Long term care often arises because elderly people can no longer manage a number of daily living activities without help and it is envisaged this will occur for their lifetime. It comprises of support with daily living activities like washing, dressing or walking and can be provided in the person’s house, in a residential home or nursing home.
The need for care can occur instantly without warning, such as the result of a stroke or heart condition. On the other hand the need for care could evolve progressively as the person’s dependency increases due to lack of mobility or dementia.
How does a long term care insurance policy work? Basically this is a lump sum insurance plan that guarantees a regular payment to help pay for life time care. The purchase price is progressively cheaper relative to adverse health and older age unlike life insurance which is progressively less costly due to younger age and better health.
The risk of a life time care insurance policy is that if a person dies early the original outlay is lost unless there is an element of insurance against premature death.
The purchase price of a care plan is based on the applicant’s life expectancy. Insurance companies take into account gender, age and medical condition by requesting a report from the persons G.P. Also they usually contact the care provider direct by telephone. If an individual’s life expectancy is deemed to be lower to chronic medical ailments, the price of the plan will be lower.
In addition to age, gender and state of health, the lump sum cost of a long term care policy is assessed by the level of monthly payments to the care provider. The monthly shortfall is calculated by deducting other regular income such as pensions and state benefits. The regular shortfall will help determine the amount of lump sum purchase price in return for a guaranteed income stream for life. The care benefits can be arranged to rise automatically every year by a given percentage to coincide with the care provider’s annual review date.
Why not suggest to the care home that they could agree to fixed 5% fee increases annually? In this way the care plan can be arranged to match these rises every year.
Even a guaranteed care plan cannot take into account increased care costs if there is a need the need to move care homes. This may be due to a requirement for nursing care or if the present care home closes for some reason or is taken over by a larger group. A regular NHS contribution is made for persons assessed as needing registered nursing care. However if the person’s health has deteriorated to such an extent that they qualify for continuing care, this is fully funded by the NHS.
Long term care plans have a significant tax saving benefit. This is because there is no tax liability on the person in care when benefits are payable direct to a registered care provider.
before to commence providing for long term care payments make sure to access Barbara Davies’s vital free report about long term care insurance plans .
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