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Long-term Care Insurance| MoneySuperMarket 

Donna McConnell
Written by  Donna McConnell
6 min read
Updated: 17 May 2024

Long-term care insurance is no longer available in the UK. In this guide we discuss if there are any alternatives that can help with the costs of later life.

This page gives information about a financial product that’s not currently available through MoneySuperMarket. We hope you find this information useful, but bear in mind that we’re unable to help you buy this product.

What is long-term care insurance? 

Long-term care insurance was a type of elder care insurance designed to cover the costs of nursing home, care home or at home care services. These services help with daily activities such as bathing, dressing, and eating.

elderly couple

How did long-term care insurance work? 

Long-term care insurance provided a regular income to pay fees for a nursing home or for home care for customers who can no longer look after themselves, because of old age or long-term disability.

There was two types of long-term care insurance policy: immediate care plans and pre-funded care plans.

Immediate care plan: If the customer needed care straight away and didn’t have cover in place, they could pay a lump sum to buy an annuity, which would then be used to make regular payments for their care.

Pre-funded care plan: A pre-funded care plan was one where the customer paid premiums into a plan while they are still healthy, to help cover the cost of their nursing home or home care in the future. This is no longer sold.

Why is long-term care insurance no longer commonly sold? 

The pre-funded type of insurance is no longer widely available. The lack of cap on care costs meant the cost of the premiums to maintain the cover became unaffordable for policyholders.

Are there other types of insurance that offer similar benefits to long-term care insurance? 

While long-term care insurance was specifically designed to cover care costs, there are other insurance options that can help to cover the cost of at home or nursing home care such as:

Each type of insurance has its own features and benefits, so it’s important to consider your personal circumstances and financial goals when choosing the right coverage. Consulting with a financial advisor can help you decide on the best approach for your situation.

How much does long-term care cost? 

According to Age UK fees will vary depending on the area you're in and the home you choose. On average, it costs around £800 (1) a week for a place in a care home and £1,078 a week for a place in a nursing home. However, these are average figures – individual care homes may charge more or less.

What other funding options are available to cover long-term care? 

Funding high cost long-term care from your regular income may not be achievable for most people. But there are several alternatives to funding long-term care available which can help you to finance your care or if you need to make up a fees shortfall.

Local authority funding depends on your eligibility. First check you’re claiming all the State and other benefits you’re entitled to. Check with the local council, or in Northern Ireland, Health and Social Care Trusts, and NHS funding options too.

Immediate need care fee payment plan: An immediate needs annuity is designed to cover the shortfall between your income and the cost of your care for the rest of your life. The income is tax-free and paid directly to the care provider.

Selling your home: Downsizing by selling your home and buying a cheaper one can give you extra money to pay for your care.

Equity release Equity release lets you get a lump sum or a regular income to pay for your care using some of the money tied up in your house, while you continue to live there. The money must be repaid later, usually when the house is sold.

Sale-and-rent-back schemes In a sale-and-rent-back scheme, you sell your home for less than its market value. In return, you can stay in the house as a tenant and pay rent for a set period, known as a fixed term.

Can government funding care cover long-term care costs? 

In the UK, you can get help funding your care costs, but it depends on your financial situation. To get help with paying for long-term care, you need to apply to your local council, which will conduct a care needs assessment to determine the support you require.

Local authority funding

If you are eligible for funding support, your local council could pay some or most of the fees. The council will carry out a care needs assessment. If this concludes you need care in a care home, they will carry out a means test to work out whether you qualify for help with the cost. This will look at your income and capital.

NHS funding

If your needs are mainly health-related, the NHS organises and covers the cost of your care under NHS continuing healthcare (NHS CHC). If you qualify for NHS CHC, your stay in a care home will be free.

But if you don't meet the criteria for NHS CHC but still need nursing care, the NHS pays a contribution towards the cost of the nursing care directly to the nursing home. This is known as NHS-funded nursing care (NHS FNC).

Where can I find help or advice on paying for potential long-term care? 

The Society of Later Life Advisers (SOLLA) can put you in touch with an independent financial adviser If you’re looking for further advice on how to pay for potential long-term care.


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