Stuart Wilson is channel marketing director at more 2 life
A tale of how a British tendency to understate our health problems could leave many of us financially stumped in retirement
Monty Python’s film ‘The Holy Grail’ was, by chance, the first film I saw at the cinema without my parents.
I say by chance because it wasn’t the film I went to see. This was back in the late 70s when a matinee performance at a cinema often involved two films shown back-to-back with an interval in between. On this occasion, The Holy Grail was the ‘warm up’ act for the main feature.
The Python’s film is hilarious for many reasons (if you like that sort of comedy) but mainly for the scene with the Black Knight fighting King Arthur. Despite losing first one arm (“Tis but a scratch”) and then the other (“just a flesh wound”) the Black Knight remains in complete denial of his increasingly precarious medical condition to the bitter and rather bloody end.
This scene is a rather apt metaphor for the all-too common British tendency to understate our health issues. Whether it’s a “stiff upper lip” refusal to take any painkillers for the headache, or a ‘I’ll-leave-it-a-bit-and-see-how-it-goes’ approach to putting off a visit to our GP, we are a nation often in denial about our state of health.
And when it comes to being truthful with our financial adviser, we are in a league of our own.
“Your arm’s off!”
“No it isn’t!”
Recent research carried out by UCL and Cancer Research UK (published in BMJ Open) shows that we are certainly a nation in denial about our weight. With obesity reaching epidemic levels in the UK, we are not seeing what is arguably one of the greatest health crises facing the UK today.
From the research carried out amongst people graded as being obese on the BMI scale, only 11% of women and 7% of men recognised their weight problem, correctly identifying themselves as being obese, the rest regarding themselves as being merely “overweight” or actually “just right”. Weight and particularly obesity can be a precursor to serious health problems such as high blood pressure and type 2 diabetes, so anyone in denial about their true weight is someone potentially on a road to much more serious consequences later on in life.
So if we have a tendency to knock off a few pounds or even more when we are talking to health professionals, it should come as no surprise that many of is do the same when discussing health matters with a financial adviser.
more 2 life’s own research backs this up. We found that nearly a third of advisers said they had spoken to clients who either lied or – at best – mislead them about their health status when discussing a lifetime mortgage loan.
When we asked advisers why their clients had done this, there were three key reasons:
• 45% did so because they thought their application would be declined
• 39% did so because they were embarrassed to discuss their health problems
• 28% thought that a poor health record would be higher set-up costs for their plan
It is certainly telling that a large number of clients who refuse to disclose their full medical background to financial advisers do so because they think this information will count against them in some way. Perhaps this is understandable given that premiums for life, health and travel insurance will often be loaded as a result of existing health conditions and – in some instances – cover may be refused altogether.
But in the world of retirement finances, poor health can actually start to work in your favour and that is something that comes as a startling revelation to many clients.
Enhanced annuities and now enhanced lifetime mortgages give financial advantage to people with medical conditions and lifestyles that are likely to shorten their life expectancy. With a lifetime mortgage, that can mean a significant uplift to the LTV that can be achieved. Even relatively minor health conditions can deliver thousands of extra pounds of potential lending.
While an enhanced lifetime mortgage will not be the right solution for every client’s needs, a failure to even recognise it as being at least ‘a’ solution could mean that some clients miss out on the opportunity to do more in retirement. As many as 75% of people aged 65 and above could qualify for some for of enhancement on their lifetime mortgage, but only around one in six people currently end up with an enhanced plan.
Unlike King Arthur in The Holy Grail, advisers don’t need to resort to extreme measures to make clients admit problems with their health, but asking the right health questions and in the right way is crucial to ensuring that they take all of their client’s circumstances into account before making their final recommendations.