11th February 2013
Under the Government’s plan it is believed that those needing long term care will be able take out a Government loan up to the expected cap of £75,000 which is repayable on death from the proceeds of their estate. Above this amount, the Government will then step in and pay for care. The Government says this policy is designed to stop families having to sell their parents’ home in order to pay back care bills.
However, it may require those who believe they might need care to make some sort of provision for themselves.
Michael Ward, Managing Director of Payingtoomuch.com says, “An alternative solution would be for the loan to be repaid from the payout of a Whole of life policy. Whereas most life insurance operates on a term basis with the cover ending at a certain age or on death whichever comes first, whole of life remains in force until death regardless of age.
“£75,000 can be the sum assured of a whole of life policy, making it a known and quantifiable cost during the person’s lifetime. Then of course should the funds not be required for long term care they become payable to their dependants rather than being lost in the tax and benefit system.”
Ward adds that the payout can also be shielded from inheritance tax if it is written in trust.
The site says that the typical costs are as follows
Age 30, £75,000 cover costs £25.80 pm
Age 40, £75,000 cover costs £38.92 pm
Age 50, £75,000 cover costs £65.44 pm
Age 60, £75,000 cover costs £123.95 pm
Age 70, £75,000 cover costs £236.39 pm
* Assumes non-smoker rates which accounted for 81.6% of Whole of Life quotes in January 2013.