immediate care annuity

Immediate Needs Annuity – How to get an immediate care annuity to meet your care costs in 2022

At UK Care Guide, we understand that often the financial prospect of care can be daunting and difficult. That’s why we’ve compiled comprehensive articles on each method of paying for care to help you to make a sound decision.

Typically, people associate annuities with buying a pension annuity as part of retirement planning. 

However, In this comprehensive article, we explore the option of taking out an Immediate Care Annuity to cover the cost of those needing care. These are also a type of long term care insurance in that it provides an income towards meeting the costs of your care and is increasingly a popular option when looking at paying for care.

These types of annuities are also sometimes referred to as a care home annuity, as they are often used to pay for long term care, which can also be home care as well as a care home.

Getting this wrong can easily cost YOU £30,000.

That is why we recommend you read this article carefully, as we are pleased to have been able to help our site users avoid making a wrong and very expensive, decision. A decision that once made can not usually be revoked.

This helpful guide includes all the basic information you’ll need, including:

– what types of immediate needs annuities are available

– the advantages and disadvantages 

– who is eligible for an immediate care annuity

– how to find a professional financial specialist to help you make the right decision and avoid overspending by thousands of pounds

What is a Long Term Care Annuity or an Annuity For Care Home Fees?

An annuity is simply a term that means an income is paid for the rest of your life.  

A ‘Long Term Care Annuity’ is a type of insurance policy which provides a level of income for your lifetime, which you can use to pay for long-term care, and in particular where you use an annuity for care home fees. It is especially useful for those that may have a shorter life expectancy.

Long term care insurance or a long term annuity is a way to use your savings through a third party to pay for your care. This is often an advanced option suitable for those who wish to plan ahead for care provision in the future.

Some people may prefer to take away the worry of paying for their care in the future by buying a guaranteed income for life from an insurance company.

As above, an Immediate Annuity is most suitable for individuals who are considering care provision ahead of time. If you are already accessing care, then don’t worry – an Annuity provides a similar financial benefit for those who are currently in residential care.

One essential benefit of these types of annuities is that they are paid tax-free if the money is paid directly to the care provider.

Here is a short video that sets out how a care annuity works.

What does an immediate care annuity involve?

Firstly, you will agree with an insurance company to give them a lump sum amount. In return, they will give you a monthly payment for the rest of your life. This is where the term ‘Long Term Care Annuity’ is derived from. The income is paid tax-free if the payment is made directly to your care provider.

The amount you receive can be fixed, or it can go up each year to cover any increasing care costs.

How much you will receive from your an Annuity depends on a number of factors including your age, your health, and how much you have to pay towards the annuity.

care fees annuity

What are the different types of Long Term Care Annuity?

There are two main types that you should consider:

  • An Immediate Needs Annuity, which is suitable for individuals who are already in care or will imminently be moving into a residential home.
  • A Deferred Care Annuity is the best option for those who are reviewing their care funding provision ahead of time.

Immediate needs annuity rates comparison tables

What an annuity will cost you will depend on the current immediate needs annuity rates.   The rates are made up of many factors, including your age, health as well as the cost of care.

It is impossible, therefore, to get an instant annuity rate quotes and to get quotes, you will need to provide some medical information.

However, to make it as easy as possible for you to obtain ALL possible care fee annuity quotes we have partnered with specialists care fee annuity brokers Care-Fee-Annuity.co.uk who have agreed to obtain ALL possible annuity quotes FREE of CHARGE.

To give you a guide, we have provided an example below of what you need to pay as a lump sum to get an income of £10,000, which then increases in the future. 

Your current age       How much a £10,000 annuity would cost you

          70                                                    £135,000

          75                                                     £115,000

          80                                                      £75,000

          85                                                      £55,000

Note these are indicative costs only and can vary widely depending on a range of health factors.  In addition, on a like for like basis, the difference between the best and worst annuity rates could easily be 30%. This is why it is ESSENTIAL that you speak specialist advice when getting an annuity quote.  

For example, this could mean if you had £100,000 to pay towards an annuity, using a Long Term Care Insurance Annuity provider with poor rates could mean you have thrown away in the region of £30,000.

Immediate Needs Annuity Calculator – How To Obtain Your FREE Care Fee Annuity Quotes

We can help you access an immediate needs annuity calculator.  By clicking on the link, you will find immediate care annuity comparison tablesSimply click below, provide your details, and you will receive a simple medical questionnaire for completing and returning.

