Helping to cover long-term care fees
For a single premium payment, clients aged 60 or over can cover part of, or all of, the costs of care for the rest of their life. Immediate Lifetime Care is for your clients who are already receiving, or are about to start receiving, care for physical or mental disability.
Your clients can choose from different premium protections before the plan starts
The single premium is determined by the monthly benefit required, up to £6,000 per month. This doesn't include any additional payment for premium protection benefits
If your client is unable to handle their own affairs, a legal representative can act on their behalf
Why Immediate Lifetime Care?
The Immediate Lifetime Care plan is for clients already suffering from physical or mental disability, who are either already receiving or about to receive care. For a single premium it aims to pay part or all of the costs of a client’s care for the rest of their life.
Clients must be aged 60 or over and be receiving care because they need assistance with everyday tasks, or need constant supervision due to conditions such as dementia.
Benefits and options
We’ll pay your client’s long-term care benefit immediately as long as they're receiving care. The maximum benefit is £6,000 per month. The minimum is £200 a month. There is no surrender value either before or after the benefits become payable.
Payments and legal representation
The plan is set up by paying 1 single premium. If your client is unable to handle their own affairs, a legal representative can act on their behalf.
The maximum single premium is determined by the maximum care benefit of £6,000 per month. The minimum single premium is determined by the minimum care benefit of £200 per month.
If they’d like to, your client can help protect their benefits from inflation by choosing one of the following options before the plan starts:
- Yearly increases in benefit at a fixed rate between 3% and 10% each year (whole numbers must be chosen)
- Yearly increases in line with the Retail Prices Index
- Yearly increases of 2% more than the increase in the Retail Prices Index
Your client can also choose in which month the annual increase takes place, to fit in with their arrangement with their care provider. The increased amount applies for the full month in which the benefit goes up. We will make the increased payments automatically.
Premium protection options
Clients can select our optional premium protection benefit, which can be long term or short term. The benefit comes from a separate term assurance plan which has no cash-in value. No payment will be due if your client is alive at the end of the term.
Option 1 - Long-term premium protection
- Clients can choose to cover 25%, 50% or 75% of the total premium they’ve paid
- The amount paid when the client dies will be the amount covered minus the amount resulting from multiplying the initial monthly benefit by the number of complete months since the plan started
- If the monthly benefit payments we’ve made exceed the protected percentage chosen, the term assurance will end and the estate will not receive any payment on the client’s death
Option 2 - Short-term premium protection
- Clients can choose to cover 25%, 50% or 75% of the total single premium paid but only for a limited period after the start of the plan
- They can choose to protect the selected percentage of the premium for a period of 3 to 6 months from the plan’s start
- They can select a combination of periods and percentages. For example, they can protect 50% for the first 3 months, reducing to 25% for months 4 to 6
- The amount paid when the client dies will be the amount covered minus an amount equal to the number of complete months since the plan’s start, multiplied by the initial full monthly payment
- Once the chosen period ends, the term of the life assurance finishes
Once the term ends, when the client dies their estate will not be entitled to any payment.
The Immediate Lifetime Care plan is designed for clients who:
- Are suffering from a physical or mental disability and are currently receiving or about to receive care
- Want the peace of mind that all or part of their care costs are covered for the rest of their life
- Want their benefits paid tax-free direct to a registered care provider
- Would like the option of annual increases to their benefits at an additional cost, helping to protect those benefits against inflation
- Want to be able to increase their monthly benefit if their care plans or costs change
It’s unlikely to be suitable for:
- Clients who aren’t yet ready to enter long-term care
- Those who require a guaranteed payment to be left to their estate upon death
- Clients unable to make up any shortfall in care costs over and above the monthly benefit
Things to consider:
- Will the plan cover your client’s monthly care costs?
- Does your client have the means to make up any shortfall in care costs?
- Will the payments from the plan affect your client’s entitlement to any state benefits?
- Is your client aware that the total benefits paid may be less than the amount used to buy the plan?
- Does your client have any tax liabilities to address?
- Is your client aware that the plan has no cash-in value?
Possible alternatives to a lifetime care plan include:
- Local authority deferred payment scheme
- Equity release
- Investments or cash deposits
A fictional case study for illustrative purposes only
Sally showed early signs of dementia just after her 81st birthday. Over the next few years, the condition worsened. She moved from her own home to hospital and then to a residential care home with fees of £35,200 a year.
Sally had modest savings in a building society account and received a private pension, State Pension and Attendance Allowance. Sally’s daughter - who had registered a Lasting Power of Attorney - managed her affairs. She knew that Sally was keen to leave a legacy to her family and was concerned that Sally's savings would run out, forcing her to rely on state benefits.
For the first 12 weeks, Sally's home was exempt from the means test. Because her savings were smaller than the lower means test threshold, her local authority contributed towards her care-home fees.
After 12 weeks this contribution stopped, so Sally started to draw on her savings to meet the full cost. Next, her house was sold. The sale proceeds, together with her remaining savings totalled £200,000. By taking her combined income from her private pension, State Pension and Attendance Allowance, it left care home fees of £380 week to be paid from her savings.
At that rate, her savings would be completely exhausted in about 9 years. In addition, there was the issue of rising care-home fees.
Sally’s personal needs
Sally's daughter knew that her mother's financial independence was very important to her. She didn't want her mother to live off state benefits and have the quality of her care dictated to her. But she was also worried that her mother's limited financial resources would run out.
How an Immediate Lifetime Care plan met Sally’s needs
Sally's financial adviser recommended 4 simple steps of action:
What it meant for Sally
1. Buy an Immediate Lifetime Care plan
£88,603 of Sally’s capital (from the sale of her home and her savings) bought an Immediate Lifetime Care plan to meet the £380 weekly shortfall in care fees.
2. Tackle inflation
Care-home payments from the plan were set up to increase each year in line with the Retail Prices Index.
3. Access to some capital
£11,397 was kept on deposit for immediate access.
4. Leave a legacy
The remaining £100,000 was invested for capital growth to fund the legacies she wished to leave her family.
How the plan worked
The plan addressed Sally's daughter’s principal concerns. It ensured that a proportion of the care fees would be met for the rest of Sally’s life and provided a financial legacy for her descendants.
- Care costs - these were met from Sally's State Attendance Allowance, Registered Nursing Care Contribution (RNCC), pension income and the payments from her care plan
- Tax - Sally paid no income tax because her pensions were set against her personal allowance. The state Attendance Allowance is currently tax-free and payments from the Immediate Lifetime Care plan were tax-free because they were paid to a registered care provider
- Nursing care - the RNCC payment went directly to the care home.
This scenario is for illustrative purposes only. Depending on your client’s circumstances it may not be possible to meet all their needs, so leaving a legacy and paying for the cost of care may not be fulfilled.
Quote and apply
Our dedicated team is here to help you with existing and new business queries.
Call us on 0345 30 30 430
Calls to 03 prefixed numbers are charged at national call rates (charges may vary dependent on your network provider) and are usually included in inclusive minute plans from landlines and mobiles.
For our joint protection telephone calls may be recorded and/or monitored.
Key documents and resources
Help your clients to unlock their capital with our two lifetime mortgage products – a lump sum option or a flexible solution.
This provides a comparison showing the effect on capital between purchasing an Immediate Needs Annuity and using an investment to fund long term care costs.
Long term care shortfall calculator
This can help to show the likely shortfall when comparing income, care costs and other outgoings.
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