Product transfers
Unlocking the protection conversation for mortgage advisers.
Tracy Jeffery
Senior Intermediary Distribution Manager
Capitalising on the refinance wave: unlocking the protection conversation for mortgage advisers.
Around 1.8 million fixed rate mortgages are up for refinance this year, creating a huge opportunity for mortgage brokers to engage with clients and reassess their protection needs.
It’s usual for a mortgage client’s lifestyle to have changed by the time their initial fixed rate term matures and revisiting their situation could highlight any new or previously overlooked gaps in coverage.
This could be because they are older, have since started a family or are now more aware of the unpredictable nature of life. All these changes could indicate a willingness and need to explore their options and as their adviser, you are best placed to help them weigh up what is available and reinforce their decision.
You may even find that your client has since cancelled their policy to cope with the rising cost of living, but it is your duty to inform them that there will be a greater benefit to having some protection in place.
Whether your client is considering completely cancelling their policy or reducing the protection in place, the range of products offered by Scottish Widows Protect are designed to be flexible. Clients can choose a combination of covers with different amounts and terms, which can evolve to meet their changing needs.
For clients who are arranging protection alongside their first mortgage, our life cover policy automatically comes with free mortgage cover. This comes into effect from the date we receive a client’s fully completed application form, direct debit instruction and once the applicant has exchanged contracts.
The free mortgage cover remains in place until either the protection policy starts, or the client has completed on their property purchase. The free cover also applies until the policy application has been denied or postponed, the date a claim is made, or once 90 days have passed, depending on which event happens first.
Free accidental life cover is automatically applied to a life cover policy on the same terms as the free mortgage cover.
A boost in revenue
Remortgage activity accounted for more than a third of completions in the first three months of this year while the value of product transfer business was projected to rise from £197bn last year to £212bn in 2023.
This all points to healthy refinance activity.
Further, as the purchase market is set to contract due to higher mortgage rates and living costs, advisers pivoting their focus to people moving onto a new rate presents the perfect opening to broach the topic of protection.
Our own data suggests that half of Lloyds Banking Group’s mortgage holders have life cover while a fifth have a critical illness policy in place. This denotes a sizeable cohort of borrowers in need of protection who can benefit from invaluable advice.
This can provide a much-needed stream of additional revenue for mortgage advisers and help to weather the slowdown in the market. Mortgage borrowers cannot avoid having to refinance, especially if they do not want to end up on a costly standard variable rate, meaning there is a guaranteed customer base to tap into.
With everything being so uncertain, borrowers are more likely to turn to advisers for guidance now to ensure they make the right choice. This gives you the chance to reinforce the importance of efficient financial planning to create long-term security.
Remember, it is always better to strive to find a solution for your client so if you are not able to help them directly, you can always refer the case to a specialist. Write it or refer it – but do not ignore it.
Addressing all needs
Scottish Widows Protect offers a wide range of protection products to span various life circumstances and events people may go through.
This includes life cover, critical illness cover or a policy that combines the two where the amount can rise, fall or stay level over the policy term. This can also include mortgage cover where necessary, meaning people will be shielded if they experience any unexpected health issues or income disruption which impacts their financial stability.
And your client needn’t worry about whether their claim will be paid when it is most important.
Last year, Scottish Widows Protect paid out 98 per cent of claims at a total value of £199m. This accounted for 99.4 per cent of life claims and 93.3 per cent of critical illness claims. Our intention is always to help customers when they are most in need and this should be mentioned to clients to reassure those who are undecided about the value or benefits of protection.
Together, we can make sure that people who are due a refinance are not only aware of the best mortgage rate available to them but also the most suitable protection product. This will put their minds at ease and make them feel fully prepared for whatever life might throw at them next.
For the use of Mortgage Intermediaries and financial advisers only.