Unlocking the potential of mortgage protection

In the ever-evolving landscape of home-buying, mortgage protection products such as life insurance and critical illness cover are essential for safeguarding homeowners' financial stability. Yet effectively engaging customers at various stages of their home-buying journey remains a challenge. Mortgage engagement research conducted by Lloyds Banking Group offers valuable insights into how mortgage providers can better connect with customers and drive the uptake of protection products.¹ 

Understanding customer triggers

Imagine your client is about to embark on one of the most significant financial commitments of their life—buying a home. It's a whirlwind of emotions and decisions. The research highlights that multiple triggers are necessary to convert customers to protection products. These triggers are a blend of emotional and financial factors, often linked to significant life milestones.

For instance, a new mortgage combined with the birth of a child and recommendations from friends or family can collectively motivate customers to consider protection. However, relying on a single trigger is insufficient; a holistic approach is required to address the diverse motivations and barriers customers face. 

Potential triggers

• Having a baby 
• Taking out a mortgage for the 1st time 
• A history of illness in the family 
• Hearing about protection products from a friend or family member 
• Remortgaging 
• A particularly poignant piece of communication e.g. charity adverts 
• An increase in household disposable income 
• A milestone birthday e.g. turning 40 
• A change of job and workplace benefits

Triggers are a combination of financial and emotional components which are closely linked to life milestones/stages, but don’t always follow a ‘lifestage order’.¹  

The first mortgage conversation: A pivotal moment

Picture this: you're sitting down with your client who is already overwhelmed by the complexities of the home-buying process. For many customers, this first mortgage conversation is the initial touchpoint for learning about protection products. Unfortunately, this moment often comes when they are cognitively and emotionally exhausted.  

The protection products conversation tends to happen midway through the mortgage journey.  Customers will already have had to jump through numerous hoops by then: 

• Working out what properties they can and can’t afford 
• Finding the right property and may have had offers fall through 
• Absorbing a lot of new information and charges in a short period of time 
   

By this point, customers will be struggling to engage with new information 

They are likely to be lacking in mental bandwidth due to juggling the home purchase alongside their regular commitments e.g. work, childcare, personal life.  Ultimately, they are focused on the end goal of completing their home purchase and the emotional payoff of making it a home, everything else is simply a means to achieving this.

Clear and effective communication during this conversation is essential to positively shape customers' perceptions and long-term engagement with protection products. 

Post-mortgage engagement opportunities

The journey doesn't end once the mortgage is secured. The research identifies several post-mortgage triggers that can reignite interest in protection products. These include settling into a new home, changes in income, and the arrival of a new baby.  

The remortgage conversation/process is another touchpoint for re-considering protection.  Having been through the mortgage journey before, this audience are more likely to have an awareness of protection. But this opportunity might dwindle after multiple remortgages/PTs as they pay more of their mortgage off. 

Advisers have a unique opportunity to proactively re-engage with customers at these key life and financial milestones. Building mental availability prior to the mortgage conversation and framing the discussion in a way that encourages future take-up can significantly enhance customer engagement. 

The need to act

Alarmingly according to the latest data from Mortgage Lenders and Administrators Statistics (MLAR) from the Bank of England showed that the value of new mortgage commitments increased by 4.9% from the previous quarter to £69.3 billion and was 50.7% higher than the same point in 2024.²

In today's economic climate, the value of new mortgage commitments has seen a staggering increase of 50.7% compared to the previous year. This surge reflects the growing financial pressures on homeowners, who are now dedicating even more of their monthly income to mortgage payments. As the cost of living continues to rise, safeguarding one's financial stability has become paramount. 

Income protection is a vital tool in ensuring financial security during unforeseen circumstances. It provides a safety net that can cover essential expenses, including mortgage payments, in the event of illness, injury, or job loss. With the significant rise in mortgage commitments, the importance of having a reliable source of income to meet these obligations cannot be overstated. 

The increased financial burden on homeowners means that any disruption to their income could have severe consequences. Without income protection, individuals may struggle to keep up with their mortgage payments, leading to potential defaults and the risk of losing their homes. Income protection ensures that, even in difficult times, homeowners have the financial means to maintain their mortgage commitments and protect their investments. 

Income protection is not merely a short-term solution; it is a cornerstone of long-term financial planning. As mortgage commitments grow, the need for a comprehensive strategy to protect one's income becomes increasingly critical. By integrating income protection into their financial plans, homeowners can ensure that they are prepared for any future challenges, thereby safeguarding their financial well-being for years to come. 

Challenges in the protection conversation

Despite the importance of protection products, many customers struggle to justify the monthly outgoing, especially when faced with other essential expenses like childcare fees. Additionally, misconceptions about protection products and perceived overlaps between different types of cover can further complicate the decision-making process. Addressing these challenges requires a nuanced approach that frames protection products as a responsible adult decision rather than optional extras. 

Leveraging workplace schemes

Workplace schemes can also influence customers' perceptions of protection products. Many customers who receive protection through their employer know little about these schemes and may feel they are already adequately covered. This can lead to postponing the decision to take out standalone protection products. Educating customers about the benefits and limitations of workplace schemes is crucial to help them make informed decisions. 

Proactive communication and long-term impact

The tone and framing of the protection conversation can have a lasting impact on customers' attitudes. When protection products are presented as optional extras, their importance may be undermined. Conversely, overly aggressive sales tactics can lead to long-term negativity. A balanced approach that emphasises the practical benefits and peace of mind associated with protection products is more likely to resonate with customers. 

In summary

Mortgage protection products are essential for safeguarding homeowners' financial future, but engaging customers effectively requires a strategic approach. By understanding the triggers that drive consideration, leveraging key touchpoints, and proactively re-engaging with customers at critical life stages, mortgage providers can enhance customer engagement and drive the uptake of protection products. Clear communication, education, and a balanced framing of the protection conversation are key to unlocking the potential of mortgage protection and ensuring customers are well-protected throughout their home-buying journey. 

The significant rise in mortgage monthly commitments underscores the urgent need for income protection. It is an essential safeguard that mitigates financial risks, provides psychological reassurance, and ensures long-term financial security. As homeowners navigate the complexities of today's economic landscape, protection stands as a crucial component in preserving their financial stability and protecting their most valuable asset—their home. 

Are you ready to transform your approach to mortgage protection? Consider re-evaluating your customer engagement strategies. Identify key touchpoints where you can make a difference, such as during the first mortgage conversation or post-mortgage engagement opportunities. Proactively reach out to your customers and educate them about the benefits of protection products. Ensure your conversations are clear, empathetic, and impactful.  

As advisers, you have the opportunity to build a future where every homeowner feels secure and protected. 

Sources:

¹Lloyds Banking Group, mortgage engagement research, 2021 

²MLAR, March 2025 Mortgage commitments up 50% year-on-year but arrears cases creep up: BoE | Financial Reporter  

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