These days, people tend to live longer and many will have to plan for some form of long term care. In the UK, at present, 20% of the men and 30% of the women need long term care and the scary part is that the greater majority don’t do anything about it.
The costs involved in long care are very frightening. According to a study done by the Association of British Insurers (ABI), the average cost of care in the UK in a residential home is close to £25,000 a year. If nursing care is also required than the cost rises to almost £39,000 a year. These are just average costs many of the more up market homes will cost much more.
The research study has shown that long term care even at home can be very expensive. On an average about 300,000 households get nearly four million hours of home help and people in the UK spend about £420 million a year on home care services which are paid for out of their own purses.
This is where it is important to have insurance to take care of long term care. If you can’t get state support for long term care then you should look at what the insurance industry offers by way of long term care insurance.
The difficulty at this point is to judge how long the long term care is required and how much money is to be set aside. The average length of stay in a residential care home is about two year but it have been proven that people who self fund can live about four years in a care home. In many cases, people run out of money when still in need of care.
According to the ABI, there are immediate care plans which pay a guaranteed income for life to cover the cost of care fees which will be offset by one-off lump sum payment. This will take a load off your family as you can use the money you get from sale of assets.
Then there is the equity release plans. If you own a house you can get a loan against this property to get some of the value. The interest is added to the loan on a monthly basis and the outstanding among can be paid back when the property is disposed off or when the person dies.
You can also get an equity release plan with immediate care plan as some insurers will allow paying for the immediate care plans through home equity. This means that the money can be loaned from the insurer using the property as a surety and the loan plus interest can be repaid when the property is sold or when the person dies.