‘Unlike healthcare, social care is rarely free. Most people who need residential care in later life will have to pay some or all of their costs themselves.’
Life expectancy has increased and most of us, as we age, will require social or nursing care. Care may start with just a few hours every week but can often escalate to a live-in carer or residency in a nursing or care home in the long-term.
For anyone with assets over £100,000, support from the government is minimal and benefits that are available may not be sufficient to maintain quality of life. Most care is delivered by the private sector and annual bills are a very significant financial commitment, starting at around £40,000 per annum and rising to £80,0000 for top-end care homes.
The likelihood that the majority of us will require care at some stage of our lives has meant that insurers view potential claims as high risk; as a consequence, no insurer has been able to offer a practical insurance solution which could relieve this financial burden until now.
‘We have found a life policy that deals with the reality of ageing – it not only helps your beneficiaries with inheritance tax – for the first time it also benefits you helping with care costs in later life!’
Ali Adham, Castleacre
‘While we may avoid thinking about our own care requirements as we age it is very beneficial to plan ahead just as we do with pensions and inheritance tax. The unanticipated cost of care can diminish our estate during our life just as inheritance tax does after our death.
Whole of life policies provide a guaranteed capital sum at the end of our life which helps tackle the inheritance tax problem but we have now found an insurer that has developed a really innovative Whole of Life Policy which has an added care package. This add-on benefit delivers up to £250,000 of cover during your lifetime to help with your personal care as well as a lump sum after death.
Care payments can be activated if your health has deteriorated but you want to live at home and have difficulties with at least three basic functions, such as mobility, getting dressed and being able to wash. This policy enables people to maintain quality of life without the financial worry of finding large lump sums to deal with care issues.’
A Widower Takes out a Whole of Life Policy to Help his Children with £500,000 Inheritance Bill but Benefits from Add-on Care Cover when he Suffers a Stroke
A widower decides to take out a whole of life policy to offset an inheritance tax bill for his three children, which he calculates will amount to £500,000 after his death. For a proportionately small % increase in monthly premiums on this whole of life policy he asks to include the add-on Lifestyle Care package for the maximum amount of £250,000, plus protection so that if he makes a claim his beneficiaries will still receive £500,000 on his death. A year after taking out the policy he suffers a stroke which unfortunately leaves him unable to dress, wash and cook, activating the care cover on his whole of life policy.
He now has staged access to the £250,000 tax-free capital sum to help with his personal care. He initially makes the decision to stay in his own home bringing in a part-time carer, later he moves into a comfortable private nursing home close to his children where he stays for two years until he passes away. Following his death his children find that all his care has been fully covered by the policy and that they also benefit from a tax-free lump sum of £500,00 to help pay the inheritance tax bill.
A Divorcee Accesses Funding for Care When she is Diagnosed with Dementia
A divorced woman in her sixties has concerns about selling her family home if she needs care later and the burden this will place on her daughter, in addition she also wants to help her daughter with inheritance tax.
She takes out a whole of life policy for £300,000 but adds the Lifestyle Care option. She is primarily concerned about the cost of care so chooses not to include protection for the whole of life sum which reduces the cost of monthly premiums. Ten years later she suffers a sudden deterioration in her health following a vascular dementia diagnosis. She spends 11 months in full residential care before her death. The cost of the nursing home is £60,000, this is paid by using part of the Whole of Life pot, but her daughter still receives £240,000 towards inheritance tax and has not been forced to sell her mother’s home to pay for the care.
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