L&G revamps term assurance product
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Legal & General is introducing a range of different interest rates on which its Mortgage Decreasing Term Assurance is based.
MDTA is designed to cover a mortgage debt and the sum assured decreases over the term of the policy as the capital on the mortgage is repaid.
Advisers can now choose from four interest rates on which the cover is based, to give clients more flexibility in terms of budget and appetite for risk.
Up until now L&G based its pricing on one interest rate.
The system works on the basis that when advisers generate a quote they can input their desired interest rate into the portal or L&G’s OLP Connect system.
L&G will automatically match it to the equivalent or next highest of the four interest rates available.
A lower interest rate will offer lower premiums but a higher interest rate will offer more cover.
The four interest rates are subject to change for new business in the future and will be altered according to economic conditions and the interest rate environment.
Bonnie Burns, protection product technical director at L&G, says: “Some clients want cheap monthly premiums and will be happy not to hedge against possible high interest rates in the future.
“Other clients, particularly those for business protection, may want to choose a higher interest on which their cover is based and will be happy to pay more for that added peace of mind.
“This is evidence of our ongoing ambition and intent in the IFA market.”
Readers' comments (2)
Anonymous | 16 Nov 2009 11:01 pm
I'm sorry I have always and still do feverntly disagree with this element of MDTA. Client expect 2 things (a) for an adviser to do our job and provide a product that is fit for purpose and (2)for that product to do it's job.
To rely on an advisers ability to judge the mortgage market over a 25 - 30 year period and guage an interest rate to ensure the protection remains sufficient is only superceeded in it's stupidity by then getting the client to understand, know and agree to the same.
Mortgage protection should ensure that based on the benefits selected the mortgage is paid off, or repayments are covered if the insured event occurs and should be competatively priced accordingly.
Of course "clients want cheaper premiums" but they want the job done more, and getting them to see this is the advisers job; try explaining to a grieving widow that sorry mrs you called it wrong a few years ago and now we wont payout enough to pay the mortgage off, so you have that to worry about on top of just losing your husband!
Haven't providers learned yet that cheap, cheapening gimmicks will only come back to haunt us.
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Anonymous | 17 Nov 2009 1:19 pm
We all know that the current Interest Rates will be going up, why sell a product that will create misunderstanding and at the end of the day IFA will bear the brunt of mis-selling!!!
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