how does a Care ISA compare?
Different ways to pay for care
08 Mar 2017
|Product||What is it?||Pros||Cons|
|‘Immediate needs’ annuities||Buy on entering care. Pay upfront lump sum to guarantee income to pay for care until death||Majority of care costs covered until death||Expensive. The average premium is around £100k|
|‘Deferred immediate needs’ annuities||Buy on entering care. Income delayed for e.g. 1 year, then guaranteed income to pay for care until death||Cheaper than ‘immediate needs’ annuities||Risk of no payment|
|‘Whole of life’ policy with a long-term care element||Pays a lump sum when you die, with acceleration of the lump sum payment if and when long-term care is needed||Seen as a good halfway house for workers and insurers||Lump sum may not be sufficient to cover care needs|
|Care ISA||A way for consumers to save ‘tax free’ for their own healthcare||If unused, proposed that it could pass IHT free on death to spouse or beneficiaries Potential to transfer in savings from other ISAs||Experience of LISAs shows that providers are slow to develop long-term ISA products Need to get people engaged with saving more – would saving for care act as an incentive?|