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. Assistance is
means tested:
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Assets exceeding £19000 - no assistance |
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Between £11750 and £19000 - sliding scale,
no fixed benefit |
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Less than £11750 - costs met in full
or part by the local authority - but what quality of nursing
home? |
The above rates are accurate as at 8 April 2002 and are subject to change. (Source:
Devon County Council)
The Department of Work & Pensions (DWP) levels for means testing are £16000
and £10000 respectively.
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 or 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 that are taken into account are:
Savings & Investments
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Cash in Bank and Building Society Accounts |
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National Savings Certificates and Accounts |
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Premium Bonds |
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Stocks & Shares |
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Assets held abroad |
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Payments from charity or other financial gifts |
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Property other than main residence |
Income
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Retirement Pension and Company Pension |
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Income from Annuities |
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Earnings from employment or owning a business |
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Most Social Security Benefits |
Assets that are not usually taken into account are:
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Cash-in value of any Life Assurance or Annuity Policy |
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The value of any personal possessions (unless bought to reduce the amount
of savings to qualify for benefit). |
Income not usually taken into account includes:
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Mobility component of Disability Living Allowance |
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Payments from the Social Fund |
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Pensioner's Christmas Bonus |
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Most expenses from either voluntary, charitable or paid work |
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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:
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Washing |
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Dressing |
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Using the toilet |
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Continence |
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Mobility |
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Eating and Drinking |
Types of Cover
There are basically two types of long term care plans:
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Protection Based |
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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. |
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Investment Based |
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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. The majority of long term care benefits are paid
tax-free as they are paid directly to the care provider. |
Key Points
Long term care should be considered as part of most clients' portfolio.
Retirement is probably the best time to think about your long term care planning.
Levels and bases of, and reliefs from, taxation are subject to change.
Tax
reliefs referred to are those currently applying and their value will depend
on the circumstances of the individual investor.
The Financial Services Authority does not regulate advice on private
medical insurance and some critical illness, permanent health insurance
and long term care contracts, although it does regulate the financial soundness
of insurance companies. |
Hedgelands Financial Services Ltd, Hedgelands, Abbotskerswell, Newton
Abbot, TQ12 5PW
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Telephone
0845
165 1280
General Insurance
0845 165 1281
Fax
01626 332622
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