Social assistance: what options are available to help families finance childcare costs? | Personal finance | Finance


What other options are available?

There are many self-funding options available to capable individuals, including using savings and investments, purchasing a care annuity, or setting up a deferred payment arrangement.

Care annuities

A care annuity can be an effective way to fund lifelong care while preserving capital, according to Harris.

He said: “Similar to retirement annuities, long-term care annuities are purchased for a fixed lump sum and then pay regular income to cover ongoing care costs.

“A care annuity is purchased when the care is needed. If a power of attorney is in place, the proxy can purchase a care annuity on behalf of the person who needs care. The main advantages of a care annuity are that they can cover the cost of care for life and if the payments are made directly to the care provider they are tax free.

Although it is easy to find a quote for a care annuity, it can only be purchased through a suitably qualified financial planner.

Mr Harris continued: ‘They are weighing the benefits of having this type of plan in place as they are not suitable for everyone. There are many types of care annuities available and a financial planner can help you determine which is the right one.

Deferred payment agreements

If a person in need of care in a nursing home wants to keep their home but needs additional capital to fund their care costs, they can apply for a deferred payment arrangement.

Mr Harris said: ‘It offsets the cost of care as a charge on their property, usually up to a maximum loan-to-value of around 70 per cent.


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