Do Safe Equity Release Schemes Actually Exist?

Probably the most secure Equity Release Schemes existed around 40 years ago and were known as life time income or home income plans. These equity release plans where only available for retired home owners aged over 75 and involved a secured property loan of up to £30,000 with fixed interest only repayments for life. At that time it was possible to qualify for tax relief deducted at source on the mortgage interest so interest only repayments were reduced. The loan amount was used to buy a life time annuity that paid a very high fixed income for life. The monthly payments from the annuity were greater than the net fixed mortgage repayments, so the home owner had change left over to spend.

These equity release schemes could make a come back, but with tax relief no longer available on interest payments the annuity would need to be substantial. This means that the annuitant will need to be typically over eighty years old and in adverse health. It is also possible these days to access much larger equity release loans, particularly for much older home owners. For example an elderly homeowner could apply for an interest only lifetime mortgage that could produce a lump sum of say £50,000. This cash sum could buy an annuity income of say £7,000 p.a. or more for life. So if the interest only mortgage is say 7% p.a. (£3,500) then the homeowner would be able to keep the difference (£7,000 less £3,500 = £3,500 p.a.) as a lifetime spendable income.

In this instance the annuity income provides a guaranteed annual fixed return of £7,000 (14%) so when the fixed interest only mortgage of say 7% has been paid by the annuity income, the net lifetime annual income to the retired home owner is 7% which is paid monthly.

The downside of this equity release scheme arrangement is that the £50,000 loan to buy the annuity has been sacrificed for good, even if death occurs early. However this type of equity release may be regarded by many as the safest form of home income plan. This is because unlike a home reversion plan, you do not have to sell a part or all of your property to release capital. Also, unlike a roll-up lifetime mortgage, the original loan always remains the same, so any uncertainty is removed.

In the above example, the £50,000 loan to buy the annuity always remains the same unlike the most popular equity release schemes of today whereby unpaid interest will accumulate on top of the original advance. When the house is sold after the annuitant dies or moves into care the original £50,000 is repaid to the lender. However with a mortgage interest roll up scheme, the amount that will be eventually being repaid is not known.

With the annuity scheme if the person is still alive when the house is sold due to downsizing or entering residential care, the annuity income still continues being paid for life. This is simply because the annuity remains in force as the £50,000 loan used to buy the annuity in the first place is repaid from the proceeds of the house sale.

Immediate Annuity Explained

An immediate annuity can be thought of as the opposite of life assurance whereby young people are worried about dying too soon due to illness or accident. So for a regular payment they can make sure a large lump sum is payable if they die early. But with pure life insurance there is no return of premiums if the person does not die. However an annuity is a lump sum payment by older persons who are worried they may live too long. In return they receive a regular income for life but if they die too soon their lump sum is not returned.

In other words, the benefits of life assurance are when a person dies too soon. But the benefits of an annuity are when person lives too long.

Summary

Extra income produced by an equity release scheme can help pay for domiciliary care and prevent an elderly infirm person from having to sell up and move in to residential care.

Mortgage interest paid by an annuity may be seen as the safest form of equity release scheme, but it only works for very elderly homeowners in below average health who may be unable to carry out one or more activities of daily living. However there are three certainties.

The original loan does not increase.
The income is guaranteed for life.
The property does not need to be sold.

On the negative side, if the person dies early, the money used to buy the annuity has been lost and only a few income payments may have been received.

A free equity release scheme guide and a unique equity release calculator tool that measures equity release lifetime mortgage risks can be accessed at the Equity Release Analysis Centre.

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New Equity Release Lender More2Life Launches New Products

Signs that the equity release market is beginning to spark into life again, can be evidenced by the re-emergence of a former lender in the market.

More2Life have joined forces with annuity specialist Partnership assurance to re-launch their impaired life roll-up lifetime mortgage plan.

Incorporating an impaired life facility & protected equity guarantee, the More2Life equity release plan can be seen to be opening a niche market for itself. The impaired life facility means that depending on health & lifestyle, a higher than normal tax free lump sum can be achieved, should serious health issues be present.

The More2Life equity release plan has been designed with three scenario’s in mind: –

1. Enhanced plus – industry leading maximum release, impaired life product

2. Enhanced protected – impaired life plan with ‘protected equity guarantee’

3. Protected plan – older applicants looking for a ‘protected equity guarantee’

Pitching the enhanced plus plan at the maximum release end of the market means that should the applicant qualify on medical grounds, they would have the highest lump sum currently available. This would even surpass the current Aviva Lump Sum Max product, although this would be at the expense of a higher interest rate with More2Life.

The following percentages are the maximum releases available on the Enhanced Plus: –

Age 55 23%

Age 60 28%

Age 65 33%

Age 70 38%

Age 80 48%

Age 90+ 54%

For example, an applicant aged 65 with a property valuation of £250,000 & meeting the underwriting criteria, can release a maximum of £82,500 on the enhanced plus plan.

