In this article we introduce the Later Life Account, a new flexible annuity product from LCA, designed for individuals to provide income to pay for potential future care costs.
Following LCA research into the UK Care industry and the costs associated with receiving ongoing care treatment, we are pleased to introduce the Later Life Account product, now available from LCA.
What is the Later Life Account?
The Later Life Account, or ‘LLA’, is a flexible annuity that has been designed for customers to provide income to offset care costs in the future. Similar to our other annuity products, the LLA is a unit-linked annuity meaning that the initial premium and any subsequent top-ups can be invested for growth.
The LLA is suitable for individuals who meet the following criteria:
- are UK tax residents aged 40 and over
- who need flexible access to their investment depending on their individual circumstances
- who are looking for an investment that can be used to provide regular payments to pay for the cost of receiving care assistance for everyday tasks or constant supervision in the future, and/or regular annuity payments for life
- who want the flexibility to be able to take one-off payments to cover any home care adjustments such as installation of a stairlift
- have £50,000 or more to invest
Customers who have a family history of debilitating health conditions may consider the LLA to be the perfect solution to funding future care costs in a tax-efficient way.
The LLA isn’t suitable for individuals who are about to receive full time care support or already require care at the time of their application.
Annuity payments
The LLA annuity payments and the tax-exempt sum (‘TES’) are both calculated as part of the illustration, and then finalised after the application has been received. This is the same process we use for our other flexible annuity products.
The product is primarily designed to provide customers with sufficient income to pay for care costs in the future. Payments can be made directly to the UK registered care provider, the annuitant, or both.
Whilst the annuity payments to UK registered care providers or the annuitant may be liable to income tax at the annuitants marginal rate, it’s worth remembering that any unused TES can be carried forward to future years. Therefore, if annuitants wanted to mitigate their future tax liability, it is possible to reduce or even pause annuity payments in the earlier years to allow build up of the TES. This may allow payments being made to the UK registered care provider to be tax free if within the TES allowance.
Unlike our other flexible annuities, the LLA has an added feature which allows annuitants to request one-off annuity payments. These should only be requested to cover one-off care related costs. However, we see this as a useful feature should the annuitant suddenly need to install care-related modifications to their home or vehicle due to ongoing ill health. Examples may include a stairlift, ramps or support aids, a walk-in shower, widening doorways, or lowering kitchen worktops. Remember, any one-off annuity payments do count towards the TES allowance.
How do I find out more?
To learn more about the LLA you can visit the Document Library where you’ll the Key Features Document as well as other important product literature.
If you’d like to speak to one of our Business Development Managers, or our Technical Product experts, then visit our Contact Us page.
This article is based on London & Colonial Assurance PCC Plc’s understanding of applicable UK tax legislation and current HM Revenue & Customs practice, as of July 2025, which could be subject to change in the future.
