This option relies on investing the available capital and drawing down the required income to meet the shortfall in care fee expenditure. The success or otherwise of this strategy is dependent upon the level of risk to which capital is exposed, the actual investment returns achieved and the period for which the capital remains invested.

This option involves the purchase of an immediate needs care plan from a specialist insurance or healthcare company. In exchange for a capital sum, a guaranteed income will be provided for as long as the individual remains in need of care. The cost of this option will depend on age, sex, health and the required benefit levels. Any residual capital can then be invested for capital growth and over time may replenish some or all of the cost of purchasing the immediate needs plan.

For many people, the concept of an immediate need care plan is attractive but the risks associated with death during the short term are unacceptable and whilst it is possible to effect a degree of capital protection, this does have an additional cost.

The deferred care plan is designed to offer a potential solution and allows for the purchase of an insurance based plan, exactly as described in option 2 above, but which does not commence until after a deferred period of typically  between 1 and 5 years.   During the period of deferment, the identified income shortfall must be met from capital resources, after which time, the care plan benefits become payable.

The purchase cost of this option is  generally paid at outset and will depend on the same criteria as for the immediate need option. However, the purchase price is likely to be significantly lower due to the deferred period which applies. As before, the residual balance of capital can be invested in order to meet the income shortfall for the deferred period and subsequently to provide capital growth.

This is effectively a combination option using an immediate need care plan and an investment approach. If a full immediate need plan is selected, the entire shortfall is met from the plan and any remaining capital is invested to provide capital growth. As a consequence the estate value is expected to rise over time

However, under a partial care plan approach, the income generated from the residual capital can be used to reduce the shortfall and thus the cost of the care plan. It should be appreciated that this relies on the assumed level of growth being achieved and as such, this strategy may introduce an added element of risk.

The payment of Care Plan benefits are payable when and for as long as the individual continues to need care.