Cover Feature | Later Life Planning

expensive, and unless further insurance is purchased, there is no return of capital to loved ones in the event of death of the individual in care. The reality of how long an individual stays in care needs to be taken into account. The purchase of a care fees annuity could, therefore, potentially only pay out for a limited period of time, leading to returns that offer poor value from a large capital outlay.

Building a bespoke investment plan from capital assets, which aims to limit the erosion of capital due to the shortfall between income and expenditure, can prove to be a better option. Factors that need to be considered before deciding on an investment strategy include any existing investments held and the tolerance to investment risk accepted.

Cash will inevitably have a part to play in any sensible financial plan. For sums not immediately required, other investment options, such as Company Shares and Fixed Interest Securities, aim to generate superior returns over time to those available on cash. Returns generated can help stem the rate of erosion of capital, so that funds held can continue to pay for care provision for an extended period, or leave capital to loved ones on death. Keeping an investment strategy under review is also important, as it is often the case that care needs change over time.

We recommend that those who are faced with making decisions about how to fund care costs speak to an independent financial adviser, who can discuss the options in more detail.