Long-term care

Financial support you need if you have to pay for care assistance for yourself or a loved one

With the UK’s population ageing, more people will be living with long-term care needs. Oscar Wilde once said: ‘The tragedy of old age is not that one is old, but that one is young.’ But the good news of rising life expectancy also brings with it the challenge of how we fund our future care costs. The question is: who is responsible for looking after us if we need care in old age?

As we get older, it becomes more likely that we may need day-to-day help with activities such as washing and dressing, or help with household activities such as cleaning and cooking. This type of support, along with some types of medical care, is what is called ‘long-term care’.

Providing financial support

Long-term care insurance provides the financial support you need if you have to pay for care assistance for yourself or a loved one. Long-term care insurance can cover the cost of assistance for those who need help to perform the basic activities of daily life such as getting out of bed, dressing, washing and going to the toilet.

You can receive long-term care in your own home or in residential or nursing homes. Regardless of where you receive care, paying for care in old age is a growing issue.

Level of state support

Government state benefits can provide some help, but may not be enough or may not pay for the full cost of long-term care. The level of state support you receive can be different depending on whether you live in England, Wales, Scotland or Northern Ireland.

Types of long-term care plans

Immediate needs annuities – pay a guaranteed income for life to help cover the cost of care fees in exchange for a one-off lump sum payment, if you have care needs now.

Pre-funded care plans – gave you the option of insuring your future care needs before they develop (these plans are no longer available to purchase)

Other options

Enhanced annuities – you can use your pension to buy an enhanced annuity (also known as an ‘impaired life annuity’) if you have a health problem, a long-term illness, if you are overweight, or if you smoke. Annuity providers use full medical underwriting to get a more accurate individual price. People with medical conditions including Parkinson’s disease and multiple sclerosis, or those who have had a major organ transplant, are likely to be eligible for an enhanced annuity.

Equity release plans – give you the ability to get a cash lump sum as a loan secured on your home – these can be used if you are looking to fund a care plan now or in the near future.

Savings and investments – give you the opportunity to plan ahead and ensure your savings and assets are in place for your care needs.

If you are already retired, or nearing retirement, it makes good sense to take professional financial advice to ensure that your affairs are in order – for example, arranging your Will or a power of attorney. It also makes sense to ensure your savings, investments and other assets are in order in case you or your spouse or registered civil partner may need long-term care in the future.

When planning for your future care needs, think about: 
  • Who (in your family) most needs long-term care and for how long
  • Whether you need a care plan now
  • Whether you should be planning ahead for yourself or a loved one
  • Whether you have the money to pay for long-term care
  • How long you might need to pay for a care plan
  • Whether home care or a nursing home is required
  • What kinds of things would be required of the help – for example, help with dressing, using the toilet, feeding or mobility
  • Whether you find that your home requires additional features such as a stair lift, an opening and closing bath or a bath chair, and/or home help
Making decisions at what can be an emotional time

Life expectancy has increased, which in turn puts a greater strain on the standard of care that state support can provide. Many people don’t consider the issue of care at all, and it falls to their families to make long-term decisions (and often very expensive ones) at what can be an emotional time. However, when an individual reaches the stage that they require long-term care, this does not necessarily mean that their life expectancy becomes reduced. The required care could last for 15 years or more, and therefore incurs considerable costs.

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