Lifetime mortgage provider More 2 Life is calling on advisers to ensure that clients fully disclose details about their health before making a product recommendation order to make sure they get the optimal financial outcome.
The lender is offering a range of support to help advisers tackle the subject of health with clients, including an online Medical Reference Generator to check the level of enhanced loan-to-value clients can qualify for using a set of medical and lifestyle questions as part of its ‘Big Picture’ campaign.
Enhanced equity release plans increase the amount the client can borrow against the value of their home based on medical and lifestyle issues that affect them. In some cases, LTVs as high as 55.5% can be achieved on enhanced rates against a typical average healthy LTV of between 30% and 35%.
More 2 Life’s own research has indicated that as many as three out of four aged 65-plus have conditions that could qualify them for an enhanced LTV – everything from being overweight and hypertension through to cancer and Parkinson’s disease.
However, More 2 Life estimates that only around one in six equity release products are sold on enhanced terms.
Stuart Wilson, marketing director at More 2 Life, said: “Enhanced equity release is a relatively new concept in the UK, compared to enhanced annuities that have been around for decades. We often find that advisers and especially clients don’t fully appreciate the extent to which existing medical conditions can improve the size of loan available. We believe this is a significant barrier to higher sales of enhanced loans which could provide greater financial freedom and flexibility to clients.
“Some clients may be reticent about revealing these details to their adviser – they might be embarrassed, or perhaps they think this information will count against them. After all, medical problems usually mean a penalty – a higher premium for example – with things like life insurance and income protection.”
Wilson highlighted a recent call More 2 Life received from a broker looking for a loan in respect of a 79- year-old woman who reported to be ‘in good health’. When probed further, the adviser revealed that their client had been diagnosed with breast cancer in the previous year but had since received treatment and fully recovered. This would still qualify the client for an enhanced LTV.
He added: “It’s all too common for a client to tell their adviser that they are fit and healthy, when in reality they are taking regular medication for a common condition, such as type 2 diabetes or angina. Or they may have had a serious medical episode in the past from which they have recovered and so they don’t appreciate its relevance to their lifetime mortgage application. On the surface they may look fine but it’s important for advisers to dig a little deeper and tease out all of the relevant facts before they make their recommendation.”