Long Term Care explained

Long term Care insurance is a specialist care fee payment plan which can deliver the certainty of a regular income to help meet fees over the possible long-term. It can protect against having to fund care privately and, in doing so, protects an individual's estate from being eroded by the costs of providing care. As such, it is sometimes referred to as "income protection for the elderly". A lifetime's savings or the value of a house can be largely or wholly swept away if you become incapacitated and survive for several years. Taking out a long term care policy allows your beneficiaries to receive the rest of your estate in tact- regardless of how long the care home fees need to be paid.

There are two distinct types of state funding for care: social care and nursing care. Local authorities provide the care for social care, whereas the NHS provides the nursing care. Nursing homes will have a qualified nurse and will take residents in who qualify for nursing care. Residential homes take in those requiring assistance with certain activities of daily living (ADLs).

Each local authority carries out a means test on any applicant to receive State funding to pay for the costs of residential care. Only if your assets are below certain thresholds do you qualify for full local authority funding. In England, those with assets below £22,500 would not receive any local authority funding at all. Whilst local authorities can carry out a "deliberate deprivation" test, where gifting assets outside of the Estate to children in order to qualify for local authority funding is not allowed. However, the local authority cannot include property when means testing for eligibility if a partner or spouse still lives there.

The costs of residential care are extremely high. The average weekly cost in the UK of residential care is currently £382 per week for a shared room and £420 per week for a single. However, care homes vary considerably in terms of quality, location and price. Whilst the local authority is obliged to house an individual in a home if they have no means, this will be in the cheapest accomodation and almost certainly will involve sharing a room. If you are funding your care privately and you run out of funds, you will be moved to a cheaper care home by the local authority.

The cost of a plan is based on a person's age and health and the proceeds of a claim, if paid direct to the care home, are tax-free. The more impaired the life the cheaper the cost.

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