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Brokers must help clients take cover

We have been fortunate to have seen a number of years with low unemployment and economic stability, but the recent base rate increases have caused concern that clients could be left un- protected in the event of sickness, accident or unemployment.

The recent concern expressed by the Financial Services Authority focussed mainly on banks and mutuals. This puts even more onus on brokers to ensure they provide a full advice service and don’t simply pass clients on lenders to advise them.

As house prices rise and with them the cost of mortgages, the easy thing to do is put off buying insurance to cover accident, sickness or unemployment.

The facts are that approximately 500 people in the UK become unemployed every day. The government estimates that 70% of mortgage borrowers will not qualify for income support due to savings or a working partner. A third of people aged between 25 and 34 have experienced unemployment for a period of more than a month. And every adult in Britain is five times more likely to suffer serious disability than die before the age of 60.

Since October 1995, new mortgage borrowers receive no state help for the first nine months of unemployment or disability. The qualifications for benefits have also become stricter.

So why haven’t brokers sold mortgage payment protection insurance? There has been poor press, a lack of comparison tools, concern over the compliance procedures involved, the ability to go for soft options and refer to lenders, lack of flexibility by policy providers and the fear of having to know numerous policy criteria.

But MPPI cover allows a person the confidence to commit to paying back a loan. First-time buyers often have the excuse of being single for not buying life protection but that doesn’t wash with MPPI. MPPI is essential to keep clients out of debt and arrears. Policies are now being tailor-made and competition is leading to better pricing as well as choice.

Many advisers are concerned about compliance when using multiple providers. But what if a comparative quotation engine provided quotes based on clients’ needs in seconds, had a panel of 11 providers, gave you compliant data to put on file and did all of this online, based on the best cost to the client and with no single premium option? Enter ASU-box.


The Mortgage Mole

Digging the dirt in the mortgage world …

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Infographic — health cash plans 2014

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