Long Term Care

18.09.2020
Richard Ince
Financial Planning

Long-term care in a care home is very expensive, and can quickly erode your savings (including the equity in your property).

It is a complex area, but if you are a homeowner with savings and a reasonable pension, then if you (or your partner) need care (at home, or in a care home) it is likely that you will incur significant costs, whilst not getting much, if any, help from the state until your savings have been reduced.

Care facts

Residential care costs vary a lot, but basic care (for the infirm with no medical conditions) starts at around approx. £300 per week – increasing, as more medical and nursing needs arise.

If you live in England or Northern Ireland and have over £23,250 in capital assets, then you are not entitled to financial assistance.

If you live alone, then your property is taken into account and you would be expected to sell it to pay for your care. If you have a partner (spouse or civil partnership) then seek advice.

Long-term care is a type of insurance designed to provide funds should the person need to go into a care home, typically as a result of old age and its associated age related problems

If you are retired, approaching retirement, or would consider yourself to have a potential financial responsibility for an elderly relative, you should talk to a financial adviser at Lovewell Blake Financial Planning Limited about long-term care, and the options available to you.

There are also product options for those entering care, or who expect to do so.

Immediate care products

These are attractive because the problem faced by the individual is that if they live a long time in care, they could exhaust their resources.

These products are not cheap, the main practical purpose of which, is for couples to protect the surviving partner from financial worries.

Scenario

A couple living in their owned property. Together, they have modest pensions and £20,000 in investments. It becomes clear that one of them will need to go into care, but it is also apparent that they may live for several years after doing so. The savings would soon be gone. To afford a good care home, the property is sold and soon those savings start to dissipate. The surviving partner could spend a lot of their money looking after their partner.

An immediate care product allows for an alternative process.

The property is sold. Some of the money is used to buy the care package, and the rest is divided between savings and the purchase of a replacement property for the survivor - typically a flat/apartment. This means that the survivor can face the future on a financially stable basis, without worrying about care fees.

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