Residential care fees

Guaranteed income to help cover the cost of care in the future.

A Deferred Care Plan could be suitable for you if:

• You have funding for the short-term but need security against care costs for the remainder of your life
• You are looking to reduce the costs of your premium, but require maximum benefits
• You have access to a lump sum to purchase the Care Plan
• You want the certainty of payments for the rest of your life
  
  There is no return of capital from your plan if you die after the first 6 months

How a Deferred Care Plan works

The Deferred Care Plan is an annuity which will pay a regular, tax-free* income to your registered care provider.  Payments are guaranteed and do not depend on investment performance.

You choose how long you want to defer the care payments for – anything from 1 to 5 years.  The longer the deferment period, the lower the cost of the Care Plan. 

When deciding whether or not to opt for deferment, you should consider that if you die during the deferred period your estate will not be reimbursed with any of the money you invested in your plan.

If, once the payments have started, you leave care at any point the income will be paid directly to you, rather than to the care provider, but it would lose its tax-free status.  However, it can be converted back to being tax-free should you require care again in the future.

Protection against inflation

Care fees can increase over time due to inflation.  If you want to protect your investment against the effects of inflation you can consider:

• Escalating benefits – when you buy the plan you can choose to increase the income you receive by a rate between 1% and 8% per annum.
• Retail Price Index (RPI) – linking your Care Plan to the RPI would mean that the payments you receive would be based on the 12-month movement in the RPI 3 months prior to your anniversary date, with adjustments coming into effect on the anniversary date.
  Note – RPI linking cannot be taken out in conjunction with the Escalating Benefits and income will reduce in the event of deflation.

Paying for a Deferred Care Plan

• You buy a Deferred Care Plan via a single one-off premium.
• Your premium is based on the monthly benefit amount you want as well as whether you elect to protect your investment against inflation.
• It is also based on your age and state of health at the time you apply.
• All applications are fully underwritten so your medical history may also affect the premium.  

If you die in the first six months of making your investment a percentage of the capital you invest will be returned to your estate / beneficiaries.  That percentage depends on how far into the six month period death occurs.