Experienced advisers know that any decision on equity release from a client’s perspective is made by combining two factors – how long they are likely to live and how much their property’s value will change in this time.
From this point it is possible to estimate the amount eventually owed and what the final cost of the loan will be to the estate.
Of course actuaries have long been aware of the self-selection aspect of mortality, in that clients know better than anyone how well they are.
But this only holds good for a short period into the future, after which time past medical evidence is likely to provide a more accurate guide.
Groups of clients then fall back into the normal cohort for their age, sex, marital status and postcode.
Hence the development of products that benefit clients who have a shorter than average life expectancy, where underwriters can use medical evidence to peer into the future.
Of course, it is advisers’ responsibility to ask questions about health and ensure the answers are as accurate as possible.
Whatever the outcome, the opportunity to offer clients a good outcome when they are facing medical issues must rank as a positive in the advice process.