Immediate and Deferred Care Plans
Choosing your options
Each client, and their family, is likely to have different circumstances, needs and perhaps concerns about funding care. That’s why our care plans offer various levels of protection.
Income from Immediate and Deferred Care Plans can be paid monthly or four weekly. All income is paid in advance, and once selected, the income payment frequency can’t be changed.
The Immediate Care Plan income will start on the plan commencement date, with the Deferred Care Plan income beginning on the chosen anniversary of the plan commencement date. However, clients may choose at the outset a specific date in the month for income to be paid. In this case the first payment will be adjusted accordingly.
Income is usually paid directly to a Registered Care Provider and is currently tax-free. Payments to Local Authorities also qualify for tax relief. If the income is paid to anyone else, it'll be subject to tax.
Care fees can increase over time due to inflation, just like everything else. There are also other outside influences which can affect the price of care fees, including treatment, equipment and staff costs.
To help reduce the risk of a shortfall, clients can choose at outset for the income payable from an Immediate or Deferred Care Plan to increase each year by a fixed percentage. This can range from anything between 1% and 8%.
Alternatively, under the Immediate Care Plan, clients can choose for their income to increase each year in line with Retail Price Index (RPI). This will link the income to the general UK rate of inflation, and can help maintain the buying power of the income. However, in the event of deflation, this can also mean that income payments may fall.
Clients can also choose at outset whether any increase can be applied on the plan anniversary or in a specific month.
Please note that, once chosen, the escalation rate and the date it takes affect can’t be changed.
A Care Funding Plan guarantees to pay an income for the rest of a client’s life, but this income will stop when they die, and no further benefits will normally be payable.
Clients may be concerned that, if they die soon after the plan starts, the income paid could be less than their premium. Should they die early, then the benefits below will help clients to protect a proportion of that premium:
Money Back Guarantee - as standard
We offer a Money Back Guarantee (MBG) as standard on all our care plans. If your client dies in the first six months of taking out their care plan, we’ll repay a percentage of the premium to their estate/beneficiaries, less any income already paid.
|Month of Death||Amount Returned|
|Month 1||100% of amount invested less the total amount paid from the plan|
|Months 2-3||50% of amount invested less the total amount paid from the plan|
|Months 4-6||25% of amount invested less the total amount paid from the plan|
|If death occurs within the first 12 months and Covid-19* is recorded on the death certificate as a contributory cause of death, the Month 1 Money Back Guarantee will apply.|
*also includes Coronavirus or SARs-Cov-2 as a contributory cause of death.
For a more comprehensive protection of the amount they paid for the plan, clients can buy capital protection with their Immediate Care Plan.
Capital protection option
Capital protection is a Decreasing Term Assurance plan which allows clients to protect up to 75% of their initial premium for a given period.
The amount protected reduces over time, in line with the income payments made. Once the total payments made equal the total amount protected, a client’s estate won’t receive any benefits when they die.
Clients may buy capital protection for a single, one-off price, which they can do at the same time they pay for their Immediate Care Plan. The cost depends on the amount protected.
Capital protection isn’t available with our Deferred Care Plan.
Once a client has purchased a care plan, and the cancellation period has expired, the plan cannot be surrendered or transferred. Similarly, once the plan has been purchased, it won’t be possible to amend any of the product features that have been selected.
However, it will be possible to change the recipient of the income if clients’ circumstances change, but any payment made to anyone other than a Registered Care Provider may result in a tax charge (please see the income payment details page for more information).
It may also be possible to change the income payment date in the event of a client changing care provider. Please contact your account manager if your client would like to do this.