Social care: What options are available to help families fund care costs? | Personal Finance | Finance

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What other options are available?

There are many different self-funding options available for those able, including drawing on savings and investments, purchasing a care annuity or setting up a deferred payment agreement.

Care annuities

A care annuity can be an effective way of funding care for life while preserving capital, according to Mr Harris.

He said: “Similar to pension annuities, long-term care annuities are purchased for a set lump sum and then pay out a regular income to cover ongoing care costs.

“A care annuity is purchased at the point of needing care. If a power of attorney is in place, the attorney can purchase a care annuity on behalf of the person who needs care. The key benefits of a care annuity are that they can cover the cost of care for life and if the payments are made directly to the care provider, they are tax-free.”

Although it’s easy to source a quote for a care annuity, it can only be purchased through a suitably qualified financial planner.

Mr Harris continued: “They assess the benefits of putting this type of plan into place as they are not suitable for everyone. There are many different types of care annuities available and a financial planner can help to establish which is the right one.”

Deferred payment agreements

If someone needing care in a care home wishes to retain their home but needs additional capital to fund their care costs, they could apply for a deferred payment agreement.

Mr Harris said: “This offsets the cost of care as a charge against their property, usually up to a maximum loan-to-value of around 70 percent.





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