Until recently, it hasn’t been easy for clients to find insurance for long term care fees but that is starting to change. With the new rules on social care reform in England from October 2023, new ways to help those who want to cover long-term care fees are being introduced.

Previously, there have been insurance based solutions, however after a period of inaction by successive Governments, the providers of these gradually withdrew their offerings. 

However, new potential solutions are now being made available for those clients who may need long-term care for a physical disability or mental impairment in later life. These plans help to fund care fees for people over 60, and either currently receiving care, or about to receive care.

The monthly benefits can be tax-free if paid directly to a care provider registered with the Care Quality Commission (CQC) and can be indexed to keep pace with the rising cost of care. Benefits can be paid direct to the policyholder but these would be taxed in the same way as a purchased life annuity*.

Plans can pay all or part of the ongoing care costs and can be taken out by the policyholder themselves, their legal representative or on their behalf by somebody else.

Such care products can be purchased by a single payment and can cover part or all of the costs of care for the rest of their life.

They also work for clients with the financial resources to pay their care fees, but who’d like to limit their financial liability.

This news update does not constitute advice. We recommend that you seek advice from an Independent Financial Adviser.

*Income paid for a purchased life annuity contains a capital and an income element. The capital element is treated as a return on the annuitant’s original investment and is tax free: the income element is taxed as savings income at a 20% rate of tax for basic rate taxpayers.


Although every effort has been made to ensure that the information provided in this article is accurate and correct, the information provided does not constitute any form of financial advice. We recommend that you take financial advice before making any financial decisions.