secured Lifetime Care plan is for people who can pay for their own care but want to limit their financial responsibility. They must be at least 60 years old and either already getting care for a physical or mental disability or about to start.
You pay a single premium for this policy and the benefit amount can be inflation protected.
Purchasing a Care plan will not be for everyone. If you are close to the limit of paying your own Care costs it might be that you decide to consider some alternative options. Some of these include:
Care costs can be expensive. Depending the type of care or type of support you seek, costs could range from £30 hourly for care professionals to in excess of £30,000 annually if a care home is needed.
There is support available through local council authorities for some. However, most need to self-fund their care planning. It is a good idea to plan for care if you may struggle with the expense in later life. For an idea of the average costs of care, take a look at our insight 'The cost of care'.
Speaking with a later-life adviser will provide you with the information and advice required to make a decision on to manage your care and support plans. It's equally as important to review all of your later life needs as it is to look after your current finances.
If you are not sure where to start, Sunny Avenue can help you find an adviser suitable to help. Complete our Sunny Fact Find to get started.
In some circumstances, the cost of care can be more expensive than the amount the benefit plan would pay. Care plans provide a minimum of £200 a month towards care, there may be a difference between the income received from a care plan and the actual cost of care. You would need to make up for the difference in costs.
The total payments made may be less than the premium paid to purchase the plan at the point of death. You will not be able to have the premium refunded.
You may be eligible for state-sponsored care. It can help with the costs of care, paid by the government. It is determined by your specific care needs as well as your total value of assets.
Financial care plans are complex financial products. It's a good idea to seek advice to discuss your circumstances. Plans are bespoke but vary from provider to provider. A later-life adviser would be able to help you understand your options and provide you with more information on whether a Care plan is right for you.
It may be an option to consider setting up a trust. A trust will move the ownership of the property from your name to someone else. This means, when costs of care are being assessed, the value of your assets will be less. This can make a difference when it comes to state support.