View more on these topics

Nest eggs cannot do the job of insurance

Dare I say it, there appears to be a note of optimism in the air around protection insurance at the moment.

Could we be on the way to making financial protection sexy? OK, that’s probably a step too far, and until this optimism translates itself into sales, and protection becomes a must-have product, I should perhaps curb some of my enthusiasm.

But there has never been a better time to promote the virtues of protection insurance to clients. The gender directive comes into force in December and with it price increases.

Of course, there will still be individuals who are reluctant to take out cover and one scenario that IFAs may be faced with is clients who prefer to self-insure.

Rather than taking out a protection product, they will put the money they would have paid in premiums into a savings pot.

But for the average person, it would take eight lifetimes to build up a lump sum of £100,000 – the amount they might receive from a life insurance payout.

People can’t hope to put that amount away in savings. How would a family cope if something untoward happened before those savings had built up into a substantial amount?

When you take into account that someone could be paying £1,000 a month in mortgage repayments for the next 25 years, adding £10 a month for life cover isn’t a lot, especially for peace of mind.

Of course, they might live until the end of those 25 years – but what happens if they don’t?

Recommended

AToM offers 1.5% proc fee

All Types of Mortgages is offering brokers a 1.5% proc fee on cases placed today through Precise Mortgages’ short-term lending range.

Data for February shows another spike in year-on-year gross lending

Gross mortgage lending in February was almost identical to the previous month but increased significantly year-on-year, according to the Council of Mortgage Lenders. Lending in February was an estimated £10.7bn, relatively unchanged on January’s £10.65bn but 14% higher than February 2011. Bob Pannell, chief economist at the CML, says that while a seasonal decline is […]

Nationwide’s Dyson to head GI as well

Martyn Dyson, head of mortgages at Nationwide, has been appointed head of general insurance at the society as part of a restructure of its mortgage division. Dyson will, however, still have responsibility for mortgage policy and regulation. Meanwhile, Tracie Pearce has taken on the role of head of group mortgages, products and pricing, and will […]