Long Term Care

Many clients are concerned about the cost of long term care which can vary between £25,000 – £40,000+ per annum depending on the part of the country and the style of accommodation.

Any one in the UK with capital in excess of £23,000 is required to fund their own long term care . The capital assessed will normally take into account the family home unless this is occupied by a spouse or a dependant family member.

A few years ago it was possible to effect an insurance policy which would cover the cost of long term care in whole or part. However, the increasing cost of nursing home care has resulted in a number of Insurance Companies removing their policies.

The only policies which are currently available are special annuity schemes which provide an enhanced income to pay the fees but in the event of an early death the capital is lost.

In most cases the best course of action is to draw up a cash flow model and gradually fund the fees from a mix of income and capital.

Equity Release

In later life some people turn to their property as a means of funding their retirement. This can be achieved by:

  • Lifetime mortgage – in this case you continue to own the property but raise a mortgage using a maximum of 40% of the value of the property, depending upon your age and repay neither capital nor income.
  • Reversionary scheme – in this case, ownership of the property is transferred but the borrower can remain in the property rent free until death.

There is a high level of risk in both types of scheme and professional advice is essential.