Advice firm Lifesearch saw enquiries for protection insurance treble last week, compared to a normal week. The majority of customers wanted to know if loss of income because of the virus was covered.
Borrowers are anxious that they if they have to self isolate or their business closes they will have insufficient income to cover their mortgage costs and household bills.
However, those who become ill with the virus and have to stay at home will only receive statutory sick pay. Others are concerned that the will lose their jobs or if they are self employed, will only have universal credit to fall back on.
Confused about cover
Managing director of Prolific Mortgage Finance, Lea Karasavvas said the first wave of enquiries he received from worried homeowners were for Accident Sickness and Unemployment policies, fearing they may lose their jobs because of the impact of the virus on health and businesses.
But advisers expect the unemployment part of this type of policy to be removed for new plans. L&G insurance has already temporarily withdrawn its unemployment cover for new customers.
He too has seen an uplift in income protection requests. He says clients are confused about what income protection will cover them for, believing incorrectly that it includes redundancy as well as sickness protection.
Karasavvas said: “What is clear, is that our client base is now understanding the importance of their income and to insure it.
“We pride ourselves on ensuring all aspects of protection are discussed with our clients and issue insurance decline letters to remind them of its importance throughout the mortgage process if they decide not to heed our advice.”
Cover on submisison
Prolific advisers have also reported a rise in life cover enquiries.
The biggest concern among protection specialists, he said, is how providers will get GP reports given how overworked doctors are right now and how long it will take to get these issued and policies on risk.
“Because of this, he added, providers that do not offer accidental death benefit on submission of cases meaning clients are not covered on submission of application rather than acceptance, are being disregarded when it comes to recommendations.”
“Our hope now, is that providers will look to follow suit of the mortgage companies and provide payment holidays for their policy holders in financial strife so people can remain covered through these difficult times,” said Karasavvas.
“However getting any provider to respond to this so far has proved a challenge. What is vital now is that people remain insured when they need it most, rather than lapse policies to try and save a few pounds.”