EDITION 3 | NOVEMBER 2021
19 mortgage payments . Home movers could be forced to re-think their plans , affecting their dream of moving up the property ladder and hindering their ability to enjoy the niceties that come with buying a new home , such as decorating , buying new furniture or upgrading a bathroom or kitchen .
These are the sort of thought-provoking discussions that consumers won ’ t encounter if they buy protection through an aggregator site . Advisers have , in my view , a duty and responsibility to ensure that consumers have a memorable discussion about IP . Often , buying a home may be the only time a consumer engages with a professional on the topic . Or it might not crop up again in conversation until two , three , five or more years later when it ’ s time to remortgage , reinforcing the reason mortgage advisers should afford IP the time and prominence it deserves from the outset .
Overcoming the price barrier
Despite best efforts by advisers , price can often be cited by a consumer as a reason why they decide not to purchase IP . In an ideal world , an adviser would have impressed upon the customer the benefits of the product to such a degree that the customer can see past the premium and appreciate the overall value . In the real world , we can ’ t ignore the role price plays in determining a customer ’ s decision .
Typically , IP is more expensive than life insurance , and when faced with the statistics on a risk calculator , this makes sense : for most people are more likely to be off work due to sickness than they are to die . Most mortgage advisers aim to give protection products as much attention as possible without favouring one over the other , however , as life insurance is a more natural fit to a mortgage conversation , many advisers will mention this product first as part of their protection discussions . Even advisers that approach the conversation more holistically will likely find that one product is given more prominence than another . The result is that IP may become second or third on the list when structuring protection conversations .
LEAD WITH IP
My question is , if protection discussions were flipped to lead with and present IP first , could we see increased consumer take-up of the product and less friction when it comes to price ? I ’ m no expert on
If we re-visit the aim of helping to keep a customer in their home , IP is the glue that keeps all other insurances firmly in place and as such is an important part of mortgage protection advice .
psychology , but when it came to my own mortgage and protection experience , I saw that my life insurance would cost me £ 9 per month , and this became the comparative benchmark I , consciously or subconsciously , compared my income protection quote of £ 32 a month to . It ’ s probably worth remembering that I ’ m someone who holds protection products and appreciates the importance and value of the cover . I wonder if in my telephone call with my adviser and subsequent email that laid out the options , they ’ d included the IP options at the top ( rather than led with the life insurance quotes ) this would also signify the importance of this cover and factors in the probability of me needing to claim on IP versus life insurance .
IP is arguably the foundation of protection insurance , if not all insurances . Without it , a customer ’ s financial situation could quickly crumble if they had no way to continue to pay their bills . This could have a knock-on effect on their ability to pay other insurance premiums and leave them susceptible to becoming uninsured due to lapsed cover as a result of non-payment .
If we re-visit the aim of helping to keep a customer in their home , IP is the glue that keeps all other insurances firmly in place and as such is an important part of mortgage protection advice .
For further information about the research and work AMI undertakes in respect of protection in the mortgage industry , visit their website : www . a-m-i . org . uk
Sources : 1 . FCA Financial Lives , 2020 2 . The New Protection Challenge , 2020