Would you like to see how much a Care Annuity would cost you?

Click the button below to get a personalised quote from


Immediate needs annuity providers

Unlike conventional annuity providers, the market for immediate needs annuity providers is much smaller.  The main providers in the UK are Aviva, Legal & General and Just. They are both regulated by the Financial Conduct Authority.

How to pay for an annuity

One of the most popular ways to fund an annuity is through releasing equity from your home.   This allows you to take a lump sum, tax-free from your home. It basically takes the pressure away from you running out of money as you grow older and allows you to stay in your own home!

Here is a short video that explains how equity release works.

Try the equity release calculator below and see how much money you can get out of your house to help pay for your Annuity. I think you will be surprised at what you could get……tax-free!

You can read more about how equity release works here.

There are some advantages and disadvantages associated with these types of products.  We have set these out below.

Who a care annuity may be suitable for

1 – Already in a care home or care environment

They are suitable for anyone that is already in a care environment, such as a care home.  The annuity payment is tax-free if it is made directly to the care provider

2- Peace of mind

The main benefit of a Care Fees Annuity or Immediate Need Care Fee annuity is that both can provide you with peace of mind, knowing that you can expect an income to cover care costs for the rest of your life. When the money is paid directly to your care provider, it is tax-free – therefore saving some valuable funds.

3- Cap the cost of care 

Care Fees Annuities also enables you to effectively cap the cost of your care – as you only provide a set lump sum. This means that you can leave some as inheritance provided you don’t need to dip into it during your time in residential care.

4 -Flexible

A Care Fees Annuity is suitable for both home care and residential or nursing care provision.

They are fairly flexible – and can be transferred or used for care at home or a less expensive care home. This means in most cases; you’ll never be downgraded or unable to afford your home. When your care provider changes, your annuity changes with them.

5 – You have the money to pay for it

Annuities can be expensive, so if you can afford it, it will help you know that these costs have been provided for.

What are the risks with a Care Annuity and who may the be unsuitable for

There are, however, some important risks to think about when considering a Care Fees Annuity.

1 – Decision cant be reversed 

Once you hand over your lump sum to the insurer, it is their money.

It cannot be reversed or refunded. If you were, unfortunately, to die earlier than you may have expected, your money would not be returned, unless you specifically bought some protection against this at the time.

2 – Doesn’t guarantee care costs are covered

It’s also possible that your care may not be fully covered – and many annuities don’t fully guarantee that the ongoing cost of your care will be covered indefinitely.

This depends on your health condition over the years, inflation and the cost of care provision. In this instance, you’d be liable for the extra cost and would need to then top up or provide funds to plug the difference.

3 – Impact on means-tested benefits and tax credits

You should also note that the income payments from the plan may affect your entitlement to some means-tested state benefits. They can also impact tax credits, so this is something you should check.

4 – Potentially expensive in the annuity rates are not in your favour

Annuities can often be seen as expensive, so you need to consider whether this is the best way to spend what may be a large cash lump sum.

5 – You may not need to pay for care immediately

If you don’t need to pay for your care straight away, they may not be suitable, particularly as to receive the money tax-free you need to pay it directly to a care provider

6. You may not need care on a permanent basis

You may have alternative provision in place for long term care, so if you only need to cover the costs of care in the short term, then an annuity may not always be the best option.

7 – You are eligible for NHS Continuing Care funding

The NHS may be responsible for paying for your care costs.  This is known as NHS Continued Care Funding and is a very complicated area.  However, it is something you should look at and check your eligibility before you enter into an irreversible annuity contract.

immediate need care fee annuity

Who is eligible for a Care Annuity?

Immediate Needs Annuities are required when a person has gone into care already and requires care provision immediately. Therefore, they are often suitable for those with a shorter life expectancy.

Normally this is in residential care circumstances. An Immediate Needs Annuity is an insurance policy that works in the same way as annuities in retirement.

The person pays a set premium for a policy that will pay a regular income towards their care costs for the rest of their lives.

Anyone over the age of sixty is eligible for an Immediate Needs Annuity if they need to be cared for either in a registered care home or by a non-registered care provider in their own home.

The level of the premium depends on a person’s age, health and their choice of care home or care provider. Each plan is individually underwritten for an individual’s personal needs using the information provided by their GP. This means that applicants do not have to undergo a medical examination.

