Underwriting importance moves up as pension freedoms kick in

Its study found 85% say that receiving accurate health and lifestyle information from clients is central to making the right recommendations across the range of retirement planning solutions.

But nearly a third (31%) of advisers admit they don’t know or don’t think there will be an impact on the deal offered in the equity release market even though 87% always ask about health issues.

The research shows confusion among advisers about the range of solutions available to customers with health issues in the equity release market with 14% believing health issues make the application more likely to be rejected while 18% believe it would mean lower LTV rates or higher arrangement charges.
more 2 life is campaigning to help advisers ensure clients fully disclose details about their health before making a product recommendation to ensure they get the optimal financial outcome.

Its analysis shows 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.

But more 2 life – which specialises in enhanced lifetime mortgages – estimates that only around 1 in 6 equity release products are sold on enhanced terms which include higher LTVs.

Stuart Wilson, marketing director at more 2 life, said:

“We are in the middle of a seismic shift in how people fund retirement and the impact is being felt in retirement income products and clients should be made aware of the impact that medical underwriting has.

“Medical underwriting should be a common feature of the equity release mortgage market, just as it is for lifetime annuities. The concern is that there are still many customers missing out on potentially higher LTVs as their health is not being taken into consideration when applying for equity release. Currently, around 90% of more 2 life's deals are underwritten but we believe that in the lifetime mortgage market as a whole just 17% of products are underwritten.

“We have found that the majority of those at retirement could qualify for enhanced LTVs if health issues are discussed. It’s important for advisers to dig a little deeper and tease out all of the relevant facts before they make their recommendation.”