Many LTC bonds will not maintain existing level of cover
Thousands of elderly people with long term care (LTC) bonds may be left with massive shortfalls on their plans because they were ill-advised on the fluctuating nature of the investment market. It is thought many will need to seek professional advice about their investment when details of their five-year review are revealed.
It is anticipated that many pensioners holding bonds with Prudential and AXA Sun Life will be faced with the prospect of pumping more money into the bonds in order to maintain the existing level of cover. For those with no additional funds, the alternative will be to reduce the level of benefit or take no action.
Prudential has already postposted its five-year review from April to mid-August, claiming the mailing was delayed to ensure staff involved had the knowledge and expertise to handle any queries that arose.
'We need to ensure that we have everything in place and that there will be enough staff resources to deal with any enquiries that come in,' said Darragh Leeson, spokesperson at Prudential.
Similarly, AXA has put off releasing details to bondholders until it can be sure it can provide customers with a range of options. It hopes to contact its 950 bondholders within the next two months.
'We are trying to look at something more instructive and customer friendly, particularly if there is a shortfall in the fund,' said Peter Webb, spokesperson for AXA Sun Life. 'We want to offer a range of options and encourage people to seek professional advice,' he said.
The possibility of having to invest additional capital into the plan will leave many elderly people reeling and facing the possibility of having no protection when they need it most.
Owain Wright, head of the Care Funding Bureau, said for those close to claiming, there is a great deal of uncertainty ahead and stressed the importance of gaining advice before making a decision.
'The good news is that the market is showing signs of improvement. Those affected should seek specialist advice on what their options are and what they may mean in the future,' he said.
