As you get older, you might develop health problems that could make it difficult to cope with everyday tasks. So you may need help to stay in your own home or you may have to move into a care home.
The State may provide some help towards the costs of this care, depending on your circumstances, so always check with your local council about any support it offers.
There are two types of LTCI:
- immediate-care LTCI – you can buy this when you actually need care
- pre-funded LTCI – you can buy this in advance, in case you need care in the future. You can buy immediate-care LTCI when you have been medically assessed as needing care, regardless of age.
You buy it with a lump sum, and it pays out a regular income for your care for the rest of your life. You’ll be assessed medically to see how much you must pay for your chosen level of income.
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When you die, the income usually stops. Capital is only repaid if you’ve chosen a plan that provides some death benefit (a lump sum paid to your estate). You can buy pre-funded LTCI in advance, in case you need care in the future.
You can buy it at any age, but some policies have a minimum age of 40 or 50 for receiving the plan benefits.
You take out an insurance policy that will pay out a regular sum if you need care. It pays out if you are no longer able to perform certain activities of daily living (such as washing, dressing or feeding yourself) without help, or if you become mentally incapacitated.
You might never need long-term care and, if you don’t claim, you may not get any money back.
Some existing policies may be linked to an investment bond, which is intended to fund the premiums for the insurance policy. If you are thinking about this kind of policy, you may want to get professional advice first.
What happens when you die will depend on the type of policy, the options selected and whether you are taking benefits from the plan at the time.
