The company has added a questionnaire of 24 medical questions across its range to allow advisers to include information on a customer’s health in their application.
The firm has said that six in 10 lifetime mortgage customers could benefit from medical underwriting, either through heightened borrowing amount or an improved rate.
Borrowers with shorter life and longevity expectations would get the enhanced rate. Borrowers without shorter life or longevity expectations would get the standard rate.
Stephen Lowe, Just Group’s group communications director said: “This could mark the beginning of the end for standard lifetime mortgage interest rates.
“Rather than telling clients what the rate is and the limit of how much they can borrow, advisers will increasingly be able to discuss a client’s own unique rate and available borrowing based on their individual medical conditions and lifestyle factors.”
Sarah Morris-Simpson (pictured), Just Group’s director of propositions, said currently price is set on property value, customer age and borrowing amount, but the introduction of medical underwriting allowed a personalised approach.
She said: “From the advisor’s perspective, this is moving for them from a one-size-fits-all solution to being able to offer personalised solutions to their clients. When you look at the regulator’s direction of travel, and where the FCA is focusing its attention, it is very much around that personalisation, and making sure that you’ve considered the entirety of the client and their need, rather than just a very simple ticking a couple of boxes.
“They [advisers] will be the ones leading this crusade, so we want to arm them with the ability to deliver the best outcome possible for all of their customers and that’s what this is doing.”
Potential savings and future outlook
Morris-Simpson said that medical underwriting could reduce the rate by up 0.5 per cent, which could lead to a saving of £10,000 and upwards over the lifetime of the loan.
She added that the borrowing amount could be increased by £5,000 to £15,000 or more depending on the customer, their need and the impact of their health on their life expectancy.
Lowe said that the technology infrastructure was not previously available to apply these changes but that was no longer the case.
He said: “Whilst we’ve got the medical insight and intelligence, the train tracks have been put in place for financial advisors, and they’re now able to use digital solutions that can then cope with what we’re describing, and they’ve not had those until relatively recently.”
He added that he expected other lifetime mortgage providers to follow suit as it provided fair value to clients.
Lowe said: “People will have to respond, because if they don’t they’ll become dinosaurs and they’ll become extinct because unless you can do this for a customer then you won’t be able to give them a fair value.
“This is why we describe it using such evangelical language because it will fundamentally change how business is done.”