In the event that you or a loved one requires immediate care, an immediate needs plan, also known as an impaired life annuity, can be purchased using your savings. This plan provides a financial safety net when an individual is unable to perform daily activities such as dressing, eating, or remembering things due to conditions like Alzheimer’s.

These plans provide an income for life, with the amount determined by the individual’s health at the time of purchase. The shorter the life expectancy, the higher the income. If the income is paid directly to a registered care home, it is tax-free; otherwise, it is taxed as regular income.

There is a choice between a level income or one that increases with inflation. There is also an option to guarantee a lump sum if the individual passes away shortly after taking out the annuity. However, it is important to note that once the plan is established and the cooling-off period has ended, it cannot be cancelled.