CCA has the benefit of being specifically designed for those who are either approved for low or high level residential care or those moving onto or already in such facilities. Investments in the CCA are via individual annuity policies whose income payments are set at the issue date and are fixed. CCA is structured to allow investors to exit within the first 10 years.

Commutation by death within this period has a Residual Capital Value equal to 100% of the initial investment (RCV100) payable to the annuitant’s estate. Voluntary commutation at the end of the 10th year also has a RCV100 benefit however commutation during the period is likely to result in less than the original amount being returned.

Zenith’s View 

The chief benefit of the CCA is that part or all of the payments received (the Deductible) is tax free; not included when calculating income tested aged care fees and not included by Centerlink when calculating social security benefits.

The combination of a low risk fixed income stream for life with a Deductible which can be used to reducing the impact of income tested aged care fees results in a product which can work well with a range of common advice strategies for clients in aged care. Zenith rates the Challenger Care Annuity Recommended.

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