Online calculators and price comparison websites can encourage borrowers to consider all home-buying related costs, such as utility bills and council tax. But often insurance is not included.
So, this week, Mortgage Solutions is asking: Should comparison sites and independent mortgage calculators include or suggest insurance quotes to stress the importance of protection?
For me, this is very topical as we all know that when brokers are busy servicing an increased demand for mortgages, they tend to drop the ball on protection, and the last 18 months will surely evidence this.
Most advisers aim to go back to these clients and cover this off at a future meeting but invariably, such reviews prove harder to schedule. And once the client has secured their mortgage offer, and may even have completed the sale, the lead will have gone cold and any protection sale will be much harder.
This potentially leaves clients exposed to all manner of risks and, increasingly, the adviser to a complaint, if the worst were to happen in the future.
So yes, prompting the client to think about and potentially budget for any level of associated mortgage protection as early as possible in their mortgage application journey must be a good idea.
Basic life assurance quotes shouldn’t prove difficult to generate with age and smoker status, although users of such websites would need to be warned that detailed underwriting could result in varied premiums and in some cases, a full decline.
When these clients then approach a broker for final advice and application, it should make it much easier for the adviser to introduce a protection review as an integral part of the process, hopefully resulting in better-protected clients and more relaxed advisers.
While it is imperative to raise awareness of the need for protection, including quotes on a comparison site could be a double-edged sword.
On the positive, including quotes could raise awareness of life assurance and other protection products, making a client more open to a conversation about them. What could be dangerous, however, is someone buying their protection policy online without advice.
Someone may think they just need life insurance to cover a mortgage, but it is rarely that simple and people’s protection needs are usually more extensive. People buying online, especially for the first time, are highly likely to go for the cheapest but may sign up for something that is not right for them, which may mean paying for years into a policy that may not even pay out if they need it.
Many people understandably don’t realise the intricacies and the extent of information that needs to be disclosed to make a proper purchase.
Generating a quote based on a mortgage, or a sum of money someone believes they need, may not take into consideration their health, occupation or family situation.
For example, someone who has an occasional cigarette on a night out may put they are a non-smoker, but this would invalidate their policy should they need to claim.
When deciding on a utility provider, generally you pick the cheapest – this is not the same when choosing a protection policy.
Everyone is different, everyone’s needs are different, and protection needs to be tailored to make sure that, should the worst happen, every element of someone’s life is protected, which cannot be determined by a quote.
So including the issue of protection is vital, allowing people to buy online without advice is definitely not recommended.
A mortgage is the biggest financial commitment that most people will have in their lives.
I want my clients to be thinking about what could happen to them financially if they had a medical crisis, especially as there is a trend for younger borrowers to be taking on longer term mortgages, sometimes to 35 or even 40 years.
With the prevalence of critical illnesses affecting people at an even younger age, we need to be educating and informing clients of the all the options available them to mitigate the risk of losing their income or taking time off work while undergoing treatment or recovery, and the impact this can have financially.
I would not want anyone to use a comparison site for sourcing quality protection advice, this is where we as seasoned professionals can genuinely add value.
Especially for anyone with existing health issues who would have their cover rated and/or excluded, knowing where to place a case to get the best cover and premium for a client comes with knowledge and experience.
It is my opinion that highlighting the need for protection on websites and online calculators would be beneficial for the general public, as it raises the awareness and importance of this aspect of the house buying process.