Long Term Care Insurance
Men have a one in five chance of needing care whereas women have a one in three. Although women live longer than men, they have a higher risk of needing long-term care before they die.
NHS continuing healthcare is often described as ‘fully funded care’ and meets the full cost of care in a care home for residents whose primary need for being in care is health-based.
Each local authority sets its own priorities in determining what funding is available for long term care and what severity of need is required to become eligible. Each individual’s health need is assessed by the patient’s Clinical Commissioning Group.
Individuals assessed as needing nursing care in a nursing home are entitled to receive nursing care allowance.
Attendance allowance can be claimed if the individual pays their own care fees and is paid by the DWP to eligible people over the age of 65. However, it can also be paid to younger people who qualify for Disability Living Allowance or Personal Independence Payments.
When assessing an individual’s level of contribution, the local authority must always leave them with a sum of money to cover some of their own personal expenses. This is called the PEA (personal expenses allowance) and is currently £24.40 per week.
Charging for Residential Accommodation Guide
Local Authorities must use national guidance for making assessments contained in a Department of Health document called CRAG (Charging for Residential Accommodation Guide) that takes into account income and capital when determining what local authorities can charge. None of these forms of income or capital would be taken into account by a local authority:
- pension funds (although pension income is taken into account)
- personal possessions
- the surrender value of life insurance
- investment bonds
Deferred Payment Plan
The value of an individual’s home is disregarded for twelve weeks from the date they enter a residential home.
If a person’s assets, excluding their property, are worth less than £23,250, the local authority cannot force them to sell their home. Instead a charge is put on the property to be repaid on death which allows the property to be rented. This is called a deferred payment plan.
The burden of proof is with the local authority for proving deliberate deprivation but it only has to prove that deliberate deprivation was a significant motive – not the only motive.
When considering whether deliberate deprivation has occurred, a financial adviser should record the motives of the investor in a suitability letter.
A viatical settlement provides an immediate cash benefit that is expressed as a percentage of the expected value of the policy to be paid out on death. It is a suitable option for someone with a terminal illness that has a prognosis of less than 36 months, particularly if they need care at home. It, effectively, converts a life assurance policy into critical illness benefit but it might affect means-tested benefit entitlement.