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Ask the Expert: Do low interest rates equal low interest in protection?

by: Steve Bryan, director, Intermediary, Legal & General Insurance
  • 07/12/2015
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Ask the Expert: Do low interest rates equal low interest in protection?
Advisers should ensure that both borrowers and renters are presented with the opportunity to protect themselves, writes Steve Bryan of Legal and General Insurance.

The mortgage market continues to be buoyed by low interest rates. However, despite the continued growth of the mortgage market, and to an extent the remortgage market, interest in protection products has not spiked to match this demand. Although protection may seem like a harder sell, it is important that mortgage brokers and advisers continue to discuss these products with their clients on a regular basis, particularly if they have recently had a change in circumstances.

Historically, when demand for mortgages has been depressed, intermediaries have looked to protection products to boost income. Now that the tables have turned, however, there is no reason that advisers and mortgage brokers shouldn’t see this recovery in the mortgage and remortgage market as a way to discuss clients’ protection needs. The first step is to educate consumers on what protection is, making sure they are aware of the full range of products on offer. Protection is often seen as expensive but this can be misleading as there are many affordable products on the market which can be tailored according to the individual circumstances of your client.

Many homeowners are likely to be looking at remortgage options at the moment, due to low interest rates and the raft of competitive deals available. This presents a good opportunity to ensure not only that clients have adequate protection in place on their home loan, but also to talk to them about other products to ensure that their lifestyles and families are also protected should the worst happen. Borrowers who are eligible to remortgage now will have taken out their existing products a few years ago and could very well have seen a change in circumstances since then. Even a short phone call might highlight that a client’s previous level of cover is no longer appropriate, or that now is the time to take out a protection product for the first time.

Traditionally, buying a first home was the jumping off point for a discussion about protection, however the increasing trend of people renting for longer means this date is getting later and later in people’s lives. While renters may not usually feel they have cause to see a financial adviser, they still have financial obligations such as rent, energy and food bills, as well as everyday expenses, meaning that they too will need a financial safety net to catch them if something were to happen that would stop them from paying their monthly bills.

Often advisers rely on ‘triggers’ such as buying a house or having a child to talk about protection. However, as demographic changes mean these events are taking place later in life, advisers should still be keeping in touch with their clients on a regular basis. In this way advisers can make sure all clients are getting the best service while also taking advantage of the opportunities to cross sell.

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