Income Protection and Long Term Care

Income Protection

There are numerous variations of these types of policy, definitions of disability vary considerably and it is important to match the definition with the needs of the person to be insured.

The objective of this type of plan is to replace income in the event of sickness or disability. The benefits are paid after what is known as a deferred period, which is chosen at outset, and can be one day, four weeks, three, six or twelve months. The shorter the deferred period the greater the chance of claim, and consequently the higher the premium.

Self employed people find these products very useful, but they can be used also to complement an employers sick pay scheme, for example, if you get six months full pay from your employer, then you could have a six month deferred period with your own plan, therefore having no period without income.

Income Protection is based upon morbidity rather than mortality which means the provider bases his premiums on instances of accident and sickness rather than death. Also premiums for females tend to be higher than for males (with life assurance the opposite is true!)

Click here to request more information about Income Protection.

Long Term Care

Did you know …….

• Anyone with assets (including the value of their home) in excess of £19,500 will have to pay the majority of their care costs. (Department of Work and Pensions)
• Over 70,000 homes are sold every year to provide for long term care costs. (Liberal Democrats)
• 31% of people of the age of 65 need some form of care (Laing & Buisson - Care of Elderly People Market Survey 2002)
• £22,500 is the average annual cost of care (Laing & Buisson - Care of Elderly People Market Survey 2002)
• 1 in 5 people over the age of 70 need some kind of care, with 20% of these needing continuous care (ABI)
• 1 in 5 people over the age of 80 have dementia (Alzheimers Society)
• Three hours of care per week will cost around £10,400 per year. (British Nursing Association)

As you can see the cost of care in later life can be extremely expensive and the provision of benefits under a Long Term Care plan can help you to ensure you receive the best and most appropriate care for your needs.

Plans can be funded by three main methods:

• regular monthly premiums (future care plan)
• a lump sum payment (immediate care plan/prefunded policies)
• equity release* (exchanging the value of your home for a lump sum to provide funding for long term care premiums)

*This is a Lifetime Mortgage. To understand the features and risks, ask for a personalised illustration.

Benefits normally consist of monthly income payments once the criteria determined within the plan are met. The criteria is usually based upon what are known as 'Activities of Daily Living' or ADLs. Benefits are payable once a policy holder is unable to perform a certain number of ADL's.

Typically ADL's consist of:

• Mobility
• Bathing
• Dressing
• Ability to use the toilet

Claims are also made if the policy holder is diagnosed with Alzheimers Disease, and in most cases dementia. It should be noted that Long Term Care plans do not cover for care in the instance of nervous disorders such as depression, or schizophrenia.

Click here to request more information about Long Term Care.