Income Options
The income from the Care Fee Annuity can
either be set at a fixed level for life or can escalate each year to help keep
pace with any increase in care fees.
Escalation can be either at a fixed rate or
in line with the Retail Prices Index (RPI), though as care fees often increase
above the rate of inflation, it is also possible to add escalation at RPI plus
an additional 2%.
Adding escalation to the annuity will
increase the cost somewhat as outlined below: Example costs, based on a starting
income of £12,000 per annum with no capital protection, for a female aged 90:
|
Fixed income:
|
£54,282
|
|
Escalating at 5% pa:
|
£60,224
|
Source:
The Annuity Bureau – April 2008
In some cases it may be possible to agree
fixed fee increases with care providers where a Care Fee Annuity is in place to
meet payments.