"While there will always be clients that decide not to take out cover, there shouldn’t be advisers who don’t raise the topic"
Since the introduction of Consumer Duty on 31st July last year, there is now greater onus on advisers to ensure a positive outcome for each and every one of their clients.
For advisers in the mortgage market, this means looking beyond their borrowing needs and adopting a more holistic approach to the advice process by also asking about other financial requirements, including protection.
Even with this regulatory focus, it’s still the case that protection products such as life insurance, income protection and critical illness cover, can still be overlooked during the advice process. In fact, many consumers are unaware the products even exist, think they are too expensive or have simply never thought about how they would meet mortgage repayments if they fall ill or are unable to work.
This means it is down to advisers to raise the topic of protection with their clients and ensure the subject is taken seriously at every client meeting. Taking out a mortgage is one of the biggest financial commitments most people will ever make, so highlighting the importance of protecting the income that pays it, or the person earning that income, is crucial.
This may not necessarily mean providing the actual protection advice, as there are referral options available for those advisers unfamiliar with this area of the market. But it does mean having a conversation about what protection is, why it is important and why the client might benefit from having at least some cover in place.
Once the protection needs of the client have been determined, it is important advisers ensure they have access to the best range of providers/products available in the market. This means avoiding products with loaded premiums which cost more money but do not provide any additional benefits to the client.
Keeping costs low by avoiding loaded premiums is important as it means the client will get the cover they need at a fair price. It also makes protection more affordable which is more likely to appeal to the client and increase the chances of them taking it out.
For those advisers confident in their knowledge and ability to service the client themselves, having access to an extensive panel of protection providers is imperative. The Right Mortgage & Protection Network’s panel of providers provides access to over 49 products so advisers can rest assured they are getting access to the widest range of options to meet the different needs of every client.
For advisers unfamiliar with the protection market, referring your clients to The Right Mortgage means one of our dedicated protection specialists will ensure your client gets the advice and outcome they need. You will also be paid a fee for the referral and kept in the loop about their progress, with a promise of no cross-selling.
All you need to do is have the conversation, i.e. ‘Did you know your home is at risk if you don’t keep up the payments? How will you make the payments if you are unable to work, have a critical illness, or if you die would your dependents be able to keep the family home?’ Then send the client details across and we will do the rest. You must however ensure you have a conversation about protection with every single person you see.
Obviously, we appreciate some advisers might not fully be on board with every client requiring such a conversation and might even need to sell the idea of providing protection advice to themselves first before they even try to sell it to their clients.
But we should keep this in mind. There are, unfortunately, many examples of cases where there was a need for the client to take out protection but because no cover was arranged, they ended up in a dreadful position due to an accident or ill health and couldn’t work or bring in the income they needed.
There are also many positive stories of clients who had the policies in place and ultimately needed to make a claim. According to the latest figures from the Association of British Insurers (ABI) and Group Risk Development (GRiD) a record £6.8 billion was paid out in individual and group life insurance, income protection and critical illness claims in 2021. This equated to £18.6 million a day, £1.6 million a day more than 2020’s previous record.
While there will always be clients that decide not to take out cover, there shouldn’t be advisers who don’t raise the topic, as they are opening themselves up to potential issues if, down the road, a complaint is made and upheld.
Having the conversation early and arranging the cover yourself or referring the client to a specialist, will not only ensure your client’s protection needs are adequately addressed, it will also ensure you are meeting your Consumer Duty obligations as an adviser. It is not an area to be overlooked, and with the many options and opportunities available in this space, it is now one that needn’t be.
