Long Term Care Insurance

Basically, there are three different approaches to long-term care fees planning. The first is straightforward insurance. You pay either a fixed monthly premium, or a single premium to guarantee a certain sum to help pay fees for life, if and when you need care. The amounts can be linked to inflation, and the policy can also provide for assistance at home should you become unable to cope with certain "activities of daily living". Like life insurance, the younger you are when you take out long-term care insurance, the cheaper the premiums will be. However, unlike life insurance you are paying to insure against something that may never happen. It's also relatively expensive and so its hardly surprising that very few of these policies are sold. According to the ABI, a total of just 5,000 such policies were sold last year, including regular and single premium plans. Single premiums vary comparatively little with age. The second option is in bonds. These offer lump-sum investors, with a minimum of £10,000 to £15,000, some capital protection. Your money goes into an investment bond, from which regular withdrawals are made to pay premiums on an insurance policy. If the investment growth exceeds the cost of the premiums, your original investment will remain intact, and may even increase in value. If you die without ever making a claim, then the full value of the remaining units in the bond is repaid to your estate. If you do need to make a claim, you'll still benefit from the value of the bond, because it is no longer needed to pay the premiums on the insurance policy. Depending on the provider you chose, you may be able to encash the remaining units, leave the bond invested, either to maximise capital growth or to provide long-term care insurance for another family member, or you can bequeath it to someone.