Care funding plans
The UK average cost for a one-year stay in a nursing care home was £48,724 for the financial year 2019-20. It's therefore really important that if you or a loved one needs care, you explore the options available to you for funding it. To help you understand the system, we've put together information about some of the key things you need to know. Please click on the links below to find out more.
Just Retirement Group plc merged with Partnership Assurance Group plc to form Just Group plc. Care Funding Plans are now written by Partnership Life Assurance Company Limited, trading as Just.
What are care funding plans?
It’s a financial product that provides an income for life – to help you avoid running out of money to fund your care in the future. Care plans are bought with a lump sum, and are non-refundable. The income is normally paid direct to your registered care provider – if paid in this way it will benefit from favourable tax treatment.
Is this different to an annuity?
It’s a type of annuity. It’s sometimes referred to as an immediate needs annuity.
Why would I want to buy a care funding plan?
A care funding plan may be suitable for you if you’re already in a care home, you’re about to move into one, or you’re receiving care at home – and you want to be sure there’s a regular income that’s guaranteed to pay towards the cost of your care for the remainder of your life.
Where can I find out more about care funding plans?
We always recommend that you talk to an adviser about your situation, before making a decision. They will be able to give you more information about the care funding options available to you. Your local authority can help you find an adviser in your area, or you can find impartial details of advisers on thepfs.org or unbiased.co.uk website.
How much do care funding plans cost?
The amount you’ll need to contribute will depend on your own personal circumstances – for example, how much income you’d like to secure, your age, the state of your health and your life expectancy.
The best thing to do is to talk to a professional adviser about plans to fund long term care.
Things to consider about care funding
It’s worth taking some time to review all the options you have for funding care before deciding to take out a care funding plan. This means sitting down and considering some of the following:
How much money will I need?
The cost to you of long-term care depends on your health, what level of support you need and the value of your savings, assets and income. You may have to pay for all of it, some of it or nothing at all – the NHS may provide your care, depending on your circumstances.
But how much does care cost?
The UK average cost for a one-year, single room stay in a nursing care home was £48,724 for the financial year 2019/2020*. Of course, actual costs vary by services provided, by homes and even area as well as whether you opt for a single room instead of a shared room. Find out more about the costs of care here.
How can I find out if I’ll get help with those costs?
Talk to your local authority about long-term care funding, and what they have available to support you. They'll be able to provide you with information and advice, assess your care and support needs and help you find an independent financial adviser to talk about options for funding care plans, as appropriate. You can also find out more about the costs of care here.
Will my savings affect long-term care funding?
Yes. For the tax year 2021/2022, if you have savings and assets that are worth more than £23,250 in England and Northern Ireland, £24,000 for Wales (non-residential care, £50,000 for residential care) and £28,750 in Scotland, then you'll have to pay for your own care.
Who can help me decide what to do?
Before you begin, it's worth taking some time to gather information about how much you have set aside in savings and assets. Then you should talk to your local authority first. They will be able to tell you whether you qualify for any financial support and may point you in the direction of a professional adviser.
They’ll have experience of, and insights into, many of the issues you face, as well as into the financial options open to you – so they’ll be in a good position to answer a broad range of frequently asked questions about long-term care funding. He or she can also talk to you about equity release, tax planning and your investments and savings.
An appointment with a financial adviser and ongoing advice may incur a charge or fee, so it may cost money to talk this through – but it's very important to get this right, as the arrangements you’re making may have to last a lifetime, and could ultimately save you much more than the cost of advice.
*Source: LaingBuisson Care of Older People UK Market Report 31st edition 2020
Buying a care funding plan
Nobody relishes the idea of very old age. For some, it will eventually mean moving into long-term care. Sadly, whether care happens at home or in a care-home, many people will have to contribute towards the cost of their own care, and some will have to pay for it completely.
How do I buy a care funding plan?
You’ll need to talk to a professional financial adviser first and foremost as there’s a lot to think about when setting up a care funding plan. When you start thinking about state benefits, savings, other annuities, income from investments, your outgoings, emergency money, the cost of care in itself… there’s so much to think about, that it really does pay to get professional advice.
What will a professional adviser do for me?
