By offering a guaranteed tax-free income for life, a care fees annuity can help ensure money will last and are very safe and secure.

However, they are not the only way to pay for care so when consider buying one here are a few top tips:

Check whether you need to pay for care?

A care fees annuity should only be considered if you need to pay for your own care.

So, the first thing you should do is to check a care needs assessment has been carried out and if so, whether the person needing care may be entitled to free NHS Continuing Healthcare

Check Whether Your Local Authority Will Pay?

Even If not eligible for NHS Continuing Healthcare, you may qualify for some Local Authority funding if your assessable capital is below certain thresholds. For more information see will I need to pay for my care.

If there is an unoccupied property and need care in a care home – investigate whether you may be eligible for a Deferred Payment Arrangement?

If you have to pay for your own care because you still have a property and your non-property capital (bank account, deposits, shares, investments, ISA premium bonds etc) is less than £23,250 (England), £50,000 Wales, or £22,750 in Scotland (2026/7), your Local Authority may be willing to lend you the money to pay the fees, under a Deferred Payments Scheme or Arrangement.

This could even allow you to let it to generate more income.

Claim All State Benefits?

Even if you have to be a self-funder – make sure you receive all possible state benefits.

Consider Whether Simply  To Pay-As-You-Go?

Should care only be required for a short period, this will inevitably prove the cheapest option but offers no security, or peace of mind and will require regular monitoring, unlike an annuity.

If you want peace of mind and avoid the risk of money running out – you should at least discover how much an annuity would cost.

When requesting annuity quotes – you only need to cover any shortfall in income.

Annuity premiums are based on life insurance companies underwriting and how long they feel they may need to pay.

If you die sooner than calculated, you can lose a considerable sum.

To minimise this risk and also to minimise the premium and preserve as much money as possible, we would suggest you only request quotes for the shortfall in income.

You can calculate your shortfall by using our instant shortfall calculator.

Not all annuity providers offer the same terms or features.

Even though all providers receive the same medical information, they underwrite differently, and premiums can vary, in some cases quite significantly it not unusual for us to see £20,000-£50,000 differences.

Providers also offer slightly different features. Some include short term (6 months) decreasing premium protection free of charge, whereas others charge.

Similarly, some providers offer escalation up to 10% whereas others only offer 8%

Therefore, when considering an annuity, it pays to obtain all possible quotes through an experienced and impartial care fees specialist who is also SOLLA accredited like ourselves.

You don’t necessarily need to do an escalating annuity just because care fees tend to increase each year.

Escalating annuity premiums will be more expensive than level annuities. It can take several years for the additional income to compensate for the additional premium so providing you would still retain sufficient money to cover annual increases in fees each year, it may be better and cheaper to go for a level annuity.

We will certainly request both level and escalating quotes for you and do so free of charge if you ask.

Additional Information

Although these benefits are very useful, if you need pay for your own care they are unlikely to avoid you having to consider other ways of funding care so you may also like to read the following: