Writing for Mortgage Solutions Phillips, who is group operations director at Just Mortgages and Spicerhaart, asked if brokers should refuse to proceed with a mortgage if the client cannot afford protection?
David Smith of iPipeline, a service provider to the finance and insurance industry, took this question to the Legal and General Mortgage Club event at the AJ Bell stadium in Salford.
A short video clip was tweeted by Smith, asking four advisers the question which drew a range of responses. (Link to the full video below.)
One broker told Smith: “Absolutely. Business is business, refusing it because a client thinks they can’t afford protection – that is, to be honest, foolish.”
He suggested that in certain cases, the client may be incorrect and actually has the wrong protection, so is in need of advice to highlight cheaper or better ways of getting protection.
“There’s no reason to just turn down business just because someone thinks they can’t afford protection,” he added.
A matter of affordability
However, other advisers argued that if a client cannot pay for protection, it is clear that they cannot afford a mortgage.
One broker said: “I don’t want any of my clients scrimping to pay their mortgage each month. So there’s always a budget in there for protection.
“You can’t afford protection, you can’t afford a mortgage, simple as that in my view.”
And another highlighted that premiums could start from as low as £6, so it was very rare that protection was unaffordable.
“But would I continue to do the mortgage? Yes I would – but I’d get a disclaimer to say that I pointed it out to them and they declined it,” he added.
As for Smith himself, he would suggest that some protection is always necessary – because of the potential for unexpected events.
Smith commented: “Personally speaking, I have had the benefit of protection already assisting with my mortgage – I was diagnosed with cancer a few years back and knowing I had critical illness cover really did help us through some tough times.
“If we didn’t have it, it could’ve been catastrophic. So I’m biased now – I certainly would suggest some cover is always needed, even if it’s just one or two years’ salary to see you through the potential tough times.”
— TheWizardOfPoS (@LifeMadeFun) March 8, 2018