Using immediate needs annuities

One of the biggest challenges of funding for care is uncertainty around how long someone will live for when they go into a care home. We also acknowledge that care home fees can be very costly. So what does this mean in terms of risk? 

If you underestimate how long someone will live, they could run out of money and be left without the care they want and need. 

It’s impossible to know how long someone may live in a care home. But we do have statistics on life expectancy and average stays in a care home, which should be considered when putting a financial plan in place. 

A BUPA study found that one in ten people admitted to a nursing home, with an average annual care home cost of £44,152, will still be alive after six years. That could cost over £250,000. 

This creates uncertainty. It's difficult to predict how long someone might spend in a nursing home and the impact of a long stay can be financially devastating. An immediate needs annuity can provide a guaranteed monthly payment for life to help pay for your client's care home fees. 

In exchange for a single premium, an immediate needs annuity pays a monthly payment to the individual's UK registered care provider for the rest of their life. Fees are likely to increase with inflation over time and there are two ways to deal with this. Firstly, your client can choose for payments to increase by a fixed percentage or in line with RPI to help mitigate the impact of future price rises. Secondly, care increases could be paid for from other assets if available. Either way, the guaranteed lifetime payment will remove a lot of the financial uncertainty when someone enters a care home.

Who might it be suitable for?

  • Anyone looking for peace of mind that some of their care costs will be paid for the rest of their life.
  • Someone looking to mitigate the risk of running out of money.
  • Someone looking to protect any further assets they may have.


Supporting your care conversations

We’ve joined the care market, with the launch of our new immediate needs annuity, Lifetime Care Plan. We’ve developed a range of useful resources and have hosted a CPD accredited webinar to help support your care conversations.

Find out more about Lifetime Care Plan Lifetime Care Plan product overview