Some ways to fund your long-term care needs

Scott Woods.
Scott Woods.

Money Matters by Scott Woods

Contrary to many people’s understanding, long-term care (or social care as it is sometimes known) is not funded in the same way that both health and medical acre is.

Local authorities do provide some social care subject to a means test and an assessment of the type of care needed.

But the level of this test means it is likely that most people will be liable to fund all or part of the cost of their care.

While pre-funded, long-term care insurance is available, it can be difficult to encourage consumers to pay into a policy to cover an event that may never happen.

More popular options are “point of need” products, but care can cost a considerable amount so planning for this is something that people really should consider as they approach or enter retirement, rather than when they need to enter a care home.

The difficulty with contemplating care costs and the type of vehicle best suited to paying the bill is that the amount of cash needed is unpredictable.

While a quarter if us may spend little, many spend significant six-figure sums and few people put aside funds specifically for care in later life.

If people need to pay for care, many rely on their pension income or other accumulated savings and investments which can soon be wiped out.

Other sources for self-funding are from children and the sale of a home.

The popular option for long-term care funding is an immediate needs annuity where, for a one-off premium, this provides a guaranteed income which, if paid to a registered care provided, is received without any deduction of income tax.

The main advantage is that once purchased, the care plan continues to pay for however long the individual requires care thereby protecting other assets from having to used in the event of an extended stay.