A care-fees annuity is also called an immediate-needs annuity and has the advantage of funding continued care without restriction. This annuity is bought from a provider with a single premium and guarantees that a specified amount will be paid for as long as care is needed. A major advantage is that the elderly or ill do not have to worry about having a diminishing amount of capital which may eventually run out and see them unable to afford the care they require. Having a care-fees annuity allows for peace of mind at a time when the last thing you want to worry about is money.
The cost of the annuity is based on the applicant’s personal information. Age, health, medical history and the level of care required is used to calculate the monthly payment needed for adequate care. Because the premium is based on an individual’s state of health, it will differ depending on the type of care required. If care is no longer needed or is reduced, part or all of the care-fees annuity is then converted to pay out an additional personal income.
There are very few disadvantages to care-fees annuities, but it is always important to understand the pros and cons of any investment. An early death could lead to capital loss if this type of annuity has been taken out, but this can be avoided if capital protection has been included.
A shortfall could be experienced if care fees rise above the annual benefit rate, but provision is made for an increase and the probability of this happening is slim. Once the annuity has been established, you cannot change the amount or benefits, but a further plan could be taken out to top up at a later date.
The advantages of a care-fees annuity far outweigh any disadvantages. The biggest advantage experienced by those who have this annuity is peace of mind. The guarantee of continued care means that you won’t have to move or leave the care home you are in, eliminating any stress or worry and allowing you to continue to receive the best possible care at all times. The benefits are also guaranteed to be paid for life, meaning that no family member has to take responsibility for any shortfall in fees.
The money is paid direct to the care home and is tax-free, creating no liability for income tax and ensuring a cheaper premium. In addition, most care-fees annuities offer an optional escalation of benefits to allow for rising fees and cap the cost of extended care needed over time.
Purchasing a care-fees annuity has many advantages and provides absolute financial peace of mind for anyone who needs care and their families.
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