The benefits generated from an Immediate Needs Annuity are tax-free if they are paid directly to a registered care provider.

They can also be paid directly to the policyholder if preferred – for example, if they are receiving care at home by non-registered care providers, they may prefer to receive the funds directly.

However, the downside to this is that the benefits from the Immediate Needs Annuity will be taxed in the same way as a purchased life annuity would be.

Care Annuities are fairly flexible. For example, you can also choose to have the benefits you receive increased every year at a rate offered by the product provider. This is usually in line with inflation.

You can also choose the month in which the rate increases to coincide with the month the care provider increase their fees. In turn, this offers you peace of mind and ensures that your fees are fully covered at every step of the way.

Providers regulate care homes and home care agencies, as well as other medical establishments, to ensure they meet current care standards.

As above, it is important to note that if your care costs exceed the income provided by the plan in the future, then you will be responsible for the difference. Care Annuity plans, including capital protection, have no cash value at any time and cannot be cancelled or reversed.

One frequently voiced concern is the worry that a person could die soon after taking out the plan. In this instance, you can opt to protect some of the purchase prices to ward against this in the early years. This is typically known as capital protection.

This, however, will increase the purchase price – so it’s a risk in itself.  The higher the value of the funds you protect, the greater the purchase price will be.

Buying a care annuity – What do I do next?

There are a number of steps involved in the process of buying an annuity.

The first stage is to have your plan underwritten. This allows you or your advisor to compare options also and consider options available for both immediate and deferred policies.

If a care funding plan incorporating an annuity is your chosen or recommended solution, it is best to shop around among all available providers in order to find the most cost-effective solution.

Make sure that you fully understand the options available to you when buying an annuity such as capital protection, a deferred period, escalation, and how the plan can help with inheritance tax planning. However, if these terms are alien to you, the whole process can feel daunting.

This is why our most crucial piece of advice for those considering any type of care funding, but especially anyone looking into buying an annuity, is to seek independent, professional advice.

Ideally, it’s advisable to seek support from an advisor who understands all funding options available to pay care fees. They should also understand how that relates to you and your current needs and future wishes.

They will know how to help anyone considering buying an annuity and offer the best advice in line with their preferences, requirements and financial situation.

How to get a FREE Care Fee Annuity Quote

Simply click below, provide your details, and you will receive a simple medical questionnaire for completing and returning.  This will then be sent to the insurer, and they will be able to give you a quote.

Would you like to see how much a Care Annuity would cost you?

Click the button below to get a personalised quote from



Try the equity release calculator below and see how much money you can get out of your house to help pay for your Care Annuity. I think you will be surprised at what you could get……tax-free!

How can I locate a reputable financial advisor?

At UK Care Guide, we can help you in one of 2 ways.

It’s important to ensure that you are dealing with someone who understands the market and your requirements fully. An experienced financial advisor will have up-to-date, in-depth knowledge of Annuity providers and will be able to appreciate your personal preferences, putting together a plan in line with your requests.

Option 1 – Search our directory of financial advisors

Option 2 – Get in contact directly with Care-Fees-Annuity.co.uk to get a quote.

What should I do next?

If you are thinking about taking out an Annuity, you should first explore other options open to you to ensure that this is the most suitable.

When considering various ways to fund an annuity for care home fees, we always recommend that you speak to a specialist financial advisor.

This is an accredited, qualified person who possesses specific experience in assisting individuals needing to fund care. They are completely impartial, so they won’t try to sell you any products from a particular company, and provide guidance with your best interests at heart. They will be able to:

– Advise you on any alternative funding options that may be available

Review the annuity market and advise you on which provider will give you the most money for your cash sum – rates can differ significantly and change daily!

– Help you tailor an annuity that is right for your circumstances. This would include looking at whether it should increase in payment, can the value be protected on early death, can payment be made to a surviving spouse etc.

Care Annuities are complex products – without sound advice, you could make the wrong choice. As Care Annuities are irreversible, this could be catastrophic for you and your family.


How much you can receive as a care annuity can get very confusing.   That's why we work with 'Care Fees Annuity' to help you get a quote.  This is a specialist area and only a few companies are able to get quotes.  

Leave your contact details below and Care Fees Annuity will contact you.

You can get a quote and see how much annuity you could receive.

Contact us for a free quote