Long-Term Care Insurance

Long-term care insurance is one way of insuring yourself against the cost of long-term care.

Long-term care is care that you may need for the foreseeable future, perhaps as a result of an illness or old age. As you get older, you may develop health problems that make it difficult to cope with everyday tasks. For example, you might need help in order to stay in your own home or you may have to move into a care home (residential or nursing).

The state may provide some assistance towards the costs of this care, depending on your circumstances. There are other ways to help you cover the cost of care, including using savings and investments. Another option is to obtain long-term care insurance (LTCI).

There are two types of long-term care insurance, the difference between the types of cover is that they can either be bought: when you need care; or in advance:

1. Immediate care long-term care insurance - you buy this type of cover when you have been medically assessed as needing care. You pay for an immediate care plan with a lump sum. This then pays out a regular income for the rest of your life, which is used to pay for your care.

2. Pre-funded long-term care insurance - you buy this type of cover in advance, in case you need long-term care in the future. You take out an insurance policy that will pay out a regular sum if you need care. It will pay out if you are no longer able to perform some activities of daily living (such as dressing or feeding yourself) without help, or if you become mentally incapacitated.

Long-term care insurance can be expensive and complex, so you should discuss your requirements and find out about the various types of long-term care insurance by seeking advice from a financial adviser who is qualified and experienced in this particular area.
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