Like the price of all goods, the cost of Care fees can increase over time due to inflation.
To help reduce the risk that your clients will have a shortfall, they 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 be between 1% and 8%, in whole percentages.
Alternatively, under the Immediate Care Plan, clients can choose at outset for 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 cannot be changed.