Live In Care Financial Case Study

Here is an example of how Care Fees Investment Ltd has helped one of our clients to finance their long term care.

Finance Case Study:  Mr and Mrs Brown

Mr and Mrs Brown have been married for 50 years and although Mr Brown has dementia, their overwhelming desire is to stay together in the family home. Mrs Brown has been her husband’s primary carer for a number of years, but is now feeling the strain. She has therefore arranged for the help of a live-in carer from The Good Care Group, who provide support six days a week, giving Mrs Brown the valuable respite she needs.

The cost of the care package is £950 per week and coupled with the cost of running her home, Mrs Brown will need to find a total of £1,150 per week (£59,800 per year). Her income and benefits cover £29,000 of this, so there is a shortfall of £30,800 per annum.

Care Fees Investment investigated the use of a special Care Fees Annuity, which in exchange for a one off premium of £147,000 guarantees to pay £30,800 per annum, for the rest of Mrs Brown’s life. Although Mrs Brown likes the security of the annuity, she is concerned by tying up the amount of premium required. The solution proposed by Care Fees Investment Ltd was to cover half of the shortfall with an annuity and then make use of their Model Investment Portfolio to cover the remaining half.

The cost of the annuity and the separate investment policy is covered by making use of existing savings and investments and releasing equity from the property. This combination provides peace of mind with the security of an annuity, coupled with the flexibility of the investment basis to take care of any future change in circumstances.

Advantages in purchasing a care fees annuity policy:

  • Peace of mind that the benefit is guaranteed and payable for life
  • The benefit is paid directly to a registered care provider, this is 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 rate for their age group.  For people who need help with ‘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 exceed the inheritance tax (IHT) limit, making a payment to a care fees annuity will immediately reduce the level of assets liable to IHT, which could represent a significant tax saving.