What are care fee annuities?

Care fee annuities, also known as Immediate Need Care Annuities, are when you pay a single premium to an insurer who in return will pay, tax-free, your immediate care needs to a registered care home, for the rest of your life.

This ensures that you don’t run out of capital and avoid being in a position to afford to pay your care fees.

Why should you consider care fee annuities?

The cost of elderly residential care can be expensive, but also varies greatly by location. See the table below for a comparison.

Care Fees annuity rate comparison


If you were self-funding your care and had to meet these costs purely from savings, you may well find that your lifetime savings are eroded and you can no longer afford to stay in a home to get the care you need.  You may have to move to a cheaper home, or move in with family to help look after you.

Who can have an immediate care annuity?

If you are over the age of 50 and have an immediate need for care, whether at home or at a registered care home, you can apply.  The cost of your annuity will largely depend on the income needed, your age and your current health conditions.

As your income is paid directly to a registered care provider, there are no tax implications and it can be a more beneficial method than a standard annuity.

Care fee annuity options

Early death protection – for an additional cost you can pay the insurer an extra amount that will protect you for a time after paying your premium should you die early. This way you don’t have to worry about paying your premium and passing away early.

Indexing or escalation – to protect against the rising costs of care, you can also ask that your policy increases with inflation or at a set rate.

Advantages of care annuities

  • Could prevent erosion of life time savings
  • Is portable, so if you were to change care home, you could simply transfer payments to the new home• Prevents your family having to help out with any shortfall
  • Tax free if paid directly to a registered care provider
  • Allows you to financially plan the rest of your estate without worrying about potential care costs
  • Guaranteed care costs paid for life

Disadvantages of care annuities

  • If you die early could mean loss of large capital, although can be avoided with taking out early death protection
  • Doesn’t guarantee the rising costs of care. Taking out the indexing option may help, but doesn’t guarantee any shortfalls

How to get a quote for a care fee annuity

In order to get a quote, please either call us on 0800 1235678 or request a call back.