Care costs in old age. How will you pay for it?

If you want to take the worry out of needing to be looked after when you are older, there are schemes for you, says Edmund Tirbutt. With care in your own home costing up to £4,000 a month, a policy can bring you peace of mind

To most, mention of "long-term care" conjures images of care homes full of elderly people looking vacant or bored. But more than two-thirds of those suffering in their old age are cared for in their own homes.

To most, mention of "long-term care" conjures images of care homes full of elderly people looking vacant or bored. But more than two-thirds of those suffering in their old age are cared for in their own homes.

Leaving home can be a huge wrench and most people are naturally fearful of change. Chris Ellicott, technical manager at Age Concern Financial Partnerships, says: "Many suffering a gradual deterioration will start with care at home, especially if they are married.

"Fewer than 10 per cent of care home residents still have a living partner, because couples tend to look after each other for as long as possible and employ extra help. But once you become bed-bound and incontinent it becomes more difficult for a partner or home help to look after you."

Those in home-care, like those who enter care homes, can pay privately or rely on the state, if they satisfy the means test. Traditionally, a lack of clear national guidelines has meant that whether someone has state-funded care at home is up to their local authority. State funding is available, if you have total assets, including the value of your home, worth less than £19,000 (rising to £19,500 on 7 April).

But new guidelines from the Department of Health could improve the chances of state funding for care at home from 1 April because they advise local authorities to use means-test limits no harsher than those used for care-home cases.

Tim Ward, director of the national public help and information organisation Care-Aware, says: "The guidelines should lead to greater consistency among local authorities on means-tests limits, and they also advise that those being cared for should enjoy a minimum level of income. But this does not overcome the fundamental problem that most local authorities are short of funding for care." Even relying on local authorities who do have adequate funding involves taking what you are given, and this can be an impersonal service.

Paying privately enables you to choose your own carers, possibly forming valuable friendships. But the cost of private care at home can be up to £1,000 a week for the more labour-intensive packages. Many people start off paying privately but find their capital runs out and their local authority is not prepared to pay for the same level of care. This can force them to sell their home and move into care.

There are two main options for long-term care insurance, which will cover private care costs in your own home or in a care home: pre-funded policies and immediate fees plans.

Pre-funded policies are for those who pay a regular premium. The policies provide an income if you become unable to perform certain activities of daily living, such as washing, dressing and going to the toilet. There are no restrictions on what you can spend on this, but you do not get any premiums back if you never have to claim.

Immediate-fee plans are bought with a lump sum when care is needed. They remove concerns about running out of money by guaranteeing to pay for the remainder of the plan-holder's life, and, because they incorporate impaired-life annuities, can offer enhanced terms for those in poor health. Immediate-fees plans are less flexible than pre-funded ones because their income has to be spent specifically on care and, to ensure this happens, it must be paid to a third party rather than to the policyholder.

The third party can be a care provider, but using a solicitor or accountant instead can prove more flexible because they can distribute the plan proceeds among a wider range of care costs and can arrange different payment frequencies.

This was the method recommended to 73-year-old William Steele last December by Margaret Borwick, principal at Nexus Financial Planning, a specialist independent financial adviser (IFA) based in Haslemere, Surrey. Mr Steele, a retired civil servant who lives in a two-bedroom bungalow in Guildford, Surrey, has 24-hour attention from a live-in carer provided by Albury Care. He also has another carer for two hours a week, largely for social reasons, and has to pay his local council £15 a month for his alarm system.

His immediate-fees plan with the Pension Annuity Friendly Society, which cost him £89,300, pays a monthly income of £1,500. This tops up his existing income to enable him to meet care costs of £2,500 a month. Payments are made to a local solicitor who ensures the three different costs are met.

Mr Steele's wife died 15 years ago and he has no children or living relatives. "I find this an excellent arrangement because I know my care costs are guaranteed for the rest of my life and I don't have to worry about whether I've remembered to pay the bills. It's nice to know I can stay in my own home with carers of my choice because I regard them as good friends and their support has helped to make my life worthwhile."

Specialist IFAs: four of the best

Care Asset Management: 0161 786 6100;

Nursing Home Fees Agency: 0800 998833;

Nexus Financial Planning: 01428 658227;

The Onion Group: 01753 652000.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

News
Jacqueline Bisset has claimed that young women today are obsessed with being 'hot', rather than 'charming', 'romantic' or 'beautiful'
people
Sport
New Zealand fly-half Aaron Cruden pictured in The Zookeeper's Son on a late-night drinking session
rugby
News
Liam Payne has attacked the media for reporting his tweet of support to Willie Robertson and the subsequent backlash from fans
peopleBut One Direction star insists he is not homophobic
Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvSeries 5 opening episode attracts lowest ratings since drama began
PROMOTED VIDEO
Arts and Entertainment
Ben Affleck stars as prime suspect Nick Dunne in the film adaptation of Gone Girl
filmBen Affleck and Rosamund Pike excel in David Fincher's film, says Geoffrey Macnab
News
news
Arts and Entertainment
Lena Dunham
booksLena Dunham's memoirs - written at the age of 28 - are honest to the point of making you squirm
Life and Style
fashionThe supermodel on her career, motherhood and Cara Delevingne
News
i100
Life and Style
A new app has been launched that enables people to have a cuddle from a stranger
techNew app offers 'PG alternative' to dating services like Tinder
Sport
Greg Dyke insists he will not resign as Football Association chairman after receiving a watch worth more than £16,000 but has called for an end to the culture of gifts being given to football officials
football
News
people
Arts and Entertainment
Jake Quickenden sings his heart out in his second audition
tvX Factor: How did the Jakes - and Charlie Martinez - fare?
Sport
premier league
Sport
Frank Lampard and his non-celebration
premier leagueManchester City vs Chelsea match report from the Etihad Stadium
Arts and Entertainment
Rachel, Chandler and Ross try to get Ross's sofa up the stairs in the famous 'Pivot!' scene
tv
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave crime series
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    COO / Chief Operating Officer

    £80 - 100k + Bonus: Guru Careers: A COO / Chief Operating Officer is needed to...

    Senior BA - Motor and Home Insurance

    £400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

    Market Risk & Control Manager

    Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

    SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

    £320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

    Day In a Page

    A roller-coaster tale from the 'voice of a generation'

    Not That Kind of Girl:

    A roller-coaster tale from 'voice of a generation' Lena Dunham
    London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

    London is not bedlam or a cradle of vice

    In fact it, as much as anywhere, deserves independence
    Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

    Vivienne Westwood 'didn’t want' relationship with McLaren

    Designer 'felt pressured' into going out with Sex Pistols manager
    Jourdan Dunn: Model mother

    Model mother

    Jordan Dunn became one of the best-paid models in the world
    Apple still coolest brand – despite U2 PR disaster

    Apple still the coolest brand

    Despite PR disaster of free U2 album
    Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

    Despite the result, this is the end of the status quo

    Boyd Tonkin on the fall-out from the Scottish referendum
    Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

    Manolo Blahnik: Flats, Englishness, and Mary Beard

    The shoe designer who has been dubbed 'the patron saint of the stiletto'
    The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

    Scrambled eggs and LSD

    Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
    'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

    'Normcore': Blending in is the new standing out

    Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
    Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

    New leading ladies of dance fight back

    How female vocalists are now writing their own hits
    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments