Long term care
You should discuss possible future care needs, and how to fund them, with family or friends before you make a decision to approach a professional adviser or to buy a policy direct from an insurance company.
Long term care insurance
Long term care insurance provides a planned way of paying for some or all of the cost of any long-term care you may need now or in the future. Through a lump sum payment in advance, or regular premiums, you can buy insurance to cover the cost of care in your own home (domiciliary care) or in a residential or nursing home.
The expression “long-term care” refers to care that is needed for the foreseeable future, perhaps as a result of permanent conditions such as arthritis, stroke or dementia.
Care needs caused by these long-term conditions are not always met by the NHS and are not supported indefinitely by private medical insurance policies.
Types of care service
The term “care” is used to cover a wide variety of care services, from someone to do domestic work in your home, through to respite care which offers a break for your carer, and a place in a residential or nursing home.
Some policies will also meet the cost of installing gadgets and machines and other physical aids such as stair lifts, handles and grab bars to help mobility in the home, or the provision of medical services such as chiropody, physiotherapy and speech or occupational therapy.
The government recognises that disability and the need for care means you may need extra income, and many people needing care will be eligible for disability benefits including Disability Living Allowance or Attendance Allowance. But these benefits are not intended to cover the full costs of all the care that you might choose to have in your own home or in a residential or nursing home.
State care service
After assessing your needs your local authority is responsible for providing you with state care services. It may be entitled to ask you to contribute to the cost of the services provided to you. It is not obliged to provide every service which might be needed, and a determining factor in what services are provided is the amount of money available for those services.
The services provided and what you have to pay for vary from one local authority to another -check with your local authority for details on what is provided in your area and at what cost.
Anyone with over £16,000 in assets must pay the full costs of care home places. These assets include cash, bank and building society accounts, national savings, investments, stocks and shares, assets held overseas and any property you may own other than your own home.
In addition, if you move into permanent residential care and your own home is unoccupied, the value of your home will then count as part of your capital for these purposes. And the government has put into place measures to limit asset avoidance, for example transferring your assets to relatives before a need for care arises.
Those with between £10,000 and £16,000 get some help from the state to pay for their care and those with under £10,000 get the maximum state support, but are still expected to use their savings to pay towards some of their care.
Before you take out an insurance policy you should look at the number and measurement of the Activities of Daily Living (ADLs) which the insurance company uses to assess the need for care as policies vary.
When reviewing the different types of policy available you should consider whether you need care now or if you are planning ahead for care you may need later.
Do you intend to pay for your policy with a cash lump sum, regular premiums paid out of income, or wait until you need care and pay for it out of your assets?
Do you want to be able to claim if you need care in your home, care in a nursing or residential home or in either location? You also need to consider the level of weekly or monthly payment you need the policy to provide: this may or may not equal the cost of the care that you need.
Ways to buy long term care insurance
There are different ways in which you can buy long-term care insurance:
1. Through a lump sum purchase to pay for care immediately (” immediate need” plans).
Through regular premiums, or a lump sum, in case you need to pay for future care (” pre-funded” policies)
Through exchanging some of the value of your house to pay for long-term care premiums (“equity release” plans).
The information which we provide through Lasting Post is in outline for information or educational purposes only. The information is not a substitute for the professional judgment of a solicitor, accountant or other professional adviser. We cannot guarantee that information provided by Lasting Post will meet your individual needs, as this will very much depend on your individual circumstances. You should therefore use the information only as a starting point for your enquiries.