"You get the best seats"

He reckoned one of the most positive things about having multiple sclerosis and having to use a wheelchair was that he got to sit right in the front row at concerts and football matches: no queues and uninterrupted views.

"You get the best seats"

Stuart Wilson is technical director at more 2 life

I once met a man who suffered from multiple sclerosis. I say suffered, but – without meaning to sound dismissive of his condition or its obvious debilitating effects on his physical wellbeing – he was quite the most cheerful, positive and optimistic person I think I have ever met.

He wanted to make a film about his diagnosis and how important it is to get critical illness cover (he was planning to make a modern-day version of the fabled ‘widow’s story’ that those long enough in the financial services tooth will recall was once pretty much compulsory induction-course viewing for a career in life insurance).

He planned to call his film ‘You get the best seats’ because he reckoned one of the most positive things about having MS and having to use a wheelchair was that he got to sit right in the front row at concerts and football matches: no queues and uninterrupted views.

I think this meeting, though some years ago now, must have made a lasting impression on me. When I got diagnosed with Type 2 diabetes a couple of years ago, I was determined from the outset to have a positive outlook on my first ever serious ‘black mark’ in an otherwise unblemished health record. That meant being open about it, talking to people about it – even blogging about it.

And openness about health and medical conditions can be so important when it comes to getting a better financial deal in retirement. While the existence of medically-enhanced income terms for annuities are well-known, the ability to get a higher loan to value (LTV) on a lifetime mortgage based on existing medical conditions is less so.

The market for enhanced lifetime mortgages is quite small compared to the overall equity release market – we estimate it represented around 15% of the £1.4bn of sales in 2014 – but given that ill health is more common in old age than ‘perfect’ health, more people who could qualify for enhanced LTVs are potentially missing out.

And it’s not just serious illnesses like MS and cancer that can qualify for LTVs as high as 55.5%. Lifestyle-related conditions such as Type 2 diabetes also count.

It was reported in the news recently that cases of diabetes in the UK (especially Type 2) have increased by a staggering 60% in the last 10 years alone . It is thought more than a million Britons have undiagnosed Type 2 diabetes and the figures are getting worse as our waistlines expand.

Given that 85% of men and 66% of women aged over 65 in the UK are classed as overweight or obese and the associated medical problems that can bring (diabetes, high blood pressure etc), a large percentage of those looking for a retirement lending solution could potentially qualify for enhanced terms.

So why isn’t the market for enhanced equity release bigger than it is? That’s a hard question to give a definitive answer to but we believe it is linked to a reluctance on behalf of clients to fully disclose medical problems, together with a general ignorance about the existence of enhanced terms.

Ask a typical 65 year old if they are healthy or in ‘good health’ and the chances are you’ll get a resounding ‘yes’. Some people will have been living with a medical condition for so long it probably doesn’t seem that big a deal anymore. They take a tablet or two and everything’s fine – no problem.

Others may be embarrassed to admit to health problems or may simply be unwilling to disclose them – we are, after all, conditioned to perhaps be a little frugal with the truth about our health because of the negative impact this can have on things like life insurance or income protection policies. Knock off the odd pound or two here, perhaps admit to just the “occasional” cigarette there.

The idea that disclosing a medical problem can have a positive impact rather than a negative one can seem counterintuitive to some people – even “too good to be true”.

But getting that full picture from clients is so important for advisers in order for them to ensure they can deliver the optimal financial outcome. Even if the client chooses not to take advantage of the enhanced LTV terms they can qualify for, it is better to “rule it out” than not even rule it in to begin with. TCF Outcome 4, after all, requires advisers to take all of their clients’ circumstances into account when making recommendations.

It can be tricky tackling delicate subject matter like medical conditions with clients at the best of times, but we must encourage clients to be as honest and open as possible to ensure they are presented with the widest range of options. In a worst case scenario, a client could be locked out of future borrowing because they failed to secure a much higher facility at outset, simply because they didn’t disclose (or were not asked about) their health problems.