Long-term care refers to care you need for the foreseeable future, maybe as a result of permanent conditions such as arthritis, a stroke or dementia. It could include help with activities such as washing, dressing or eating – in your own home or in a care home (residential or nursing). Long-term-care insurance is one way of paying for this care.
The state may provide some help towards the costs of this care depending on your circumstances. Check with your local authority to find out what support they give.
There are other ways to help you cover the cost of care, including using savings and investments. To find out about the other options you should speak to an appropriately qualified financial adviser, see Getting help.
Types of long-term-care insurance
There is currently only one type of long-term-care insurance, which you can buy when you have been medically assessed as needing care regardless of your age. This is known as immediate-care long-term-care insurance.
In the past it was possible to buy pre-funded long-term-care insurance in case you needed care in the future. These contracts are no longer available to buy, but you may have an existing policy.
Immediate-care long-term-care insurance
What it does
You buy an immediate-care plan with a lump sum. This pays out a regular income for the rest of your life, which is used to pay for your care.
The amount you pay varies depending on:
- the amount of income you want
- whether you want the income to increase, for example with inflation
- your age and sex, and
- the state of your health.
You’ll be assessed medically to determine how much you must pay for your chosen level of income.
Key things to think about
- You should check what’s available from your local authority first, to ensure you don’t lose out on means-tested state benefits.
- If you have valuable savings or assets (such as a home) that you don’t want to lose, long-term-care insurance may be worth considering.
- Long-term-care insurance may also help you choose better quality care than your local authority would help pay for.
Questions to consider with your adviser
- How much cover do you need? Most long-term-care insurance policies tend to cover only part of the cost of care, with the remainder coming from your income and state benefits.
- How much could you pay out of your income (including state benefits) towards long-term care, and how much extra would you have to find to meet likely care fees?
- How much would long-term-care insurance cost to meet the shortfall?
- What happens when you die? Usually the income stops and capital is not repaid unless you’ve chosen a plan which provides some death benefit (such as a lump sum paid to your estate).
- Is inflation taken into account? Most plans let you choose whether or not the money you get from the policy is fixed, or increases either by a set amount each year or in line with inflation.
- Are there other more suitable ways to meet the cost of care?
For more information, why not contact Lisa on 0870 991 4620 or email her on email@example.com
For impartial information about insurance, please visit the Money Advice service website at www.moneyadviceservice.org.uk