Tom Robinson, National Account Manager Scottish Widows
How do we normalise the Protection conversation when people are buying houses?
The global pandemic has led many of us to reassess our priorities and our finances over the last 18 months. Theres been a buoyant housing market with many relocating away from the cities or to bigger homes.
With house prices at a record high, how do we help clients protect their home?
Lloyds Banking Group research found that two in five people (37%) have experienced a loss of income since March 2020, having faced furloughed hours, time off work for caring duties or a period of illness.
And in the same research nearly half of all respondents (52%) now say that in the event of the main earner in their household falling critically ill, they wouldn't be able to stretch their savings beyond six months.
There are still plenty of borrowers are not in financial difficulty and are concerned about their protection needs, Mortgage Advisers are perfectly positioned to talk to these clients about the related benefits of protection.
It is important for the adviser to be able to relate how a modern protection policy can support the client, throughout the lifespan of the 25 or 30 year mortgage term. Consider the events that are likely to occur to families and individuals during the mortgage term:
Positive: New home, new job, new relationship, growing a family - supported by the flexibility and features of the product
Negative: Job loss, break up/divorce, illness, bereavement -supported by financial claim and wellbeing benefits
For advisers it gives a unique opportunity to have frank and powerful conversations with clients about protection.
These can include:
Mortgage Free Cover - When a client exchanges contracts on a house they are legally required to purchase that house regardless of whether they die or suffer a critical illness. However most clients don't want their protection policy to start until they start paying their mortgage. This potentially could leave them exposed. Mortgage free cover gives them free cover and peace of mind should anything happen during this window between exchanging contracts and moving in.
Free Mortgage Cover is designed to protect your client during the period from finalising their contract to buying their new home, to the start date of the mortgage
Buyback Options - Life with Critical Illness Cover policies. When a successful claim for critical illness cover is made, the policy would normally end. However, would the critical illness benefit be used to repay the mortgage or more likely support them during the traumatic period through diagnosis?
But what if they still want the security of having some life cover in place?
Life cover buyback is an optional benefit available at an additional cost. In the event of a valid CI claim this benefit allows a ‘Life with critical illness' policy to provide a death benefit under the plan without the need for further underwriting
Guaranteed Insurability Options - The benefits of GIO's means that the clients don't need to go through further underwriting. Therefore potentially avoiding the need to cancel policy in two years when the client moves house or has more children? GIO's allow flexibility to adapt the plan when the clients lifestyle changes
The living benefits of a Protection policy.
An insurance pay out can really help to ease the financial burden at a time of family bereavement or critical illness diagnosis but you and your family might need more than just financial support. That where the living benefits of a policy really come in.
Many policies come with Care Support provided by specialists such as Red Arch this gives clients and their immediate family practical advice and emotional support to get them through difficult times. The service is often available from the day the policy starts and the client does not need to be making a claim to access it. They will have access to a Personal Nurse Adviser who will support with second medical opinions, help at home, therapies and more.
Virtual GP services are relatively new feature of protection policies but again can usually be used by the whole family to get a GP appointment at short notice.
Lets keep talking about Protection and help more clients protect their homes and families.
