Recent figures from the CML show that over two-thirds of borrowers have no protection against unemployment, choosing instead to use their savings to pay their mortgage. Many homeowners also believe they can claim State benefit if anything unfortunate should happen.
We have been enjoying favourable economic conditions over the past few years with most of the working population confident about their job security and this, too, has not helped in the sale of mortgage payment protection insurance (MPPI).
Following the tragic events of 11 September 2001, job security is not so certain. There are now greater opportunities for intermediaries to start educating their customers and raise awareness of the benefits of taking out MPPI.
A good sales point is to get customers to sign a declaration confirming they were offered MPPI but rejected it. This is good compliance, in any case, but it could lead to a conversation that is compliance rather than sales-led, which may influence the customer’s thinking. Another key point is to offer your clients a good value, adaptable and effective product and to ensure they understand clearly what it provides and how it works.
Intermediaries can generally source cheaper products as an alternative to those offered by lenders and price will be an important factor in your client’s buying decision. High premiums and single premium policies may deter those in need of cover, especially if they already have high outgoings. Look at your clients’ needs and tailor the cover to suit them: for example, a stand-alone policy can provide your clients with more flexibility as they are not obliged to take out a new policy if they move their mortgage at any time. This way, they can avoid any required qualification periods that come with a new policy.
Also, look at what cover is most suitable: do they really need full cover, or would unemployment or ill-health cover be more appropriate? This way, you are more likely to get a sale, even if your commission is not as high ‘ after all one sale is better than no sale at all.