4th April 2023

National Friendly explains the importance of discussing later-life care, and how later-life care annuity works.

Of all the financial planning we can do perhaps the least talked about or considered with any relish is the placement of an individual or loved one into full-time care.

This is likely because people don’t want to think of themselves as vulnerable and reliant upon others at later life stages. Younger generations also struggle to imagine their loved ones in such situations.

So, if no one wants to talk about it, how do nearly half a million people find themselves in care homes? Who makes the arrangements and who pays for it all?

‘Why does this impact on me? Well, you may have to make the decision yourself one day, and, if you’re an adviser, you will certainly have clients who will be faced with that dilemma.

It’s always good to be in the know, and there are some great information resources available that can help you find and choose care homes*.

Why do we need a later-life care annuity?

Too many people end up having the house they treasured and worked hard for, sold to pay for care. The inheritance they planned for their family is then drawn down on for an indefinite period. It’s not unusual for care home fees with nursing to exceed £50,000 a year, and a long spell in care can use up considerable funds.

How does it work?

A care annuity is a way of providing at least some certainty on the ultimate cost of care. Like all annuities it involves the investment of a lump sum. The size of the lump sum will be determined by the medical underwriting of the person going into care.

How do you set up a later life care annuity?

The only way this product can be purchased is through specially qualified Independent Financial Advisers (IFAs**), who have the relevant experience and training to present such an annuity as one of the options available to their client.

Conversations will often be with the extended family, and it’s not unusual for an adviser to be speaking to a relative holding Power of Attorney for the care recipient. If there’s agreement an annuity is right for their circumstances, the adviser will liaise with them to provide medical and other details on a single questionnaire involving a medical company called Medicals Direct Group (MDG).

Latest Insights


Why it’s the right time to be selling private medical insurance


Since the COVID-19 pandemic, healthy living and fitness have become an increasingly important part of client’s lives. People are more motivated to eat healthily, exercise and prioritise…

COVER: A pragmatic approach to inclusive Income Protection


NHS waiting lists have been severely exacerbated by the COVID-19 pandemic with nearly 7.6m people waiting for treatment in England.1 People waiting for treatment or investigations have traditionally…

Health & Protection: More than 50% of young people have some form of IP - National Friendly


More than 50% of young people have some form of income protection (IP) in place, according to new research carried out by Opinium for National Friendly. Younger people…

What is Friendly GP and how can it benefit your clients


We know that as people become more health-conscious, it is becoming increasingly common for them to ask about insurance policy benefits before signing up. This is a positive…

Cover: PMI - Bringing Affordable Healthcare to the Masses


With the National Health Service (NHS) facing relentless demand, it's time for the private medical insurance (PMI) sector to help fill the gap. However, while long waiting lists…

IFA: Conversations with an Underwriter – Understanding the Diabetes dilemma


Following National Friendly’s discussion last month on a fresh approach to underwriting, National Friendly sat down with Jake Watts, Disability & Development Underwriter, to learn more about underwriting…

Cover: John Fotheringham: What happens when underwriters are given autonomy?


John Fotheringham, senior underwriter at National Friendly, reviews how granting underwriters more autonomy can help ease broker frustrations with claims decisions and bring about better customer outcomes.   Underwriting…

Cover: Protect your biggest investment with Income Protection


When someone buys a property, it is likely the biggest purchase of their life, yet most people don't go to the appropriate lengths to protect their investment. Mortgage…

Cover: Opening the conversation on later care annuities


National Friendly explains the importance of discussing later-life care, and how later-life care annuity works. Of all the financial planning we can do perhaps the least talked about…