It’s a concern for many people how they will pay the cost of care either for themselves or for a loved one. The reality is that most people will be expected to pay something towards these costs. With the UK’s population ageing, more people will be living with long-term care needs.
There are a number of different ways to fund long-term care. These are some of the main options available for people needing to make provision.
IMMEDIATE NEEDS ANNUITIES
This annuity is a type of insurance policy that provides a regular income in exchange for an upfront lump sum investment. When used for long-term care, it provides a guaranteed income for life to pay for care costs in exchange for a one-off lump sum payment if you have care needs now. Income is tax-free if it is paid directly to the care provider.
ENHANCED ANNUITIES
You can use your pension to purchase an enhanced annuity (also known as an ‘impaired life annuity’) if you have a health problem, a long-term illness, if you are overweight or if you smoke. Annuity providers use full medical underwriting to determine a more accurate individual price. People with medical conditions including Parkinson’s disease and multiple sclerosis, or those who have had a major organ transplant, are likely to be eligible for an enhanced annuity.
SAVINGS AND INVESTMENTS
These two methods enable you to plan ahead and ensure your savings and assets are in place for your future care needs.
If you are already retired, or nearing retirement, you should ensure that your financial affairs are in order – for example, arranging or updating your Will or a Power of Attorney. It also makes sense to ensure your savings, investments and other assets are in order in the event that you or your partner may need long-term care in the future. This annuity is a type of insurance policy that provides a regular income in exchange for an upfront lump sum investment. When used for long-term care, it provides a guaranteed income for life to pay for care costs in exchange for a one-off lump sum payment if you have care needs now. Income is tax-free if it is paid directly to the care provider.
If you are of working age, you are in the best position to plan for your future care needs. Accumulating wealth through investments or savings while you are earning will help with the potential costs of long-term care in later life.
Making sure you have the facts on what each one of these products could mean to you is crucial, so as always, we recommend speaking to a professional before making any decisions about your future. Please call 0808 168 5866 or email info@harteywm.co.uk
