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Immediate Lifetime Care

The Immediate Lifetime Care plan can help if your client is already suffering from physical or mental disability and is either already receiving or about to receive care. For a single premium it aims to pay part or all of the costs of a client’s care for the rest of their life. 

Your client must be aged 60 or over and be receiving care because they need assistance with everyday tasks, or need constant supervision for a condition such as dementia.

Benefits and options

The maximum single premium is £300,000 plus any premium for premium protection benefits. There is no minimum single premium. As long as the individual is receiving care, we pay the long term care benefit immediately. The maximum amount will equal the amount paid for care each month. The minimum benefit is £200 a month.

Inflation protection for the benefits

Your client can choose from different options before the plan starts. The care benefits can have:

  • yearly increases at a fixed rate between 3% and 10% in increments of 1% compound each year, or
  • yearly increases in line with the Retail Prices Index, or
  • yearly increases of 2% more than the increase in the Retail Prices Index.

Your client can also choose which month of the year the annual increases will take place, to fit in with any arrangements already in place with care providers. The increased rate applies for the full month in which the benefit goes up. We will make the increased payments automatically. Your client can also choose a level benefit plan.

Premium protection benefit options

Your client can select an optional premium protection benefit. There are two different term assurance arrangements: one for the long term and one for the short term. The benefit is from a separate term assurance plan which has no cash in value. No payment will be due if the client is alive at the end of the term.

Option 1: Long term premium protection Option 2: Short term premium protection
  • Clients can choose to cover 25%, 50% or 75% of the total single premium paid.
  • The amount paid when the client dies will be the amount covered minus an amount equal to the number of complete months since the plan’s start, multiplied by the initial full monthly payment.
  • Once monthly payments made by us exceed the protected percentage chosen, the term of the life assurance will end.
  • Once the term ends, when they die their estate will not be entitled to any payment.
  • Clients can choose to cover 25%, 50% or 75% of the total single premium paid but only for a limited period after the start of the plan.
  • They can choose to protect the selected percentage of the premium for a period of three to six months from the plan’s start.
  • They can select a combination of periods and percentages. For example, they can protect 50% for the first three months, reducing to 25% for months four to six.
  • The amount paid when the client dies will be the amount covered minus an amount equal to the number of complete months since the plan’s start, multiplied by the initial full monthly payment.
  • Once the chosen period ends, the term of the life assurance finishes.
  • Once the term ends, when they die their estate will not be entitled to any payment.

Payment options and legal representation

Payment is by single premium only. If your client is unable to handle their own affairs, a legal representative can act on their behalf.

Like any financial product, there are benefits and risks involved – please consider them all before recommending our Lifetime Care Plans to your clients.

It’s been designed for clients who:

  • are suffering from a physical or mental disability and as such are currently receiving, or are about to receive care
  • want to have the peace of mind that all or part of their care costs are covered for the rest of their life
  • want to have their benefits paid tax free directly to a registered care provider
  • would like the option to add inflation-proofing benefit options to the plan at an additional cost, to ensure annual increases to monthly benefits
  • want the option to be able to increase their monthly benefit if their care plans or costs change.

It’s unlikely to be suitable for clients who:

  • are not yet ready to enter long term care
  • require a guaranteed payment to be left to their estate upon death
  • are unable to make up any shortfall in care costs over and above the monthly benefit.
  • What you need to think about:

    • Will the Lifetime Care Plan cover your client’s monthly care costs?
    • Does your client have the means to make up any shortfall in care costs?
    • Will the payments from the Lifetime Care Plan affect your client’s entitlement to any state benefits?
    • Does your client understand that the total benefits paid may be less than the amount used to buy the plan?
    • Does your client have any tax liabilities to address?
    • Does your client understand that the Lifetime Care Plan has no cash in value?

    Possible alternatives:

    • Local authority deferred payment scheme
    • Equity release
    • Investments or cash deposits

    Sally's story: a fictional case study for illustrative purposes only

    Sally showed early signs of dementia just after her 81st birthday. Over the next few years, the condition worsened. She moved from her own home to hospital and then to a residential care home with fees of £35,200 a year.

    Sally had modest savings in a building society account, received a private pension, state pension and Attendance Allowance. Sally’s daughter - who had registered a Lasting Power of Attorney - managed her affairs. She knew that Sally was keen to leave a legacy to her family, and was concerned that Sally's savings would run out, forcing her to rely on state benefits.

    Sally’s assets
    For the first 12 weeks, Sally's home was exempt from the means test. Because her savings were smaller than the lower means test threshold, her local authority contributed towards her care home fees.

    After 12 weeks this contribution stopped, so Sally started to draw on her savings to meet the full cost. Next, her house was sold. The sale proceeds, together with her remaining savings totaled £200,000. By taking her combined income from her private pension, state pension and Attendance Allowance, it left care home fees of £380 week paid from her savings.

    At that rate, her savings would be completely exhausted in about nine years. In addition, there was the issue of rising care home fees.

    Sally’s personal needs
    Sally's daughter knew that her mother's financial independence was very important to her.

    She didn't want her mother to live off state benefits and have the quality of her care dictated to her. But she was also worried that her mother's limited financial resources would run out.

    At first sight, her personal needs and financial situation didn’t match up.

    How an Immediate Lifetime Care plan met Sally’s needs
    Sally's financial adviser recommended the following course of action in four simple steps:

    Step What it meant for Sally 
    1. Buy an Immediate Lifetime Care plan

    £88,603 of her capital (from the sale of her home and her savings) bought an Immediate Lifetime Care plan to meet the £380 a week shortfall in care fees.

    2. Tackle inflation

    Care home fees payments from the plan were organised to increase each year in line with the Retail Prices Index.

    3. Access to some capital £11,397 was kept on deposit for immediate access.
    4. Leave a legacy The remaining £100,000 was invested for capital growth to fund the legacies she wished to leave her family.

    How the plan worked
    The plan addressed Sally's daughter’s principal concerns. It ensured that a proportion of the care fees would be met for the rest of Sally’s life and provided a financial legacy for her descendants.

    • Care costs: these were met from Sally's State Attendance Allowance, Registered Nursing Care Contribution (RNCC), pension income and the payments from her care plan.
    • Tax: Sally paid no income tax because her pensions were set against her personal allowance. The state Attendance Allowance is currently tax free and payments from the Immediate Lifetime Care plan were tax free because they were paid to a registered care provider.
    • Nursing care: the RNCC payment went directly to the care home.

    This scenario is for illustrative purposes only. Depending on your client’s circumstances it may not be possible to meet all of their needs and therefore leaving a legacy and paying for the cost of care may not be fulfilled.

    Useful links and documents

    Confidential Quotation Request Form
    Lifetime Care Charter
    Who pays for long term care guide
    Online indicative quote form

    You can find our full range of Immediate Lifetime Care documents and literature in our document library

    We've built a set of useful tools to help you in the long term care market:

    Comparison tool
    Shortfall calculator

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    WA05121 07/2018