INSURANCE GUIDE
Long-Term Care Insurance UK
How care insurance and pre-funded care products can help meet residential and nursing care costs.
TL;DR
- Long-term care costs in the UK average £35,000-60,000 per year for residential care - self-funders bear this fully above the means-test threshold.
- The means test for local authority funding starts at assets above £23,250 in England - most homeowners self-fund.
- Pre-funded care insurance (also called immediate needs annuities after care starts) can help manage care costs.
- The care cap proposed under the Health and Care Act 2022 has been subject to delays - confirm current status.
How Care Funding Works in England
Local authority funding for residential care is means-tested. In England, the current means test threshold is £23,250 in assets (including savings and some property values). Individuals with assets above this threshold are expected to fund their own care. A person who owns their home and has savings above the threshold typically self-funds the full cost of care, which can average £35,000 to £60,000 per year for residential or nursing care. Care costs can deplete savings and require the sale of the family home.
Pre-Funded Care Insurance
Pre-funded care insurance is a product purchased before a care need arises to limit future exposure to care costs. These products are rare in the UK market following regulatory changes; most providers withdrew from the pre-funded care market after the Retail Distribution Review. Immediate needs annuities - purchased at the point of entering care - are more commonly available and provide a guaranteed income to meet care fees for the insured's lifetime, regardless of how long care continues. They are purchased with a lump sum and provide certainty of care funding.
The Care Cap and Recent Policy Changes
The Health and Care Act 2022 proposed a cap on lifetime personal care costs beyond which local authority funding would apply. The implementation timeline has been subject to delays. Check the current policy position with official government sources before planning based on any cap amount, as the detail and timing continue to evolve. Financial advisers specialising in care planning can provide current guidance on the regulatory position.
Property and Care Funding
If a care home resident's property is unoccupied following their move into care, buildings insurance must be maintained but standard policies impose unoccupancy conditions after 30-60 days. Specialist unoccupied property insurance or a vacant property endorsement is typically needed for properties left empty while a family member is in full-time care.
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Disclaimer
This guide is for general information only and does not constitute financial or insurance advice. Kaeltripton.com is not regulated by the FCA. Always read policy documents in full before purchasing cover.
Frequently Asked Questions
Does the NHS pay for care home costs?
The NHS funds nursing care through NHS Continuing Healthcare (CHC) for individuals whose primary need is assessed as health-related rather than social care. CHC assessments are conducted by clinical commissioning groups or integrated care boards. CHC funding is not means-tested but the eligibility assessment is based on clinical need, not age or ability to pay. Many care home residents are not eligible for CHC despite having significant health needs.
Can I protect my home from being used to fund care costs?
Local authority care funding means tests in England include property values for self-funders, with some protections for couples where a spouse or dependent remains in the property. Deliberate deprivation of assets - transferring assets to avoid the means test - can be reversed by local authorities. Specialist financial and legal advice from an adviser qualified in later life planning is important before making significant asset transfers with the intention of affecting care funding eligibility.
