Immediate need care fee payment plans

Money Advice Service

If you need a regular income now to pay for care either at home or in a care home, an immediate need care fee payment plan could be worth looking at. This income is tax free if it is paid directly to the care provider.

What are immediate need care fee payment plans?

These plans are a type of annuity contract.

An annuity is a type of insurance policy that provides a regular income in exchange for an upfront lump sum investment.

When they are used for long-term care they provide a guaranteed income for life to pay for care costs.

They can be known as:

  • Imediate care plans
  • Imediate needs annuities
  • Immediate need care fee payment plans

How immediate need care fee payment plans work

Did you know?

The average cost of an immediate need care fee payment plan is £69,000.

Source: PSSRU, Immediate Needs Annuities in England, Jan 2011

Immediate need care fee payment plans are designed to cover the shortfall between your income and the costs of your care for the rest of your life.

The price of a plan is based on how much income you need and the insurance company’s assessment of how long you’re likely to need it for.

How much you pay upfront will depend on:

  • Your age
  • Current annuity rates
  • the level of income you need
  • Your life expectancy (the shorter that is, the cheaper the plan will be)
  • The state of your health (the poorer your health when you buy the plan, the cheaper it will be)

The income from the plan is tax free if it is paid directly to the care provider.

If you’re worried about future fee price increases, you can build the cost of covering them into your care plan.

For an extra cost you can also put in a special clause (known as capital protection).

This allows your family to get some of the lump sum payment back if you were to die early.

Some insurance companies offer a “deferred” option in their plans.

This option allows you to choose to defer receiving income from the plan until a later date.

The longer the deferred period, the lower the cost of the plan.

If you are considering a plan, check to see if this option is offered so you can compare costs.

Immediate need care fee payment plans could be suitable for you if:

  • you’re already in a care home, you’re about to move into one, or you’re receiving care at home
  • you want the peace of mind of knowing that you have a regular income for life that can be used towards your care costs, whatever happens
  • you have the money available to invest
  • you want to cap the cost of your care, potentially safeguarding your remaining capital

Immediate need care fee payment plans are NOT for you if:

  • you don’t need to pay for care immediately
  • you think you might only need care temporarily
  • you might want your money back in the future
  • there’s a good chance that you would be entitled to NHS Continuing Care funding

Risks

Once you’ve taken out an immediate need care fee payment plan, there’s no going back.

You won’t be able to cancel the plan and get some of the money back if, for example, you stop needing care.

You also need to weigh up having a regular, secure income to pay for care against losing the lump sum you’ve invested if you were to die early.

Next steps

An immediate needs care payment plan is only one way to pay for long-term care:

This article is provided by the Money Advice Service.

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We hope you find Rest Less Money a useful resource and we would welcome your feedback at [email protected] on how to make it even better. For more information on any of the above you can read our full terms and conditions.

Some important information about Rest Less Money

We want you to understand the positives, but also the limitations of using our site. We operate in a journalistic manner and therefore all information, guidance or suggestions provided are intended to be general in nature, and you should not rely on any of the information on the site in connection with the making of any financial decision.

When we set out to build Rest Less Money, we wanted to be a trusted place where you could find helpful information about financial matters affecting the over 50s. As a free to use resource, we try hard to provide the best information we can, but we cannot guarantee that we won’t occasionally make mistakes. So please note that you use the information on our site at your own risk, and we can’t accept liability if things go wrong.

Key things to remember when using Rest Less Money:

We do not offer financial advice – As a journalistic site, it’s important to know that we do not provide financial advice. You should always do your own research before choosing any financial product so that you can be certain it is right for you and your specific circumstances. If you are in any doubt, please seek professional financial advice from a regulated financial advisor.

No Liability – please note that you use the information on Rest Less Money at your own risk and we can’t accept liability for how you choose to use the information given on our site. We will often provide links to content or products and services available on other third-party websites. These are provided purely for your convenience and we cannot be held responsible for any content, or any of the products and services offered on any website that we link to.

 

Accuracy of Information – We try to make sure that all the information provided on Rest Less Money is correct at the time of publishing as we want it to be the most helpful resource possible. Sadly, we are not perfect however, and so we can make no guarantees as to the completeness, accuracy, adequacy or suitability of the information available on the site.
Whilst we work hard to try and provide accurate information, deals and prices can change, so whilst they may be correct at the time of writing, providers may subsequently decide to alter them later – so always double check first.

A final note on the Rest Less Community Forums – always remember that anyone can post their opinion on the Rest Less Community Forums, so it can be very different from our own opinion and may not be factual or well researched. Always be wary of any content posted on the forums and be sure to do your own research and due diligence on anything suggested. 

We hope you find Rest Less Money a useful resource and we would welcome your feedback at [email protected] on how to make it even better. For more information on any of the above you can read our full terms and conditions.

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