As the population in the UK ages, an increasing number of clients and their families are going to require advice and support on how they can access and fund care.
Advisers will already have clients with relatives and friends who are paying for care. That makes it seem familiar.
However, providing advice on care fees and care funding options is different to most other financial advice. This is because for many clients paying their own long-term care fees, the solution can impact on the capital assets they have taken years to accumulate and often want to pass on to their families.
Therefore, advisers dealing with care plans need to engage with the whole family at the outset.
While it is the welfare of the individual client that is central, sensitivity to these issues and gaining the support of beneficiaries can be crucial.
From the point of view of the adviser, there is an immediate financial incentive to getting this right.
But the support you provide to all those involved can also shape the reputation of your business and result in a level of advocacy for your company that would otherwise take years to build.
This is a complex area. In this article, I am going to provide a short introduction to immediate care plans, and their advantages and disadvantages.
What are immediate care plans?
One of the main challenges in funding care is simply not knowing how long it will be needed.
Immediate care plans can help remove that uncertainty for clients. They are a type of annuity that pays a regular income as long as the client needs it — typically as long as they live — and the income is used to pay for care.
They work in the same way as a purchased life or ordinary annuity: in exchange for a lump sum, you receive an income for life.
The difference is that to take advantage of some tax exemptions, the income is paid directly to the care provider to cover all or some of the cost of care.
Once purchased, the immediate care plan cannot be reversed. However, most providers give a short-term guarantee that protects some of the original capital, or will allow clients to purchase additional capital protection.
Who typically takes out an immediate care plan?
As the name implies, these care plans are taken out by individuals or by their families when they are in immediate need of care. That can be for care provided at home, or in dedicated facilities.
It does not have to round-the-clock care, it could be for as little as a few visits a week, or a month.
Often, though, an immediate care plan is for large amounts of regular care, or for moving into a care home that may prove too expensive over the long term.
It helps safeguard against the risk of running out of money and then having to rely on the support provided by the state, which can often be inadequate.
