Times warns of the risks of investing in care bonds

2010-05-06 09:19:31

The Times reports on the potential risks of investing in a bond to cover the future cost of care. The article gives the example of Rosemary Upton, who took out a long-term care bond in 1997 after the death of her husband. The bond should have provided around £750 a week should Rosemary develop certain care needs later in life. By 2010, the bond was worth just £3,000, its value decimated by poor investment performance and spiralling care costs. Rosemary was told she either had to make up the shortfall herself, or accept the loss in benefits. She decided to cash in the bond. Care bonds like Rosemary’s – which was a type of insurance policy partly based on investment performance – were mostly sold in the 1990s and are no longer widely available.

However, as The Times points out, many more people could find themselves in Rosemary’s position as they try to make financial provision for themselves in the face of potentially long delays before the next Parliament decides on the future of social care funding.

Cheselden urges anyone considering buying any type of financial product to pay for current or future care costs to consult an experienced and reputable independent financial adviser before proceeding.