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Tories&#39 granny bonds aim to protect assets

The Conservatives have unveiled proposals which will allow long-term care insurance policyholders to ring-fence their assets if the costs of care exceed their level of protection.

People would be encouraged to take out LTC insurance to meet expected costs of care, estimated at £25,000-30,000. If the fund turned out to be insufficient to meet the costs, the state would be responsible for further costs without eroding the policyholder&#39s remaining assets.

The proposals have been criticised by Government and LibDem politicians as privatising healthcare for the elderly.

PPP Lifetime Care marketing manager Paul Bennett says: “The proposals look like a soundbite without substance and throw up more questions than they answer. They seem to be more appropriate for people in two generations time, once they have had time to save up for it.”

Nursing Homes Fees Agency partner Philip Spiers says: “People who can afford this are people who could afford to fund their own long-term care anyway. But it is a move in the right direction. LTC has not taken off and people will trust it more if the Government is recommending it rather than the insurance companies.”

The Woolwich&#39s mortgage administration department is understood to be close to collapse after being flooded with applications for its Open Plan product range.

Industry sources claim the UK&#39s fourth-biggest lender is buckling under the strain of coping with rocketing applications from IFAs since the bank revamped its flexible mortgage range in January.

IFAs claim that the borrower applications they have forwarded to the bank are up to two weeks behind the normal processing time of a few days.

They also claim that Woolwich gave them no indication of impending delays, leaving them to face angry clients.

A source close to the bank claims it was “ill equipped” to cope with the avalanche of applications it attracted from IFAs following the overhaul of the company&#39s mortgage range earlier in the year.

Woolwich admits the abnormally high volumes of business is putting its admin department “under duress” but denies it is on the verge of imploding.

A spokeswoman says: “There are going to be times when we will not be able to meet the timescales we set ourselves. We are working to keep the delays to a minimum, but volumes have just been absolutely immense.”

A mortgage IFA says: “Woolwich has been the victim of its own success but it really should have kept an eye on the levels of business coming in.”

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