Safeguarding the Value of an Estate From the Potential Cost of Care

The cost of care is already a massive problem in the UK, and that problem will only continue to worsen. Most people are living for longer, so the likelihood of more people needing some form of care is constantly increasing.

The percentage of the population who are over 75 is set to double over the next generation, meaning that the number of people demanding care will increase by 25%.

On a daily basis, we see press reports highlighting the issues surrounding cost of care, and the Government has promised a green paper to address the growing problem.

However, the bottom line is that most people will probably have to pay for the care they need themselves – in the very likely event that the country cannot pay for all the care needed, both today and in the future.

That being the case, if anyone needs to compensate for care in later life, it could reduce the value of the estate they are trying to preserve.

By insuring against this potentially major cost, investors can be sure that the value of their estate will be safeguarded for future generations.

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An Overview of Care Insurance

A life insurance plan helps protect loved ones financially, if the worst were to happen or they suddenly become ill. The investor’s family will get a cash lump sum they can use to cover costs such as funeral expenses, debts or household bills.

Care Insurance is ideal for investors that have either a partner, children or any other dependents that rely on them for income. Most people will choose to take out life cover at key milestones, including having a baby, getting married or nearing retirement.

Investors who are homeowners or in the process of buying a home should also think about care insurance to cover their mortgage. This means that if an investor was to pass away paying off their mortgage, then their family do not need to worry about the monthly repayments.

“…[it is] vital that advisers stress the importance of a sustainable income throughout retirement, [which has to] contain provision for unexpected events and the cost of care” – Fiona Tait, Technical Director at Intelligent Pensions

How It Works

This insurance policy will pay a tax-free lump sum in either of two possible situations, at any time during an investor’s life:

  1. On diagnosis of permanent symptoms of Alzheimer’s, Parkinson’s or Dementia, 20% of the chosen benefit will be paid
  2. In the event of a stroke – with permanent symptoms, failure to perform three activities of daily living, or diagnosis of Permanent Confusional State – the remaining 80% of the benefit will be paid.

If the second of these events happens first, the insurance policy will pay 100% of the benefit. Alternatively, if none of these events ever happen during the investor’s lifetime, the policy will pay the whole amount on their death – so it is a guaranteed benefit.

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