Paying Care Home Fees

Case Study

Using an Immediate needs annuity to fund care in a care home

The following case study is for illustrative purposes only and does not constitute advice.

Alan’s Case - Paying for Care in a Care Home

Financial Situation

Alan’s house was estimated to be worth £325K
His pension income was £22,550 p.a and he was receiving lower rate Attendance Allowance (AA),
which at the time (2024) gave him an additional £ 72.65p.w. = £3,778 p.a.
Despite already starting to pay for his care Alan still had £55,250 left in savings and his care home wouldn’t accept just Local Authority rates so if Peter wanted his dad to remain there he needed to find a way of ensuring money wouldn’t run out.

Income Need/Shortfall

Total Income (inc. AA) = £ 26,328 p.a.

Using our helpful care fees calculator, Peter realised his dad could also qualify for Higher Rate AA and this would give him an additional

Additional Higher Rate AA	= £ 1,866. p.a.
Care Fees	= £ 59,800 p.a.
Personal Expenses	= £ 1,040 p.a.
Shortfall	= £ 32,646 p.a

Potential Solutions Considered

Letting his dad’s home and using rental income to make good shortfall. This was discounted by Peter as he couldn’t cope with the extra work involved in managing his dad’s house and the rental income wouldn’t be sufficient to make up the shortfall. Peter had already marketed dads’ property and accepted an offer.

Selling the house and paying for fees directly from deposits or investments. Whilst this was a possibility Alan didn’t want the hassle of managing investments or switching deposit accounts and wanted something that would also help meet increasing fees.

Purchase an Escalating Immediate Needs Annuity providing initially £ 32,646 p.a. paid monthly directly to the care home and escalating by 6% p.a. – using some of the sale proceeds to buy it.

Recommendation

Step 1

Obtained Annuity Quotes form all leading providers.

Cheapest cost £155,325

Step 2

Met with Peter and reported on all funding options .

Peter sold his dads home and realised £310,00 after costs.

Step 3

Purchased an Immediate Needs Annuity

Step 4

Peter Benefited from:

Payments being made directly to the care home.
Income Tax free payments
Knowing dad could remain in his care home for life.
Escalating benefits.
Capping the future costs helping to protect £209,925 of dads estate.

This is a fictional case to demonstrate how an immediate needs annuity can be used to pay for care in a care home. All premiums and fees are for illustration purposes only.

If you would like to obtain your own personalised no obligation quotes from ALL leading providers – simply click below.

Whether or not you may buy an annuity will of course depend on its cost,
so why not ask us to obtain your personalised quote today?