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The
quality of health care a person enjoys in his
or her old age depends increasingly on an ability
to pay for it. Many people have been left facing
a simple but unpalatable truth – they
will have to sell their house to finance their
long-term care.
For
many of us there will come a day when we will
need to go into a nursing home, or arrange domestic
help in our own home. But who will pay for it?
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An ageing
population
It's a known fact that people are living longer than
ever before. The UK, like many countries, has an ageing
population. Better health care has increased our life
expectancy from 47 years in 1900 to 82 years (for
women) and 78 years (for men) now (Source: Office
for National Statistics 1998).
The cost
of care
The degree of care required will, of course, vary
according to the severity of an individual's illness
or disability. Some people will need round-the-clock
attention; others may simply need help in washing
and dressing themselves, for example.
But who is
to provide this care? There is a great deal of confusion
about exactly what help is still available from the
State. Currently, although under review, if you have
assets worth more than £10,000 (and your house will
be included in the assessment if you own it and no-one
else lives in it with you), the State will not pay
for your long-term care.
If you have
over £16,000, you have to pay the full cost yourself.
If your assets are between £10,000 and £16,000, you
have to meet some of the costs. The amount you pay
is assessed on a sliding scale. Many people, therefore,
are deciding that it's a sensible precaution to take
out insurance to meet such costs.
Long-term
care insurance
Long-term care insurance policies can be taken out
before care is needed, to pay any fees in the future.
You choose the level of fees you think you'll need
and then pay monthly premiums, which are set according
to your age. Claims on these policies can be made
when the person insured can no longer carry out a
certain number of activities of daily living (ADLs),
which include washing, dressing, feeding, mobility
and continence. Long-term care insurance, if properly
arranged, should cover care in your own home, and
the cost of a residential home if this were needed.
Immediate
care insurance
Immediate care insurance is a way of paying for care
only if you need it. You can take out a policy just
before you or a family member needs to go into a residential
home or receive care at home. You pay in a lump sum
premium and care fees are paid at a specified level
until the person needing care dies.
Long-term
care insurance bonds
Insurance bonds are a combination of long-term care
insurance and investment. They're intended to get
around the problem of losing thousands of pounds in
premiums if you don't need long-term care. If you
do eventually need care, some of the fund is cashed
in each month to pay your care fees. And if you go
on needing care fees after the rest of your fund has
been cashed in, insurance is then used to pay all
the subsequent fees. But if you don't need care or
you die before all your fund is used up, the remaining
value of the fund is returned to you or your family.
Investments
for care
Investments can be used to create your own long-term
care bond. You simply have to build up sufficient
capital to be able to buy income-generating bonds
or annuities when care fees are needed. And, as there's
no insurance element, there are no premiums or deductions
to come out of your capital – so it can all
be passed to your family if you don't spend it on
care.
If you
are concerned about how you would cope if you had
to fund long-term provision, either for yourself or
a family member, please E-mail
, use our advice
request form, or contact us on 08000 151613
today. .
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If
you or a family member went into a nursing home
today, the average cost would be £340 a week
or around £18,000 a year, according to research
by Laing & Buisson.
Care in a residential home is less expensive,
averaging £250 a week, but that still works
out at £13,000 a year. Care in the home can
also be expensive. According to the British
Nursing Association, it costs an average of
£9.48 per hour, which, assuming an average care
requirement of four hours a day, also works
out at £13,000 a year.
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Immediate care Plan
Today a more common tactic for families is to make plans once immediate care is required for an elderly relative.
This can be done using a specialist annuity called an “immediate care plan” that pays out a fixed sum to cover annual care costs, or families may choose simply to drip-feed payments from their savings, or from the proceeds of the sale of the family home. Each immediate care annuity is individually underwritten to take account of age, sex, health and other factors.
The payouts from immediate care annuity plans, are tax-free as long as they are paid to the registered care home owner.
The
Financial Services Authority does not regulate
some forms of Long-Term Care cover. The past is
not necessarily a guide to future performance.
Levels
and bases of, and reliefs from, taxation are subject
to change. Tax reliefs referred to are those currently
applying and their value depends on the circumstances
of the individual investor or fund involved. The
value of the units in these investments, as well
as the income from them, can fall as well as rise.
These investments are intended as long-term investments.
If you withdraw from these investments in the
early years, you may not get back the full amount
invested. |
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