Long term care

Long Term Care Assurance is designed to pay for all types of domiciliary or nursing home care for people who are no longer capable of looking after themselves without assistance. It is needed for conditions which are unlikely to improve, and is distinct from acute care which is required for the short term and will relieve the underlying condition.

Local Authority Considerations

When Local Authorities consider what level of care is required, they will take into account disabilities, age or both. However the main consideration when they assess whether they will help with the cost of care is assets, which are means tested. In practice everybody is likely to make some contribution because everybody has sufficient income to do so. Local authorities work out the contribution by applying a standard set of national rules to the calculation of income and capital. These largely mirror the rules of the Social Security Income Support scheme. The objective is that after making their contribution towards the fees, people will be left with at least the amount of their personal expenses allowance, often called "pocket money". Most income is taken into account in full; for example Retirement Pension or payments of Income Support. In some cases, people will be expected to pay the full fees because their income, ignoring any capital, is high enough to enable them to do so and still leave them with their personal expenses allowance. Where an individual has capital assets which exceed the limits then the rules are that he or she has to pay the fees in full.However, few people are aware of the 'Continuing Care Funding' arrangements which are provided by 'Primary Care Trusts' and are not means tested. This can pay the full cost of care and is subject to a test which everyone is entitled to but few receive unless they ask.

Main Residence

The main residence will be taken into account if the owner doesn’t live there due to moving to Residential or Nursing Home Care. If the property isn’t sold, the Local Authority may place a charge on it and make a claim when it is eventually sold. The main residence is not usually considered if a wife/husband, a child under 16 for whom the resident is legally responsible, or an elderly (aged over 60), ill or disabled relative still lives there.

Other assets taken into account are:

Savings & Investments
• Cash in Bank and Building Society Accounts*
• National Savings Certificates and Accounts*
• Premium Bonds
• Stocks & Shares^
• Assets held abroad^
• Payments from charity or other financial gifts
• Property other than main residence

Income
• Retirement Pension and Company Pension
• Income from Annuities
• Earnings from employment or owning a business
• Most Social Security Benefits

• Cash-in value of any Life Assurance or Annuity Policy - this is crucial - see below
• The value of any personal possessions (unless bought to reduce the amount of savings to qualify for benefit).

• Mobility component of Disability Living Allowance
• Payments from the Social Fund
• Pensioner’s Christmas Bonus
• Most expenses from either voluntary, charitable or paid work
• The special War Widow’s Pension
• Activities Of Daily Living (ADLs)

The Product Providers pay the benefits from a Long Term Care plan when certain activities of daily living can no longer be performed, without third party assistance. Below is a list of common ADLs taken into account by Product Providers when assessing claims:

• Washing and Bathing
• Food Preparation
• Feeding
• Continence
• Dressing
• Cleaning
• Use of Toilet
• Ability to transfer from a bed to a chair or wheelchair

Types Of Cover

There are basically two types of Long Term Care Plans:

Protection Based

The protection products can be either regular or single premium funded. The majority of Regular Premium products do not have any surrender value or death benefit. Single Premium Contracts may have a death benefit within a certain time period. This may be part of the main Plan or may be covered by extra Life Cover with the Contract.

Investment Based

The investment-based contracts are either Regular Premium or Single Premium Unit linked or 'Whole of Life' based Contracts. They are dependent on Unit Linked Investments funding the Long Term Care Protection Plan. The value of the Investments funding the Plan can go up as well as down and is not guaranteed.

Key Points

• We all know that people are living longer. Long Term Care may not have been an issue in the past but should be considered as part of your general financial planning review.
• If you are at or near retirement age then now is a good time to think about your Long Term Care planning.

For a personal quotation or discussion please complete the enquiries form.