We get a lot of questions about how or what is the best way to pay for the cost of Live-in care, so we asked Chartered Financial Planner Michelle Boakes from Verve Financial to explore some of the various options and strategies to ensure you or your loved ones receive the care they want and deserve for as long as possible.
Live-in care offers unparalleled comfort and support for individuals who require assistance with daily activities or medical care whilst remaining in the familiar surroundings of their own homes. This form of care is highly sought after, but it comes with a financial responsibility that needs to be addressed.
Exploring Financial Options
Long-term care plans: Also sometimes called care annuities. They are designed to provide a guaranteed income stream for life, giving you peace of mind that your live-in care costs will be met for as long as you live.
A long-term care plan works by exchanging a lump sum of money for a guaranteed income payment. The amount that you have to exchange for the income you need is based on your age, health and personal choices. You can choose how often the income is paid and whether you receive the same amount or whether the amount increases annually to cover the rise in inflation. You are also able to guarantee a minimum amount of return on the policy, so if you or your loved one passes away early into the plan a percentage of the lump sum paid is returned to your family.
The only way to determine how much this option will cost you is to obtain a personalised quote from a suitably qualified financial adviser, who will also be able to discuss with you the advantages and disadvantages of choosing this option for your personal circumstances.
Investments & Savings: You may already have savings or investments that you can use to generate investment income, investment capital or a combination of both in order to provide a flexible way to pay for your care fees. However, careful planning is needed to ensure that you don’t run the risk of running out of money.
Equity Release: Also known as lifetime mortgages. One of the key advantages of live-in care is that you get to remain in your own home. A Lifetime mortgage can help you meet the costs of your live-in care by taking the equity and turning it into either a lump sum for you or a steady income stream.
The amount of equity that can be released by a lifetime mortgage is based on the value of the property and your age and health status. Lifetime mortgages offer the choice of fixed interest rates or variable interest rates. Importantly, you can also choose whether you want to pay the interest charged on the mortgage monthly or whether you would like the interest to ‘roll up’ which means that you make no monthly payments to the loan but the interest is added to the loan monthly and then further interest is charged on the larger loan.
One of the key concerns for people arranging a lifetime mortgage is whether their loved ones will have to pay the loan off if it is greater than the value of the property when they pass away. Reputable equity release providers will offer a ‘no negative equity guarantee’ which means that you will never owe more than the value of your property.
It is important to seek advice from an appropriately qualified financial adviser in relation to equity release, they will be able to help you assess the advantages and disadvantages of arranging a lifetime mortgage for your personal circumstances.
Michelle Boakes is a Chartered Financial Planner and Fellow of the Personal Finance Society. She is also a fully accredited member of the Society for Later Life Advisers.
At Access Care, we believe that costs should be transparent and we try our best to keep it simple. Our costs & financial planning page has been created for you to access clear and concise information about the costs of live-in care and to provide useful information regarding financial planning for care. For further advice or information please call our friendly consultants on 01264 319 399.