What is a Life Right?
Buying a Life Right can be viewed as the ideal way to purchase a home if you are of retirement age. The concept of Life Right is officially recognized by the Housing Development Schemes for Retired Persons Act 65 of 1988 so it is legally regulated. Buying a Life Right is therefore a very secure transaction. In purchasing a Life Right the retiree purchases the right to live in a specific unit in the retirement facility for the remainder of his/her life.
A Life Right or a Sectional Title ?
The beauty of the Life Right model versus a Sectional Title purchase is that a Life Right transaction does not generate any transfer or registration fees, and because the Life Right Scheme holder retains ownership of the unit, all maintenance and upkeep costs are the scheme’s responsibility and not that of the Life Right owner.
With a sectional title property the retiree will not only have to fund future maintenance and up-keep of his/her section, but may additionally have to bear the cost of any special levies that the trustees deem necessary, even though the retiree may never actually enjoy the benefit of the planned upgrade. It is also worth keeping in mind that with a sectional title property a large portion of the retiree’s wealth is tied into that sectional title and can only be accessed when it is sold.
In the Life Right model, the Life Right owner can, in case of an emergency draw on the initial amount paid for the Life Right. This initial amount would normally be returned to his/her estate anyway on his/her death. So if the Life Right owner or his /her partner were to face unexpected expenses for example for healthcare, the Life Right scheme may be accessed. That avoids having to sell and move (as with Sectional Title) and means that family do not need to be called on for additional financial assistance.
In short a Life Right is essentially an insurance policy and a worry-free existence rolled into one.
Buying A Life Right
A retired person buys his or her Life Right from a registered Life Right Scheme offered by a retirement company. However as not all companies are the same, neither are all Life Right schemes. There are some important questions you should be asking:
- How financially secure is the retirement company offering the Life Right and how long have they been operating?
- Does the scheme give me /my estate the initial purchase price back when the unit in question is resold?
- How much of any profit the sale generates will be given to my estate?
- What happens to the balance of any profit?
- How does the Life Right Scheme use their share of the profit?
A Question of Care.
We know we are all living longer and with advanced age comes the question of care. When choosing a place to live in retirement it pays to understand what care facilities are available. Of course an onsite Care Centre will always be preferable but also important is the availability of in home or respite care packages. Some Life Right Schemes actually include free days in the Care Centre so it is well worth asking.
A well-run Life Right Scheme will have all the answers immediately available and can therefore provide the retiree and his family the basis for a happy, secure, and stress-free retirement.