PPP Lifetime Care – Lifetime Care Asset Protection Bond
Type: Long-term-care bond combining PPP's Lifetime Care plan with Axa Sun Life's Flexible Bond with life cover.
Minimum premium: £8,500 single premium.
Minimum-maximum ages: 19-90.
Minimum benefit: Monthly £400, annual £4,800.
Charges: 5 per cent.
Options: Three levels of cover based on being unable to perform up to three out of six activities of daily living. Diamond plan pays out full benefits on failure of two ADLs, Select plan pays out full benefits on failure of three ADLs, Premier pays out half of benefits on failure of two ADLs and full benefits on failure of three ADLs.
Commission: 7.5 per cent.
Tel: 0845 3030430.
Tim Storer – Financial services manager, Luker Rowe
Alan Buswell – Proprietor, Glenburn Financial Services
Robert Selby – Research manager, Brookridge Services Associates
Jeremy Hulbert – Proprietor, Hulbert Financial Services
Broker Ratings (ave. marks out of 10):-
Company's reputation: 7.0
Premium rates: 6.0
Product literature: 5.3
The Lifetime Care Asset Protection Bond is a long-term-care product aimed at clients who are nearing retirement. The product combines PPP's Lifetime Care plan with Sun Life's Flexible Bond with life cover. It is a joint project between the companies, which are part of the Axa Group.
Casting an eye over how well the product fits into the market, Buswell says: “Long-term-care plans keep raising their heads above the parapet as the Government, IFAs, insurance companies and, indeed, the general public try to find a satisfactory solution to who pays and how much when long-term care is required. To my mind, no satisfactory solution has been found and I am afraid this one is much the same.”
But the rest of the panel disagree. Selby says: “It fits in very well. It extends the product range currently available, addressing the shortfalls of PPP's own product range and of its competitors.”
Storer says: “This is not a crowded market, so there is plenty of scope, particularly as this product is emphasising not just the PPP name but the Sun Life name as well.”
The panel have different ideas on the types of client for whom the product might be suitable. Storer says: “It is for the client who has only an average or lower than average income in retirement but has a decent net worth which they would like to preserve for their family or beneficiaries.”
Selby suggests the plan might suit the client who is prepared to address the problem of estate preservation.
Buswell says: “It is for the affluent elderly who probably do not need it as they have sufficient financial reserves to cover their needs, anyway.”
Hulbert, on the other hand, says: “This product is for middle-wealth homeowners in late middle age or older homeowners likely to need immediate care.”
The panel also suggest different types of marketing opportunities presented by the plan. Storer says: “The whole issue of long-term care is at the back of people's minds and this product could create a real opportunity to bring it to the front.”
Selby thinks the bond provides the chance to revisit the existing client base where inheritance tax concerns have been identified, as well as to develop professional connections, in particular, with solicitors.
But Buswell says: “Nothing new here, I'm afraid. Both PPP and its new parent company Axa are well known and, indeed, PPP was one of the first into the long-term-care market. The recent royal commission report will make very little difference to the market so there are few new marketing opportunities.”
Commenting on the benefits available within the bond, Buswell says: “For the small percentage who live long enough and then need care provision, the monthly benefit will be very useful indeed. But for heaven's sake, don't die too soon or the money paid into the care part could be entirely lost.”
Selby regards the benefits as being very good. He says: “It should be possible to use the bond for most clients' LTC needs. The product covers all the existing PPP product range and, therefore, maintains the main advantage of using PPP – the ability to pay the gross benefit required.”
Storer says: “The key factor in the product is the guaranteed monthly income provi-ded in the event of a claim. As a top-up to existing income, it is the difference between coping financially with the cost of care and succumbing to the effects of capital erosion.”
Examining the main useful features and strong points of the product, Buswell says: “It may well encourage people to move their investment from the building society and, provided they remain healthy for many years, the investment will grow nicely.”
Selby says: “It is deliberately aimed at the asset protection market and can be used in conjunction with other IHT mitigation products. The inclusion of the Sun Life brand name gives credibility to the investment performance expectations.”
Hulbert says: “It is neatly packaged – the return of the investment on death is obviously the strong allure of the product.”
Storer feels the strong points include the life cover protecting the value of the initial investment and the Sun Life bond element. He says: “There are few better known, more successful insurance-based investment products than the Sun Life bond.”
Looking at the disadvantages of the product, the panel are split, with Selby thinking there are no drawbacks at all.
However, Storer thinks it is not a simple product and there is always the risk of a client misunderstanding parts of it.
Buswell says: “As I said earlier, until we – both the general public and the insurance industry as a whole – get some guidance from the Government, these plans will continue to go nowhere.”
Hulbert feels the three-month waiting period is too long. “If one finds oneself in the position of needing to claim on this contract, three months feels like an awfully long time,” he says.
Turning to the reputation of PPP Lifetime Care, the panel are positive. Storer sees it as one of the central players in the market, while Hulbert thinks it has a very sound reputation.
Selby says it is probably the most respected long-term-care provider and Buswell regards it as one of the most solid in the market.
The panel differ on the charges. Storer, Hulbert and Selby think these are fair and reasonable but Buswell disagrees. He says: “This is a general failing and I think one of the main reasons why these plans are not working well enough. Should a client die in the early years, then the care plan component may be entirely lost.”
Examining the product literature, the panel express varying degrees of enthusiasm. Selby regards it as being first class, while Buswell describes it as fair for its type.
Hulbert says: “It is reasonable but complex. Most clients will require assistance with the completion of the application form.”
Storer is also critical. He says: “The literature is very disappointing. It includes a mixture of PPP and Sun Life bro-chures. Back to the drawing board, please. It needs to be clear, integrated and coherent.”
Summing up, Buswell says: “This is a difficult concept to get over to the pub-lic and, in my opinion, the recent Government response to the royal commission isnot enough. Otherwise, companies must continue torefine their products in the hope that someone, somewhere, will get it right sometime – and I say, somewhat cynically, some hope.”
Storer says: “As long as the illustrations are clear and simple and as long as the pricing stays competitive, there is a product here which we can recommend without any worries to a large number of clients.”