Quiet often a stroke or heart attack happens without warning resulting in the need for immediate long term care. Other symptoms such as Alzheimer's disease can develop more slowly requiring increasing levels of care.
Why take out a long term care immediate needs policy. Essentially predicting life expectancy is not a precise science. When people pay for their own care they may live longer in a good care home but their money could run out. An insurance care plan policy guarantees life time payments.
The risk of a life time care insurance policy is that if a person dies early the original outlay is lost unless there is an element of insurance against premature death.
Long term care insurance plan premiums are calculated based on the individual's life expectancy. this is forecast by reference to medical information provided by the person's family doctor. Also insurance companies endeavour to speak to care home staff for an up to date hands on assessment. The cost of a care plan is less relative to correspondingly deteriorating health and frailty.
The lump sum premium is calculated by taking the shortfall between the income coming in and the cost of the care fees going out and insuring this shortfall by payment of a single premium to an insurance company. Indexation or escalation of benefits can be included to cover the usual annual price increases.
When arranging the annuity, it is a good idea to ask the care provider about the history of price increases so that this can be taken into account when arranging the level of benefits required. Better still ask the care provider if they will agree to fixed annual fee increases at say 5% in return for direct increasing payments into their account.
Obviously, if the care costs rise above the cover of insurance bought there could be a further shortfall but, to all intents and purposes this is usually manageable from other savings, unless the level of care required has altered drastically. In this case, a further review of the situation should be done before parting with more funds. For example, the care needs may have escalated to the point of the person becoming eligible for free personal care known as 'continuing care'.
Payments from long term care policies are payable direct to registered care providers and taxed in their hands as a trading receipt. in this way there is no tax payable on the income stream by the person receiving care.
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well.. the lifetime annuity could be a very good option for young people, but, obviously all these options of annuities
ReplyDeletehave some disadvantage. You should be careful.