Please note: this article was not written by a financial or legal specialist, and does not cover every circumstance. Please consult a specialist before making any financial or legal decisions.

A care bond is an investment bond where the returns are designed to cover the costs of care in old age.

It can be used to pay for the cost of a residential care home as well as fund expenses for when care takes place within the home.

About long-term care bonds

With care bonds you invest a one-off lump sum in a variety of available funds.

The aim is that through this investment of funds you experience capital bond growth, up until you decide to withdraw money from the policy or until your death occurs.

Although money made through investment bonds is taxable, you can usually withdraw up to 5% of the original investment amount each year without any immediate Income Tax liability. This can be drawn monthly to provide a regular income, which can then be put towards the cost of your care.

Questions about funding care?

Care Sourcer’s friendly care experts are on hand to provide guidance on typical care costs, help you explore your funding and benefit options, or even negotiate care fees on your behalf. Call us on freephone:

0800 098 8299

(Mon-Fri, 9am-5pm)

Purchasing investment bonds to pay for care

It is recommended to consult with a financial adviser, as they can offer you impartial and expert advice on financial products from across the whole market.

If you decide to purchase insurance bonds, then you can go ahead and do this directly purchased from a life insurance provider, or through your financial adviser.

Taking investment bonds into account during a care needs assessment 

To find out whether you qualify for funding for care, you should first arrange a care needs assessment through your local authority (which may be called a local council or trust, depending on where you live). 

If the care needs assessment recommends that care is needed, a further financial assessment (means testing) will be arranged to see if the local authority will pay towards the care.

If you have purchased investment bonds before you started to need care, the local authority might exclude any money tied up in investment bonds when assessing your savings and assets. This is because they are treated as life insurance policies and therefore may be disregarded. 

Purchasing investment bonds if you already need care

It is important to note that if you already need care and then purchase investment bonds, this may be seen by the local authority as trying to avoid paying towards care and therefore being a deliberate ‘deprivation of assets’. 

The local authority may decide to calculate your financial liabilities taking the value of the investment bonds into account. This can mean that you are liable to pay more for your care than you can afford.

If you are thinking about giving purchasing investment bonds and know that you may need care and support in the near future, it is advised to get in contact with your local authority to ask them if it is likely to be seen as asset deprivation. Having a written response from the local authority may help if you need to dispute their decisions in the future.

Summary 

What is a care bond?

A care bond is an investment bond where the returns are designed to cover the costs of care in old age. It can be used to pay for the cost of a residential care home as well as fund expenses for when care takes place within the home.

How do I buy investment bonds to pay for care?

Insurance bonds are usually purchased from a life insurance provider, or through a financial adviser.

Can I buy investment bonds if I already need care?

If you already need care and then purchase investment bonds, this may be seen by the local authority as trying to avoid paying towards care and therefore being a deliberate ‘deprivation of assets’. 

The local authority may decide to calculate your financial liabilities taking the value of the investment bonds into account. This can mean that you are liable to pay more for your care than you can afford.

Are there risks associated with using investment bonds to pay for care?

As with all investments, the value of your bonds can fall as well as rise, which could leave you unable to pay for the care you need. That’s why it’s recommended to consult with a financial adviser, as they can offer you impartial and expert advice on financial products from across the whole market.

Questions about funding care?

Care Sourcer’s friendly care experts are on hand to provide guidance on typical care costs, help you explore your funding and benefit options, or even negotiate care fees on your behalf.

Call us on freephone: 0800 098 8299 (Mon-Fri, 9am-5pm)

Related Articles

Looking after yourself

When caring for someone it is important to also look after yourself, view our tops tips on how to best do this

Types of Elderly Care

Guide to the different care services available to the elderly

Where to look for care

Many of us need some extra help in the form of care, this article helps advise on where to start looking for this

Share This