Elderly people require Long term care when they need someone to care for them because they are no longer able carry out a number of every day normal activities unaided. These activities require assistance with day to day personal actions such as bathing, putting on clothes or toileting and can occur at home, in residential or nursing care.

The need for care can occur instantly without warning, such as the result of a stroke or heart condition. On the other hand the need for care could evolve progressively as the person’s dependency increases due to lack of mobility or dementia.

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 way a long term care insurance works is that those who die too soon effectively pay for those who live longer. One insurance company guarantees a full refund if the person dies within the first 30 days and this progressively reduces over the first six months to zero death benefit. it is possible to buy extended protection against dying in the short term, but the protection is very limited and costly.

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 amount of long term care insurance payments required is determined by the monthly cost of care less the person’s state pension, benefits and other income such as private pensions. The balance required to meet the care fees bill is the shortfall. It is this regular shortfall that can be paid for life by payment of a once only lump sum to an insurance company. It is possible to pay extra to make sure that the benefits increase each year in line with rising care costs.

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 rises at say 5% in return for direct payments into their account that increase automatically every year.

Even a guaranteed care plan cannot take into account increased care costs if there is a need the need to move care homes. This may be due to a requirement for nursing care or if the present care home closes for some reason or is taken over by a larger group. A regular NHS contribution is made for persons assessed as needing registered nursing care. However if the person’s health has deteriorated to such an extent that they qualify for continuing care, this is fully funded by the NHS.

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.

before to commence providing for long term care payments make certain to access Barbara Davies’s essential free article concerning long term care insurance policies.