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Mortgage brokers embed customer value through multi-benefit plans

by: Paul Yates, product strategy director at iPipeline
  • 27/07/2018
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Mortgage brokers embed customer value through multi-benefit plans
Good news arrived a few weeks before the World Cup kicked off this year thanks to Swiss Re’s annual Term and Health Watch report, which revealed that protection sales increased by 11.6% in 2017.


Even better, this increase was not solely down to life insurance or whole of life sales. Critical illness (CI) policies increased by 21.1%, while income protection (IP) was up by 2.8%.

So, what is behind this rise and what, if anything, does it mean for mortgage advisers?

Quite a lot actually.

Data captured through our protection sourcing platform SolutionBuilder shows the market is moving away from standalone products and towards multi-benefit plans.

For example, during 2017 30% of IP policies were sold using multi-benefit plans, up from 15% in 2016, and this has risen a further 35% in the first quarter of 2018.

Most of these multi-benefit IP sales were alongside decreasing life/CI cover, providing a fixed benefit to cover living expenses alongside mortgage cover.


Multiple benefits

With this much IP written alongside decreasing cover benefits, it suggests multi-benefit plans are having a positive impact on the way mortgage brokers sell protection.

In 2017, mortgage brokers wrote the highest rates of multi-benefit business: 25% of policies written through this segment were multi-benefit, compared with 12% for general IFAs.

The conclusion we can draw is that multi-benefit plans are helping mortgage advisers to sell better and more comprehensive protection solutions, probably because it is a more efficient and cost-effective way to do it than having to set up several standalone product applications.

We’ve noticed that the most common benefit combination for mortgage brokers is income protection alongside decreasing CI (12% of all multi-benefit plans).

In fact, 45% of multi-benefit policies written by mortgage brokers include IP and 67% contain CI.

With CI and especially income protection being, in general, the most important products that help people pay bills and maintain their standard of living when they cannot work due to illness, the data shows that when mortgage brokers write comprehensive solutions, they are doing so through multi-benefit plans.

Based on our Q2 data, 42% of income protection policies were sold by mortgage brokers as standalone policies and 58% via multi-benefit.


Improving product ranges

It is not just the rise in multi-benefit plans that is causing the upturn though.

In recent years we have seen a wider array of better tools that make it simpler to sell advised protection as well as better product ranges too, such as short-term income protection that can be more attractive to people with smaller budgets.

There is something of a virtuous circle taking place, where better fintech drives greater demand from advisers, which in turn drives the development of better products.

It is increasingly accepted that selling a decreasing term assurance policy alongside a mortgage is not enough to cover many clients properly.

Now we have better fintech and better products that make it easier for mortgage brokers to sell protection than ever before and we are, it seems, seeing the results through more sales of quality products that benefit both the clients and their advisers.



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