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  • Industry Insights
  • August 2021
  • Author: Alison Pallett

Could term assurance make the difference?

Our Sales Director, Alison Pallett, speaks about how our term assurance policy is helping over 55s get the mortgages they have always dreamt of, and where we stand out against other lenders.

Writing a Term Assurance Policy could help a further 36% of over 55’s applying for an interest only mortgage fulfil their dreams.

Following a review of lending policy back in Dec 2020 we made the informed decision to allow customers to use a new term assurance policy written to age 90, to help bridge a potential affordability gap, as well as the more common acceptance of Whole of Life policies.

Was this a bold decision?

The death of first stress test for joint applicants looking for a RIO is often given as one of the biggest barriers to why this product hasn’t taken off as the FCA expected when they made the amendment to the Rules in 2018.

With historic pension planning often seeing one applicant with a greater level of retirement income than the other (traditionally husband and wife), this is no real surprise.

In a market always calling for innovation the introduction of Term Assurance to bridge this gap was a bold move as no other lender in the Interest Only over 55’s marketplace currently allows this.

Of course, there are wider considerations to take into account:

  • The costs of the new policy must be factored into the affordability calculations

  • The applicants must decide if they want to bridge the gap, or cover the full amount
    of the loan and;

  • The Lender must work with the Intermediary to determine the minimum amount of cover
    required.

What about assignment of the policy?

At LiveMore, we do not require assignment of policies, we believe that once this potential shortfall has been identified and the intermediary has helped the customer work out the best way to bridge this gap, applicants understand the importance of keeping the plan in place.

Could this be one of the long-awaited solutions to helping many more over 55’s realise their dreams?

(This article was the basis of a published piece by Mortgage Solutions on 5 August 2021)

  • Industry Insights
  • August 2021
  • Author: Alison Pallett