The interest rate for this product will be 7.49% monthly.

The second product – ‘enhanced protected plan’ is also based on health & lifestyle grounds & again can provide an enhanced lump sum. However, to qualify for this equity release scheme the health situation will not be a serious as the enhanced plus. The interest rate for this plan is lower at 6.99% monthly.

Another feature of this plan is the ‘protected equity guarantee’ which is included & guarantees a percentage of the property for the children/beneficiaries on the eventual sale of the property.

The guarantee works as follows: –

Should the overall facility available be £80,000, yet only £40,000 is taken, then 50% of the final sale value will be protected on sale.

This can be an essential tool for applicants who wish to ensure that a guaranteed inheritance is passed onto their children.

The final option is the ‘protected plan’ which has no impaired life facility, but does include the protected equity guarantee. The interest rate is the same as the enhanced protected at 6.99% monthly.

In summary, depending on whether the maximum lump sum is being sourced, or one is looking to take equity release but still guaranteeing an inheritance for their children, then one of the three More2Life schemes can benefit.

Mark Greggs is the founder of Equity Release Supermarket who were recently accredited ‘Best Financial Advisers’ at the Equity Release Awards 2008. Mark is an experienced Independent Financial Adviser who has now been providing quality equity release advice for the past 8 years.

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Aiming at Health Equity Through Public Health

Health Equity or healthcare disparity is required to be diminished in order to imbibe a social institution, a discipline or a practice that improves healthcare for all. Aiming at this wellbeing is very essential especially effective through the route of Public Health. Let’s have a look at how this concept works in building up Health Equity.

Health services tend to fail due to lack of accountability. Health equity refers to the differences in quality of health and healthcare. There currently exist vast discrepancies between developed and developing countries in relation to public health. Ultimately, collaboration is what can reduce healthcare disparities. Focusing on prioritizing healthcare needs and their respective consequences and economic impact is majorly considered.

Public health aims at improving the health of communities. Public Health Solutions specialize in improving the health of all the health management information related communities, groups, organizations to address the various challenges for a better tomorrow. What differentiates this concept from various concepts is the fact that it emphasizes on communities rather than individuals or primary care physician. Healthcare professionals generally deal with just individual health. Here, all the efforts adds on improved quality of life with higher expectancy, world-wide reduction in infant and child mortality, keeping environment safe and clean, preventing many transmissible diseases and promoting good health practices.

For the delivery of better patient care there has been more focus on the computerization of hospitals. There have been efforts in making institutional care happen. Healthcare delivery too is one of the most crucial aspects. Although there is improvement in the managerial efficiency it is indeed required to account if the services reach the beneficiaries (poor) as well. Health Equity would be well managed through system management process leading to an outcome of spirited community.

Currently it is just treated as a nationwide concept and has not been given much of an essence since major focus has been always diverted to immunizations and curative care. What’s required to do through Public Health is evaluate and monitor health, diagnose and investigate, empower and educate the community on healthcare, develop policies or enforce laws to finally assure that care is well provided. The key is to make available all relevant information on healthcare community. Communities should participate in decision makings and taking up responsibilities respectively. The goals of preventing diseases and emphasizing on health needs would highly be achieved through Public Health for the benefit of the population as a whole.

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Insurance For Equity Actors

An actor is a person who makes his living by playing roles of various characters in movies, on television shows, stage plays, etc. If an actor chooses to become an equity actor, he can become an equity actor. In the United States as well as United Kingdom there is an association called The Actors’ Equity association an actor can register with this association and get the benefits that this association provides.

Primarily, the insurance that comes free for an Equity Actor is Public liability Insurance, The backstage Insurance and accident cover as long the actor is a member and under benefits.

As an actor your body is an asset that will help you to achieve success in the film industry. Your voice, your vision, your physical ability and good health will help you to excel in every audition, rehearsal and performance. If as an actor you do not maintain a good health or do not follow a proper physical fitness routine, then be prepared to lose good roles provided by film makers.

Most of the employers do not provide any health care plans or car insurance plans or life insurance plans or house insurance plans. An actor has to take these insurance’s plans on his own.

An actor should opt for a health insurance plan that covers preventive care, including all regular health screenings appropriate for your age group. This will likely be a comprehensive plan, which usually has a deductible and co-payments for office visits.

One of the other insurances that an actor or an actor’s employer should buy is Artist Liability Insurance.

This insurance offers many benefits such as.

Artist Liability Cover:

This policy covers all the law-suits that are filed due to the conduct of an artist onstage as well as offstage. Anyone who is employed by an actor will be covered.

Equipment damage Cover:

This insurance covers damages to the equipment that an artist or his employer rents, any repairs that are carried out on these equipments will be covered.

Public Image Protection Insurance:

This insurance covers if your business spokesperson causes any kind of damage to the promotion of your business. If you are required to re-shoot commercial or cancel any shows or want to hold a show for public apology all of this would be covered.

