A Care Fees Annuity is the preferred option for many of our clients. It has the advantage of giving them peace of mind that the specified amount will be paid indefinitely, rather than paying the fees from a diminishing amount of capital which could at some point run out leaving the future of their care uncertain.
Also known as an ‘Immediate Needs Annuity’, the annuity is purchased from an insurance provider with a one-off premium and guarantees to provide a specific monthly payment for as long as care is needed.
The facts – there are a number of other valuable advantages to using a Care Fees Annuity:
- The cost of the Immediate Needs Annuity is calculated individually, based on the client’s age, state of health and the level of monthly payment they need.
- Because the Care Fees annuity is paid directly to a registered Care Provider, this will be completely tax free and will not affect any allowances being received.
- An inflation option can be included, to offset future increases in care fees.
- The premium is calculated on the specific health details of the person needing care, rather than just based on a general annuity rate for their age group. For people who need help with the ‘activities of daily living’, this will generally mean that a lower premium would apply compared to an annuity for a person in full health.
- Where the total assets and capital exceed the Inheritance Tax (IHT) limit, making a payment to a Care Fees Annuity will immediately reduce the level of assets liable to IHT - leading to a potentially significant saving in tax.
- In exchange for an additional single premium, part of the capital paid into the Immediate Needs Annuity can be protected in case of early death.
- The Care Fees Annuity can easily be transferred between different care providers.
- The annuity can also help to pay for care at home, as long as this is supplied by a UK registered care provider.
- If you no longer need care, or your care fees reduce, part or all of the Care Fees Annuity can be converted to pay additional personal income.
- The cost of the annuity will vary between each provider, so we will always source the cheapest quotation for you.
- The Care Fees Annuity is protected by the Financial Services Compensation Scheme if the policy provider is unable to meet its liabilities
How do I pay for an Annuity?
The Annuity is purchased by paying a single premium, the cost of which is calculated individually, using an enhanced annuity rate.
The capital needed can come from existing investments or assets (such as a property) – we can advise on the most cost-effective means of financing it.
- For those wishing to remain in their own home, releasing equity might be an option.
- For those going into a care home, it may make sense to sell your existing property, purchase a Care Fees Annuity and invest the remainder.
To discuss your circumstances in complete confidence without obligation or cost, please call us on 0845 077 5655 or email us
To request an initial 'guide' annuity quotation, please click the 'quote' button near the top of the page.
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