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Long Term Care Insurance

Long Term Care Insurance (LTC) is specifically designed to protect you against the substantial open-ended costs of long term nursing home accommodation, or health and disability-related services you may need to stay living at home. With nursing home fees usually around £400 a week and care at home costs variable, but £300 per week or more is not unusual for a high level of care – the potential burden is considerable. It is, of course, extremely unlikely that any private health insurance policy held would cover such requirements.

Like private medical insurance, the cost of LTC cover will be determined by the area in which you live and the cost of care locally. Policies can be arranged to suit different cover requirements e.g. to a fixed number of years, or to set payment amounts.

The most popular plans are of the regular monthly contribution kind, where payment will only kick in when you come to need nursing care.

Premiums vary depending upon personal circumstances, together with the level of benefits to be provided. Average premiums to cover a £13,000 a year benefit would be approximately £70 per month for a male at age 60 and £130 per month at age 75. With their greater life expectancy and longer need for care, female premiums will be higher than those quoted.

Alternatively, you could opt for an immediate care plan – where a one-off payment in the range of £60,000 to £90,000 might be made, to buy an annual income of £20,000. You will, of course, be ‘gambling’ your life longevity against the amount paid out – and may not live to see a full ‘return’ on your capital.

Whatever LTC plan you choose, policy payment will typically be made when the insured person can no longer perform two or three of the following daily living tasks, without the aid of a third party:

  • washing and bathing
  • food preparation
  • feeding
  • continence
  • dressing
  • use of toilet
  • movement from bed to chair or wheelchair
  • mobility from room to room

 

The drawback of Long Term Care Insurance for many people can be the cost of monthly premiums – especially if the policy is taken out well before it might be needed. It is with these circumstances in mind that family members often ‘club together’ to afford the premiums – in the knowledge that they are guarding cherished assets for family generations.

If Long Term Care Insurance is not for you, an alternative, preferable care funding method may well be an Equity Release Plan. It’s important to read all the conditions of Long Term Care Insurance very carefully before proceeding.