These concerns were raised at the Mortgage Solutions’ The Mortgage and Protection Event 2019 where representatives from Auxilium Partnership, Mortgage Advice Bureau (MAB) and SimplyBiz said advisers needed to make sure they were speaking about protection with their clients.
So this week, Mortgage Solutions asked: Are there any barriers to you advising on protection?
Some protection can seem very simple, such as arranging a life policy solely to cover a mortgage for a vanilla client.
However, for more complex clients, particularly those who own their own business or have extensive benefits through work, there are a wide range of options and what constitutes best advice is not always obvious.
It is not so much a case of a client’s circumstances or the options available being too complicated, but rather whether the adviser has the required knowledge to deal with those circumstances.
If not, they should either upskill themselves or pass the enquiry on to an adviser who does. All insurer systems vary, but overall, they are easy to use.
I think the majority of fully underwritten protection policies offer good value for money. Some of the non-underwritten accident, sickness and unemployment policies can be expensive for low risk clients; that said, they are still best, and offer good value, for certain clients, particularly those in higher risk jobs.
If you are confident in your knowledge of protection and believe it is beneficial to a client, it should not be a difficult topic to bring up.
For brokers who deal with complex clients, it can certainly require a high level of knowledge to be confident you are providing the best advice for their insurance needs.
If you tend to deal with complex credit applications, maintaining your knowledge of this market and the insurance market can be very difficult.
I’ve always advised on protection and only recently started doing mortgages, so for me it’s not complicated.
I wouldn’t say the system is hard to use, it’s just a matter of knowing how to use it. The process is quite straightforward, and the Openwork system is quite basic.
It’s not an easy topic and it can get complicated if a broker doesn’t know what they’re talking about. If you keep it too brief with the client, they won’t understand and won’t buy it, but if it’s too detailed you confuse them, and again they won’t buy it.
I wouldn’t say protection is too expensive; we tailor it to the client so irrespective of the premium, we can find something for them.
Generally protection isn’t something they’ve prepared for, they’ve already done their mortgage research and decide they’re paying X amount, so some have no disposable income left but if a client puts their head down, they can find out where to save.
At Capricorn our brokers have been trained to mention protection and are told they must bring it up at least seven to eight times so there is no reason a client should say they haven’t been told – but how they position it will be down to the individual.
I wouldn’t arrange such a meeting for 15 minutes during a client’s lunch break. I prefer to talk to them when they have time because there will be things I am unable to explain.
Some brokers might end up doing a quick meeting to try to be flexible, but I’d rather tell clients: “No, if you’re going to make a lifetime decision, you’ve got to make time for it.”
When giving mortgage advice, protection needs to be integrated into the initial conversation. This helps clients understand the importance of protecting the mortgage as well as buying their new home.
Cost is always the biggest barrier to people taking up protection, and it is important to help give a variety of options and break down costs to demystify the products.
We help our clients understand that something is better than nothing and that there are reduced costing options which can be offered.
Budget income protection can reduce costs significantly and you can also reduce the amount of critical illness quoted for. Premiums are not cheap; it is important to support clients in understanding that this is due to the high claim rate.
You can support your recommendations by talking about claims and how many are made, what age people make claims at, and giving a few options to ensure you can fit within budget.
The reason we advise on protection is because there are real benefits, for example in regard to statutory sick pay. The government offers very basic assistance, at just £94.25 a week, and lots of employers pay very limited sick pay.
We need to help our clients really think about what would happen next. How would they pay the mortgage?
We do such a valuable job giving advice. Insurers view medical conditions in different ways, and this can lead to increased premiums. This can sometimes be avoided, as not all insurers are the same.
The important premium is the end premium the client is offered, not the cheapest initial one. Highlighting this helps clients to understand why advice is key.