The Main Man Life Insurance:

This insurance provides financial aid if the main character of your shows dies or has an accident, financial aid would be provided to the next in Keith and Kin.

All Risk Insurance:

This insurance provides the benefits of life insurance to all the performers of the show or a stage play, in case a performer dies on the stage or off the stage.

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Is Your Business Overweight? How to Determine the Financial Health of Your Business

It’s common for small business owners to measure their financial health based on their income statement or bank account balance and deem their business “fit” if the bottom line looks good. To reveal why this approach can be deceptive, let’s apply a dieting metaphor.

Only looking at the bottom line is the equivalent of “sucking it in” when you look in the mirror. Sure, it looks like you’ve lost some weight, but what happens when you exhale? You might appear skinny for a moment, but that version of the situation isn’t accurate.

In terms of your business’ health, the balance sheet is the “real” you. Think of the income statement (also called the profit and loss statement) as your diet log. It tells you how well you did in a specific time period—last week, last month, or last quarter. We all know that there are good weeks and bad weeks on a diet. If you only look at one week or month, are you getting a true picture of your overall health? Of course not.

The balance sheet, on the other hand, is based on everything you’ve ever done. In our diet metaphor, it accounts for how much you’ve exercised and what you’ve eaten over your entire lifetime. The sum of all that information is what you see when you stop sucking it in.

To understand this metaphor, you need to understand what the balance sheet is and how it relates to the income statement. Your income statement contains information about what has occurred in the current period. Revenue, cost of goods sold and expenses are some of the account types found on the income statement.

To get an accurate picture of what’s happening in your business, you must adhere to the matching principle. That means you record expenses and cost of goods sold when you have earned the revenue that they are related to (if an expense is not related to revenue, you record it during the period it is used). The balance sheet accounts hold these revenue and expense items until the period in which they are earned or used. We use accounts such as prepaid insurance, customer deposits, and accrued payroll to classify these things on the balance sheet.

Income statement accounts only reflect transactions in the current accounting period. At the end of the period, the net profit or loss is moved to the equity section of your balance sheet (to retained earnings). This means that the balance sheet reflects all prior period revenue, cost of goods sold, and expenses in the form of retained earnings. The equity section also shows how much you’ve invested in and drawn out of your business. The equity section, therefore, shows what the company is worth to you.

So, how do you know if your business is “over weight”? Take a look at your debt to equity ratio (total liabilities divided by total equity). Compare that to your industry average and you’ll have a pretty good indicator of your business’ weight. Too much debt and not enough equity means your business is, in fact, overweight—even if your current period income statement looks healthy and you have money in the bank. Because everything shows up on the balance sheet, you can rely on it to depict the financial health of your business.

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How to Make Sure UK Equity Release Schemes Do Not Affect Your Means Tested Benefits

Firstly, There is no tax to pay on the money released from your home, provided it is your main residential property.

Releasing capital from your home that takes your savings over £10,000 can affect your means tested benefits if your income is less than the minimum the state says you need to live on. Therefore you should ensure that the balance of any equity release money left over after spending cash on immediate needs does not take you over the ten thousand pound threshold. At least not for a long period, as money entering and leaving your account very quickly is unlikely to alter the situation.

Non means tested benefits such as disability benefit and attendance allowance are totally unaffected by the extra money created from your equity release, but invalidity grants for home adaptations could be influenced, even if your savings are less than ten thousand pounds. In this context if you are seeking such grants, you should first establish your position with the local authority before entering into an equity release scheme and definitely before instructing any work to commence.

Pension Credit is a means tested benefit that could be reduced or even extinguished by equity release money arriving into your account. Pension credit payments are added to your income if you are over aged 60. This is to top up low level earnings or the state pension so that you have the minimum weekly income that the state says you need to live on. After 5th April 2010 this is £132.60 for a single person and £202.40 for a couple. If your savings exceed £10,000, every £500 over this amount can reduce your weekly pension credit by one pound.

If your circumstances change during the five year period from when you were assessed for pension credit you do not need to notify the Department of Works and Pensions. People over aged 75 at the time their pension credit decision was made do not have a time limit.

National Health Service benefits are available for persons that are claiming Pension Credit. These include free prescriptions, dental treatment, free eyesight tests, vouchers for spectacles and even reasonable transport costs for health treatment.

Council Tax benefits are available for people on low incomes that may be claiming pension credit. The amount of council tax benefit reduces proportionately as the level of savings increases from £10,000 to £16,000.

The best way to ensure that your means tested benefits are not affected by equity release is to consult an independent equity release adviser at the equity release schemes website who can provide you with an indication of the level of any benefits that may be reduced. Some advisers have access to computer software that can assess the effects of equity release schemes on state benefits.

As a general rule, make sure that the amount of equity you have released does not take your savings over the £10,000 threshold after you have spent money on essential items.

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