Immediate and Deferred care plans

Benefits and risks

As with all financial products, there are some risks and benefits associated with our care plans. 

Is one of our care plans suitable for your client? This summary of the key risks and benefits will support you as you help them and their families make an informed decision.

Immediate and Deferred Care Plans

Benefits Risks

Control

Clients are in control of their care funding, reducing the uncertainty of meeting long-term care costs.

Meeting the cost of care needs

The care plan doesn't guarantee to cover the full costs of the client’s care, and if the cost of care exceeds the income from the plan the client will be responsible for paying the difference themselves.

Certainty

The risk of the client’s estate being eroded by future care costs is reduced, giving them increased certainty as to what assets they will be able to pass on.

Rising costs

Care costs will be subject to inflation, and the client may need increasing amounts of care in the future so, unless there is an agreement with the care provider, their care costs are likely to increase. These may not be covered by the care plan.

Flexibility

Clients have the flexibility at the outset to tailor and escalate their income to help cover increases in care costs.

Change in circumstances

Once the care plan has been set up, clients will not be able to alter their income payments to reflect any change in their circumstances. Also, the plan cannot be cancelled or cashed in at any time after the first 30 days.

Value

Your client can ensure the care plan provides a certain level of benefit by choosing one of our plan protection options.

Total amount paid 

The total income payments from the care plan may be less than the purchase price, and may be considerably less if the client dies shortly after the start of their plan.

Peace of mind

At what is a difficult time in a client's life, the care plan can help give them peace of mind that a regular income payment will be paid for the rest of their life to help towards their care costs.

Losing tax efficiency

If the income is paid direct to a registered care provider, the care plan benefits from a favourable tax treatment. Should this tax treatment be changed by HMRC or income be paid to a party other than a registered care provider, some of the income may be subject to tax.