Financial Mortgage Advisers
As Connect Mortgage Network, we recognise the vital role insurance plays in safeguarding the financial well-being of individuals and their families. However, it’s crucial to acknowledge that many clients may have misconceptions about insurance.
In this article, we delve into these common misconceptions, backed by up-to-date survey figures and reports, to empower financial mortgage advisers to guide their clients effectively.
In today’s rapidly changing economic landscape, where unforeseen circumstances can have a significant impact on one’s financial stability, insurance serves as a crucial safety net. Yet, misconceptions about insurance can leave individuals exposed to unnecessary risks.
Our goal is to shed light on the importance of protection policies and to dispel myths that may be preventing clients from making informed choices about their financial future.
We understand that clients might be wary of insurance due to concerns about affordability, the fine print in policies, or even doubts about whether they really need it. Providing context for the cost of protection is frequently an effective method for financial mortgage advisers to demonstrate its affordability, a fact that clients may need to be fully aware of otherwise.
By addressing these concerns and providing factual information, we aim to ensure that financial mortgage advisers’ clients have a comprehensive understanding of the various insurance options available to them.
This knowledge empowers clients to make informed decisions that can help secure their financial well-being and that of their loved ones. In doing so, we aim to strengthen the overall financial resilience of the individuals and families we serve.
Misconception 1: They don’t need insurance
A prevalent belief among young, single, mortgage-free individuals is that insurance is unnecessary. After all, they may argue, what is there to protect? The truth is that life circumstances can change rapidly. A new partner, marriage, home purchase, or starting a family can bring significant responsibilities. It’s essential to remind clients that insurance is more affordable when they’re young and healthy.
Locking in lower premiums early can provide invaluable protection as they age.
Stay-at-home parents often need to pay more attention to their need for insurance, assuming they aren’t primary breadwinners. However, in the event of their passing, the surviving spouse may face financial strain due to childcare costs. Insurance can bridge this gap and ensure financial stability.
Clients relying solely on death-in-service benefits from their employer should consider the limitations of this coverage. If they change jobs, this protection may disappear. An individual policy offers consistency and ensures coverage, regardless of employment changes.
It’s also worth clarifying that insurance isn’t just about posthumous payouts. Critical illness cover and income protection are valuable components that provide financial support in times of illness or injury. All of reason why you should seek the advice of financial mortgage advisers
Misconception 2: Insurance companies don’t pay out
The misconception that insurance providers routinely deny claims can deter potential policyholders. However, recent data from the Association of British Insurers reveals a reassuring reality. According to the most recent data released by the Association of British Insurers (ABI), individuals and families dealing with bereavement, illness, and injury received substantial support in 2022. The figures reveal that a total of £6.85 billion was paid out by protection insurers, encompassing both group and individual protection policies during that year.
The 2% of claims not paid were primarily due to non-disclosure of medical information or conditions not covered by the policy.
Clients need to understand that as long as their policy remains active and accurate information is provided during the application, valid claims will be honoured. This is an excellent opportunity for advisers to stress the importance of seeking expert advice when selecting insurance coverage. Advisers can guide clients through the application process, ensuring clarity and accuracy.
Misconception 3: Insurance Is too expensive
Perceived high costs often dissuade individuals from obtaining insurance. It’s essential to emphasise that several factors, including age, health, existing medical conditions, lifestyle choices, and more, influence insurance premiums. Clients must understand that their individual profile significantly impacts premium rates. This awareness may inspire positive lifestyle changes, such as quitting smoking or adopting a healthier lifestyle.
Moreover, the cost of insurance is relatively affordable, with policies available for as little as £5 per month. When clients realise the potential consequences of being underinsured, the value of protection policies becomes more apparent.
How do I talk to my clients about life insurance?
Financial mortgage advisers discussing life insurance with their clients can feel discomforting. People often avoid conversations about mortality, even though these discussions can ultimately benefit their families. Understanding that your client is protecting their most cherished treasure on earth, their family will offer a sense of security.
This is a clear illustration of how our discussion on building client rapport, which we covered in “Client Rapport | Valuable Strategies for Mortgage & Protection Advisers,” will be beneficial.
In the meantime, when embarking on the journey of introducing protection insurance, financial mortgage advisers must delicately broach the topic of life’s inevitable conclusion and the potential impact on their loved ones without financial security.
The challenging paradox is that even experienced protection financial mortgage advisers must establish trust. Your clients should find comfort in the tone of your voice and the language you employ to put them at ease, making it easier for them to pay attention to your advice on a topic they may initially be hesitant to address.
It’s essential that, after the conversation, they leave with the belief that they’ve made one of the most beneficial decisions in a long time and that your utmost priority is to assist them in reaching their financial objectives while ensuring their security in the worst-case scenario.
Why financial mortgage advisers should be introducing protection to their clients?
Aside from the FCA, which expects Consumer Duty to be a top priority for mortgage and protection advisers, financial mortgage advisers who have yet to enter the protection market overlook a valuable chance to enhance the depth of their customer relationships. This counts towards establishing a good rapport with their clients.
Advisers proficient in addressing and providing tailored protection coverage to meet their customers’ requirements will cultivate more enduring and financially rewarding relationships with their clients.
They bear a moral responsibility to guarantee that customers are safeguarded in the event of the worst-case scenario, especially when they are taking on what could be the most substantial debt of their lives.
Interestingly, in 2021, findings from the Association of Mortgage Intermediaries (AMI) indicate that numerous consumers need a more comprehensive grasp of the various protection products they might require. Forward today, 2 in 5 (40%) advisers say their firm has seen an increase in protection conversations with customers as a result of the FCA’s Consumer Duty, reveals the Association of Mortgage Intermediaries (AMI), ahead of its fourth annual AMI Protection Viewpoint Report on protection within the mortgage industry.
The benefits of protection policies
It’s time for a fresh perspective because comprehending perspectives and, more significantly, addressing misconceptions is the essential approach to safeguarding financial mortgage adviser clients.
Consumer Duty has provided the financial industry with the chance to ensure that financial mortgage advisers are making every effort to prioritise the requirements of their customers.
The key message here, without a doubt, underscores the significance of placing protection at the core of the advisory discussion for financial mortgage advisers. This is especially crucial when contemplating mortgages, as exploring the array of available products can have a significant impact on the long-term financial well-being of their clients.
Financial mortgage advisers should be keenly aware of products such as the following:
Life Insurance: Life insurance provides financial support to the client’s family or beneficiaries. It can be used to pay off a remaining mortgage, cover funeral expenses, clear existing debts, or provide an inheritance for children.
Over 50s Life Insurance: Designed for older clients, this coverage focuses on funeral costs and leaving a gift for family members. It offers competitive pricing and doesn’t require answering medical questions during the application.
Critical Illness Cover: A critical illness payout helps cover living expenses when clients are too ill to work or adjust their homes for comfort. When coupled with life insurance, it offers comprehensive protection.
Income Protection: Self-employed clients should consider income protection, as it ensures a regular income during illness or injury. Having a policy in place prevents the need to dip into savings to cover expenses.
We hope this article has provided you with insights into addressing common misconceptions about insurance. Our goal is not to scare clients into buying protection policies but to initiate an open and honest discussion about life and health realities with their financial mortgage advisers. By doing so, we empower financial mortgage advisers to guide their clients in protecting what matters most – their financial future and the well-being of their loved ones.
Suppose there are financial mortgage advisers who have yet to find a suitable mortgage network or are actively seeking a fresh start. In that case, we welcome the opportunity to discuss how our community may be the right fit for them.
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