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Actuaries give guidance on equity release

Actuaries have set out a seven-step plan for consumers considering equity release.

The advice from The Actuarial Profession – made up of the Institute and Faculty of Actuaries – is outlined in a major study, The Equity Release Report 2005.

Consumers are advised to consider other options as well as equity release such as trading down or selling other assets. It is suggested that a benefit check will see if there are any state benefits that are not being claimed.

Actuaries also stress the importance of taking advice from a properly trained financial adviser who has considered other alternatives for the client and has explained the impact that equity release can have on means-tested benefits.

It is recommended that consumers ask for an illustration of what repayments will be if they live 10 years beyond the average life expectancy and consider what impact this would have on any inheritance. They should ensure they fully understand the legal contract and be aware of how changes in personal circumstances may affect repayments.

Actuaries say anyone considering equity release should talk things over with family members to consider their attitude to inheritance.

Chairman Ged Hosty says: “Taking out a suitable equity-release scheme can make immediate and significant improvements to one’s quality of life. However, since it is likely to be the last major financial transaction anybody enters into, it is essential that everybody considering such a step makes sure they are fully aware of the financial and other implications before committing themselves.”

Safe Home Income Plans chairman Jon King says: “This is confirmation that the market is growing. It has increased 25-fold in the last 12 years but the important thing is that intermediaries control the market and are starting to acknowledge equity release.”

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