Long term care health insurance – a good investment?

As the name suggests, long term care is defined as care for a chronic condition or disability, which is likely to be required for a long term, often for the rest of your life. This care can range from round the clock nursing care in a specialist nursing home, to help and assistance in your own home.

There are an estimated 1.2 million people in long term care in the UK and a large proportion of these are elderly, including around 1 in 5 people over the age of 85 and 1 in 10 people over 64. Many of these require care following a stroke or as a result of other chronic conditions such as advanced arthritis, or as a result of declining mental capacity, such as dementia or Alzheimers. However, it’s worth remembering that you may require long term care at any age, for example, following an accident that has left you disabled.

Costs will vary depending on the level of care required, averaging over £450 a week for a nursing home and around £330 a week for a residential home. Around one in three people have to pay for their own long term care, often losing their home in the process. Long term care health insurance was created to help people to fund their care without reducing their assets.

This article on long term care health insurance UK is written by Kathryn Senior, a freelance journalist who writes health, medical, biological, and pharmaceutical articles for national and international journals, newsletters and web sites. 

I’ve paid National Insurance, why do I need long term care health insurance?

If you have assets above a certain level – in 2009 that level was £21,500 - you will be expected to fund the vast majority of your own long term care. Below this level, you will get a sliding scale of support, down to the lower limit, currently £12,750, after which you won’t be expected to contribute.

Without long term care health insurance, you risk losing everything you have worked for to fund your care, until it has been whittled away to under thirteen thousand pounds. For many people this is a heart-breaking prospect, watching their children’s inheritance dwindle.

Even if you do not have assets like a home, if you do not have long term care health insurance, you will find yourself at the mercy of the local authorities, with little or no choice in the home you are sent to and, with shrinking council budgets, little chance of finding yourself in a home you would choose if you had the option.

About long term care health insurance

Long term care health insurance is designed to ensure that you have the funds to get the care you need, in the home you want, for as long as you need it. It protects your assets and leaves your legacy intact.

There are three kinds of long term care health insurance:

• Immediate long term care health insurance – these are designed for people who already need long term care. Your needs will be assessed and you will be able to purchase an annuity with a lump sum, which guarantees a regular income to cover the cost of care. If you die earlier than expected, you may lose out, but if you survive for longer, you will not have to pay more. Most policies are index linked or have an index linking option, however, it is worth noting that care home costs generally rise faster than the rate of inflation, so this must be taken into account if you are to avoid a shortfall.

• Deferred long term care health insurance – this offers a similar kind of protection as immediate care plans, but cuts the cost by deferring the benefit for a number of months or years. This is ideal for people who want to stop funding their own care when their assets reach a level higher than the government limit – for example when savings have run out, but before their house is lost.

• Pre-funded long term care health insurance – these are more like traditional insurance, in that they can be bought at any time, to insure you against possible events in the future. The policy will pay out when set criteria are reached, such as failures in the activities of daily living, like washing and dressing, or the onset of selected diseases. However, you should check your policy carefully to ensure you have adequate cover, or you may find yourself needing long term care that is not paid for by your policy.

Is long term care health insurance a good investment?

Long term care health insurance has many benefits in protecting your assets and ensuring you have the widest choice of the care you need without financial worries, but that does not mean it is right for everyone.

There are many factors that will influence your decision to take out long term care health insurance, such as your family medical history, your personal medical history, your personal financial circumstances and those of your children.

You should also consider that although one in five over 85’s need long term care, four out of five don’t – and with most long term care health insurance policies, you will get nothing back if you do not make a claim.

Profile of the author

Dr Kathryn Senior is an acclaimed medical journalist who has written over 500 feature articles for leading international journals within The Lancet group. As Senior Writer at Freelance Copy she produces high quality scientific and medical content for websites and printed publications for companies and organisations in the health, medical and pharmaceutical sectors.

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