These types of plans are only available to people who have been medically assessed as having a reduced life expectancy.
Some care plans offer at an additional cost, that the income can be indexed linked. So, this would increase the payment each year in line with care home fees.
Capital protection can also be included in the plan. This would ensure that part of the cost will be returned to the plan holder’s estate if they should die soon after taking out the Care Plan.
Remember, as the annuity involves spending capital, the costs will reduce the value of the plan holder’s estate for the purposes of inheritance tax (IHT). The amount remaining for the beneficiaries of the estate will also be reduced.
Care Plans may not be appropriate in all situations, but they need to be considered by self-funders. It may provide a way of capping the cost of care.
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Our experience covers all aspects of financial planning including pensions, estate planning and investments.
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Finally, if you have any thoughts or comments on this article, “Care Plans. Are they a good way of capping, care fee costs?”, then please let us know. We would love to hear from you.