The reduction in Stamp Duty until March 2021 should stimulate mortgage applications both from those looking to move and first-time buyers. This will bring many into the protection market for the first time.
But protection needs can grow quickly, particularly for younger home owners. The policy you arrange when your clients complete their mortgage application may not be fully protecting them a few years later, as our research1 into the protection needs of mortgage holders showed:
- 49% of respondents had a change in personal circumstances since taking out their mortgage
- Yet 39% had not updated their protection
So as well as arranging cover for your first time buyers and movers, why not contact your existing clients for a protection review?
How can you start the conversation?
Our research identified three key opportunities for starting a protection conversation:
- 20% of respondents had a new addition to their family. So ask them if they’ve got family cover as well as mortgage protection.
The average cost of raising a child from birth to 18 is £75,436 for a couple. This rises to £102,627 for a single parent family2. New parents should consider whether their level of cover protects their family as well as their home.
It’s also a good moment to review their existing critical illness policy and check it covers children. The financial impact of a child’s critical illness can be huge. It may surprise them that children’s critical illnesses are the sixth most common cause of claims.[1] - 19% of respondents had a change in health condition, so review their policy with them.
Is their condition eligible for a claim? Clients may forget that they have cover in place or feel their condition may not be serious enough to make a claim.
Check the support services provided by their insurer and signpost personal nurse advisers, second medical opinions, counselling services or health and wellbeing advice, which could help them.
And finally, see if they can increase their cover, especially if they are eligible to utilise their guaranteed insurability options. - 20% of respondents had a change of employment status, which opens a series of questions.
Have they had a pay rise? Check their provider’s increase options or quote for an additional policy to maintain their salary to protection ratio.
For many different reasons, some clients may have had a reduction in household income. These include part-time working through parenthood, eldercare, studying, lifestyle choice or even redundancy. Does this make them more financially dependent on another member of the household?
Have they changed jobs? If so, how does their employer’s benefits package stack up against the one you reviewed when they applied for their mortgage? If any of the:
- life cover or death in service pension
- income protection
- critical illness cover
offered by their employer have changed, they may need to take out or increase their personal cover to plug the gaps.
If they’ve gone self-employed or started contracting, are their existing protection policies the most tax efficient products for them? Should they consider business protection – or Group protection – if they’re working in a partnership or small business? With Group insurance starting from just two lives, this can often be a cost-effective solution.
For a personal conversation on how we can support your protection business, please contact your account manager or email ipp.sales@canadalife.co.uk.
Natalie Summerson is Head of Sales, Individual Protection
Based on a story first published in Mortgage Introducer on 11 February 2020
1 Based on research among 1,003 UK adults with a mortgage who took out their product with an independent adviser. Conducted in October 2019.
2 What is the average cost to have a baby? Money Advice Service, July 2018
3 Canada Life MI