Shelter predicts that as many as 3.8m families could be just one pay cheque away from losing their home and that 29% of families would not be able to make their next mortgage or rent payment if they lost their job or their income reduced following a sickness or accident.
These shocking statistics not only highlight the impact of recent economic conditions, they also highlight just how far reaching the shockwaves of the PPI mis-selling scandal have been.
It is scandalous that by lumping products such as MPPI and ASU protection in with PPI, the damage that has been done in terms of consumer perception of the value of investing in these products is leaving them under insured against the real every day risks they face.
Income protection products have always been vital to a significant sector of your clients, and no more so than now, with the current situation of customer finances and the added focus of MMR on affordability.
When sold properly, short term income protection products (including MPPI and ASU) provide homeowners with a lifeline of critical cover that for some might make all the difference in keeping a roof over their head and protecting what matters most to them should the worst come to pass.
Homeowners cannot afford to live under a naive perception that the worst will not happen to them. Likewise, despite the hype, advisers must not run scared of selling this type of cover.
Speak to your clients, discuss their income and savings status, how much debt they have, how long they could realistically survive on their savings and how they would pay their mortgage/rent and bills if they were to lose their job or find themselves unable to work due to accident or illness.
Point out to them that STIP and MPPI are very different to PPI, that they are affordable products and the consequences of not having the right cover in place.
As advisers you are the front line in turning the tide, tackling reticence about income protection, rectifying the damage that has been done in the minds of your clients and ensuring that they take heed of the warning and get protected.
Mark Hutchings is sales and marketing director at Berkeley Alexander
