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LTC firms warn of shortfalls

Long-term care providers PPP Lifetime Care and Scottish Amicable are set to warn policyholders they will need to increase their premiums or face a shortfall in cover.

The move comes after the firms admitted to IFAs that the projection rates for the investment bonds on which the policies are based face shortfalls and premiums will need to be raised if the level of coverage is to be maintained.

Both Scottish Amicable and Axa-owned PPP Lifetime Care have LTC products funded by investment bonds. Due to poor market conditions, representatives of both have privately admitted that shortfalls will result in reduced coverage.

Scottish Amicable client services team leader Patrick O&#39Connor and PPP Lifetime Care senior actuary Malcolm Thraves told a leading LTC IFA there are reviews being conducted to determine how policies have been affected.

O&#39Connor told the IFA he expects letters to go out to tell clients of the shortfalls.

Scottish Amicable spokesman Darragh Leeson says there will be a regular review of the product in Q3 or Q4 but says it is too early to determine its outcome.

Axa spokesman Steve Muir says there have been shortfalls in PPP&#39s bond. There will be letters going out in the next two months telling clients of their options, one of which will be to increase premiums.

The PPP product was withdrawn in the last two months and replaced with a newer version not linked to a bond.

Care Funding Bureau head Owain Wright says: “From an adviser&#39s perspective, is it going to come as a huge shock to clients? There is a need to readvise clients.”

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