Mortgage brokers - talk to me about protection

Journalist: John Fitzsimons, Freelance

ended 07. June 2022

Morning brokers

Over recent weeks, we have seen many of the big insurers - as well as the ABI itself - publish their claims data for 2021.

Scepticism over getting a payout should the worst happen has often been raised as one of the main barriers faced when looking to promote protection products to clients, so I'd like to get your thoughts on how helpful these statistics are in overcoming that scepticism. Do these facts and figures help you make the case for life insurance, income protection and the like?

And has the attitude of your clients towards protection changed at all over the last couple of years? Have the challenges of Covid made them more open to the benefits of protection? Or is that being undercut by the cost of living situation?

All thoughts very welcome!


3 responses from the Newspage community

The statistics that insurers provide are helpful to counter the age-old basic retort when some customers say 'policies never pay out' or 'insurance companies do anything not to pay', which we all know is nonsense. However, statistics don't make people feel a particular way, and insurance is bought, like everything else, from an emotional decision. So we rationalise it afterwards, conning ourselves that the logical part of us made the decision, not our feelings. In the main, the only people that say life insurance doesn't pay out are the ones that want a way of saying 'I don't want to pay for it because I don't think I'll need it, but I don't have a compelling enough reason to say no to it.' If people were rational and bought things based on statistical evidence everyone would have critical illness cover for as much as they could get for as long as possible, given Cancer Research UK tell us 1 in 2 people in the UK born after 1960 will be diagnosed with some form of cancer during their lifetime. All homeowners can afford protection, if they can't afford the sum of £40-£80 a month for insurance then in my mind they cant afford the mortgage. After all, most can afford a takeaway, a TV package or some new trainers. It's about prioritising the right things ahead of the wrong things.
I have always found clients have been sceptical when it comes to protection, however I have not necessarily seen a change in this. I often hear clients compare life insurance to car insurance, saying we all pay for that, it has similar pay out rates but ultimately our health is far more important than our cars. Rather than using facts and figures on how much has been paid out by an insurer I find it's more beneficial to focus on the amount of illnesses and circumstances they pay out for as this gives the client confidence that they do not need to have a super specific terminal illness in order to have the life insurance pay out. The attitude towards protection has really improved since Covid as more and more people have seen the financial impact of being too unwell to work and although the cost of living has risen, I still find clients are now happier to earmark earnings for this safety net.
'Insurers don't pay out' tends to be a line used by people to justify taking the risk of not insuring themselves to protect their family and home. It feels better than saying "no, I'll roll the dice, thanks". Insurers have released their claims reports for years now and they show the millions of pounds of financial support paid out to those at, quite possibly, the worst time in their lives. However, the recent survey done by The Association of Mortgage Intermediaries (AMI) has shown that many people simply choose not to believe these reports. Having claims figures published by more independent bodies such as the ABI and FCA would likely help to give the figures more credibility in the eyes of a cynical public. What these reports don't show so much is the non-financial support that often comes hand-in-hand with a claim, for example, counselling and bereavement services, free legal help, CV writing to help you back to work. The level of help and assistance a good insurance plan can deliver at the time you most need it is very underrated. If you're unsure of the support available from your own insurance plans, have a chat with a local adviser, or contact the insurer and ask, you might be pleasantly surprised at the protection you actually have in place.