Britons clueless over equity release

By Jayne Warren - 04/07/2007

According to the latest research from Norwich Union, more than half of Britons have no idea what equity release actually is - which paints a worrying picture for an aging population and their  understanding of retirement options. In the survey, eight in ten consumers did not know the age they were eligible for equity release, whilst a fifth (19%) thought that they could take out a policy from the age of just 18. And shockingly, 17% of respondents did not realise that equity release could affect the amount they may leave to their dependents. 

 

Other key areas of confusion were the products themselves, with a third wrongly believing that they would have to make monthly repayments if they took out a policy, 38% not realising that an equity release policy could affect their state benefit entitlement, and a further 18% thought they would have to sell up should their partner pass away.  But the issue of tax and equity release seemed to baffle consumers the most. A third of respondents did not know that an equity release plan could reduce their inheritance tax liabilities, whilst a further 32% incorrectly thought that tax would be payable on the monies released from their property.

 

When asked where they would go to find information on equity release, almost three quarters of consumers said they would speak to an independent financial adviser, two thirds would speak to their bank or building society whilst almost half would turn to the yellow pages or the Internet. Others said they would also seek advice from a specialist company or ask family and friends or a mortgage broker.

 

Elizabeth Boardall from Norwich Union Post Retirement  Products said: “It is worrying to find that so many people are unaware of the basics of equity release when this may be a viable option for many approaching retirement. The fact that many consumers assume it is something they can have from the age of just 18 further strengthens the case for a drive in educating the public. Providers and intermediaries alike have a role to play in ensuring that consumers fully understand the products available and the options open to them."

 

To combat this incomprehension, Norwich Union has launched an informative film (available in VHS or DVD format) available to consumers and intermediaries alike. To request a copy consumers can call 0800 404 7137. Intermediaries can contact their Norwich Union consultant or call 0845 300 2837