The financial implications of living with HIV

Introduction

This section is designed to explain the financial opportunities and obstacles you may experience when living with HIV. It will cover aspects including:

1. Mortgages
2. Life Assurance
3. Sickness Assurance
4. Unemployment Cover
5. Pensions
6. Saving For The Future
7. State Benefits And Finance

Call us now freephone on 0800 074 6918

Overview

Life Insurance is a health issue. Loans, mortgages and savings are financial issues. The two issues need not be interlinked. Just because you have been turned down for one, due to you living with HIV, it does not necessarily mean you will be turned down for the other.

It is no longer necessarily a prerequisite of a mortgage appication to take out life assurance at the same time and from the same provider. However, this did used to be the case in the UK. Some lenders still require of their customers to secure sufficient life assurance cover, though the majority have now relaxed their policies. It is first important to find out whether life assurance is a prerequisite of the mortgage such as if you are living with HIV.

If you are living with HIV, the above should always be taken into account. There are many who can secure a mortgage because they are financially able to meet the repayment terms, however are unable to obtain life assurance due to their health situation. 

Then there are those who are perfectly healthy but are unable to secure a mortgage because they either do not earn enough money or cannot clearly demonstrate a strong history and proof of income - i.e. the un-employed or the self employed.

back to top

Mortgages

When you want to take out a mortgage the underwriting will be on an entirely financial basis. 

The only time your health becomes an issue is if you:

• Take Life Assurance to cover the mortgage in the event of death.
• Take out an Endowment Policy, which will have life assurance as a component.

Out of the many different mortgage types available, there is only one where life assurance is involved , this is the endowment mortgage.  As a result there will be health questions as a result.

Many lenders still demand life assurance. You should always check if this is a requirement at the outset of investigation and research. If you do wish to take out life assurance to protect your mortgage this is a separate issue.

Very roughly speaking you could borrow up to 3.5 times your annual income, though could be more or less than this depending on your situation, partners income and additional investments and assets held. Income is generally seen as salary, bonuses and commissions which can be proved historically. It will also include state benefits and other allowances. If you are able to put down a deposit of between 5% to 10% on the property then it will make your lender more lenient in the amount they lend you and give access to better fixed, capped and discounted rates.

back to top

Life Assurance

There is no standard life assurance policy that we know of at present which will cover clients with HIV for HIV related deaths.

NEVER lie to get the insurance policy you want or the price you want to pay. It is unlikely to pay out in the event of a claim and you will be simply wasting premiums that are better spent on a savings plan. 

back to top

Sickness Assurance

This is essentially - Permanent Health Insurance (PHI)

This policy aims to protect your income in the event of sickness and being unable to work due to ill health.

With many  policies available today, if you are unable to work for a pre-specified and agreed  amount of time, which could be as much as 13 weeks, the policy would provide you with a weekly or monthly income until such time as you are able to return to work.

back to top

Critical Illness

This pays out a lump sum on diagnosis of a critical illness (e.g. heart attack or cancer). It is usually linked to a mortgage or other fixed commitment and makes sure you are not strangled with financial burdens if your health deteriorates.

back to top

Unemployment Cover

Unemployment cover does not relate to illness and as such there are no issues to do with health or medical underwriting. Policies which combine health insurance with unemployment cover will have medical underwriting and as such may prove difficult to obtain. It is important that members applying for unemployment cover check what they are applying for first and to find out what the medical underwriting will be before putting pen to paper.

It is possible for the information to be put on a central database which would prejudice applications in the future.

If your health status is such that it has caused you to take a number of days off work in the past then this may become an issue.

One thing worth checking for those members stopping work due to ill health is whether they are entitled to take ill health retirement and begin drawing a pension early. This can be a valuable benefit and is often missed. Clients should either seek professional advice or contact their personnel department. It will be up to the trustees of the scheme who are bound by the rules set down by the Pension Schemes Office at the Inland Revenue to decide whether or not the client can take medical retirement.

back to top

Pensions

As pensions are normally only investment contracts designed for the long term there is no risk to the insurance company for health reasons and thus health does not present an issue. This is true whether the client is entitled to an occupational scheme run by the employer or they are thinking of contributing to a privately arranged Personal Pension.

Both Personal Pensions and Occupational Schemes have the ability to offer life assurance as a benefit within the scheme. Personal Pensions simply offer the same products as other people applying for life assurance but wrapped up in a different policy. Therefore the same underwriting issues apply as those encountered when applying for life assurance by itself.

Personal Pensions and III Health

If you have an HIV diagnosis and have a personal pension you can apply to take early retirement. In this situation you would take out the fund as it stands. You will then be able to apply to an insurance company for an 'impaired life annuity.' This is about the only time you will be able to benefit from the insurance industry as a result of your health situation. It essentially means that you will get a greatly enhanced pension income, at a younger age, as a result of your diagnosis.

Protected Rights Benefits cannot be accessed for any reason whatsoever, prior to age 60. Protected rights benefits are those benefits accrued in lieu of benefits under the State Earnings Related Pension Scheme, now called State Second Pension or S2P.

Occupational Pension Schemes

If you are entitled to an occupational scheme and have had to stop work due to ill health, you are entitled to apply to the trustees of the scheme for early retirement on grounds of ill health. In this situation the scheme will work out what you would have been entitled to, had you been able to work until retirement age, and give you that amount straight away, annually. This income is then guaranteed for the rest of your life. Even if you make a recovery and are able to return to work then you are still likely to be entitled to the ill health pension.

back to top

Saving For The Future

Like pensions there are no insurance risks associated with savings and thus there are no issues with health. There are just the normal financial planning issues which everyone experiences to do with the ability to access the fund, how much risk the client is prepared to take, the purpose of your savings, and so on.

The only issue arises when a client is applying for means tested DSS benefits such as Income Support and has substantial savings which may preclude him / her from receiving such benefits.

back to top

Benefits and Finance

Many people are eligible for benefits as a result of their health situation. However, your financial situation can be altered if you are claiming benefits.

The Disability Living Allowance (DLA) and Incapacity Benefits are not means tested and as such are unaffected by other savings or assets you may have. Incapacity Benefit applications made after 6 April 2001 can lead to reduced awards of Incapacity Benefit if you receive personal or occupational pension payments. Income Support is fully means tested, however. If you are planning on starting a savings plan or have other assets these need to be carefully looked at so that they do not prejudice your right to Income Support.

There are some mortgage companies who allow you to use the DLA and Incapacity Benefits as 'income' when assessing your ability to borrow money. This is by no means true of all lenders, however, and professional advice needs to be taken if this is applicable to you. If you have a partner the lender will take their income into account as well.

Call us now freephone on 0800 074 6918

Please Note:

The information on this page is based on that provided by www.gayfinance.info - independent financial advisers serving the UK 's gay and lesbian community for over 10 years.   Gayfinance.info do not offer debt or insolvency advice but are specialists in providing personal financial advice on life insurance, pensions, investments and tax.

For further information visit the www.gayfinance.info website or call on 08000 1960 69.