A professional adviser will ask about your circumstances. He or she will have plenty of experience, looking for the bigger picture – taking into consideration all of the obvious things that could affect how much money you may need to cover your care needs, but also factoring in some of the things you may not think about.
A lot of information is needed at the initial meeting – things like details of your care costs, income, outgoings, assets and investments – and having this information to hand can help speed up this process.
There’s the medical underwriting questionnaire. A professional adviser can talk you through this and help to explain why they're re-exploring some areas of your health and lifestyle in more detail.
They’ll also take you through care funding plan options available, including whether you want to defer your care income payments and whether you want to protect your income against the effects of inflation. And, they’ll get quotes from different companies such as Just to find the best deal for you.
Above all though, a professional adviser working with you to set up a plan like this will give you the peace of mind you need to be sure a care funding plan is going to do exactly what you need it to.
So where do I find a professional adviser?
You can talk to your local authority. Alternatively, you’ll find an impartial listing of professional advisers in your local area on thepfs.org or unbiased.co.uk – look specifically for those advisers who have experience arranging long-term care funding.
Just care funding plans
Our care funding plans offer a wide range of solutions to meet your individual needs.
All of our Care Funding Plans provide a guaranteed income stream for the rest of your life, and are designed to help meet the cost of your care.
Where the income is paid to a Registered Care Provider, we are able to pay it tax free, although this is of course dependent on your circumstances. If your circumstances change, we can change who receives the income, although you may lose the tax free status if the new recipient is not a Registered Care Provider.
Our Care Funding Plans offer a number of additional options that allow you to structure the plan to suit your circumstances.
Protection against rising fees
Like the price of all goods, the cost of Care Fees can increase over time due to inflation.
This is why you can choose for the income payable from your Care Funding Plan to increase each year as well, either by:
- A fixed percentage of up to 8% each year, or
- In line with the Retail Price Index (RPI) – this links the income from your Care Funding Plan to the general UK rate of inflation.
Protecting your investment in the event of your early death
A Care Funding Plan guarantees to pay an income for the rest of your life. This income will then stop when you die, and no further benefits will normally be payable.
However, if you die within the first six months of the Plan, we will return a proportion of the amount you invested to your Estate and/or Beneficiaries. The amount returned depends on how far into the six month period your death occurs.
In order to give clients further reassurance during the coronavirus pandemic, we’ve temporarily increased our Money Back Guarantee for plans purchased since 14 May 2020 until further notice. This change provides a refund of 100% of the premium, less any income already paid, for any customer dying within 12 months of purchasing a plan where Covid-19* is recorded on the death certificate as a contributory cause of death.
Month of Death
|Month 1||100% of amount invested less the total amount
paid from the Plan
|Months 2-3||50% of amount invested less the total amount paid from the Plan|
|Months 4-6||25% of amount invested less the total amount paid from the Plan|
|If death occurs within the first 12 months and Covid-19* is recorded on the death certificate as a contributory cause of death, the Month 1 Money Back Guarantee will apply.|
You can also choose to protect up to 75% of your investment (less any benefits paid from the Plan) for the duration of the Plan, although this will increase the cost of the Plan.
*also includes Coronavirus or SARs-Cov-2 as a contributory cause of death.
Protection against the cost of care in later years only
If you are happy to fund the cost of your care in the short term, but are worried about the impact if you continue to need care for many years, then you may want to consider a Deferred Period.
Under this option, we agree to start income payments at a specified date, up to 5 years in the future. Once income starts, we then guarantee to continue paying the income for the rest of your life.
This option can significantly reduce the cost of the Plan, but you will have to fund the cost of your care yourself during the deferred period.
How to buy our Care Funding Plan
Because Care Funding Plans are considered long term contracts, and cannot normally be cancelled once they have been purchased, we wouldn’t want you to purchase one unless you were absolutely sure that it was the right thing to do.
For this reason, we only sell our Plans through regulated financial advisers.
If you don’t already have a financial adviser, you’ll find an impartial listing of professional advisers in your local area on thepfs.org or unbiased.co.uk. Alternatively, SocietyofLaterLifeAdvisers.co.uk contains details of advisers specialising in this area.