Bristol-based insurer National Friendly has launched a care fees annuity in partnership with care funding specialists Eldercare Solutions.
A care fees annuity provides a regular and guaranteed income for life in exchange for a one-off, upfront, lump sum payment.
Unlike a standard annuity, it is individually underwritten to take account of the person’s health and day-to-day care needs.
If the payments are made directly to a registered care provider, the income is tax-free.
National Friendly said the rules around social and healthcare funding are complex and the product will not be appropriate for everyone, hence its decision to partner with Eldercare Solutions, which can advise on the product’s suitability and affordability.
Wayne Carter, head of sales and marketing at National Friendly, said the cost of the product will depend on how much income is needed from the annuity and the decision the underwriters make in respect of the person’s potential life expectancy.
Nicky Cave, of Eldercare Solutions, said the solution works best for are those wanting peace of mind that funds cannot run out if care is needed for several years.
“It’s a genuine alternative to the ‘pay as you go’ approach, keeping fingers crossed that the savings will last,” Cave added.