Protect your income despite the credit crunch

Iain Mallon, director of protection marketing at AXA explains how mortgage packagers and brokers can protect their income.

Things look pretty bleak in the mortgage market as the credit crunch continues.

Mortgage approvals were down 15% in March, according to the British Bankers’ Association.

Mortgage advisers need to look at smart ways to keep earning money until the market picks up.

One of the most straightforward ways of doing this is to sell relevant protection cover alongside mortgages that are still being written. This could be life, critical illness or income protection cover, or a combination of all three.

It just needs the adviser to talk to them about what’s available and find out what suits them and their budget. Advisers could expect up to 60 to 70% of mortgage applicants to need protection.

Part of this sales skill is ‘painting pictures.’ No one wants to imagine dying, but taking a moment to think about what would happen to their partner or children if the worst should happen can be the trigger to take out the protection they need. Who would pay the mortgage? Who would deal with the bills? Would they have to sell the house?

Add the commission from protection sales to the commission from mortgage sales and advisers could stay in business despite the market slowdown.

Luckily protection applications nowadays can be far simpler than they once were. Mortgage advisers don’t need to spend ages filling in long application forms.

Instead they can just fill in a short application with the customer’s contact details, and the insurer will then get in touch with the customer directly and take all the relevant medical and lifestyle details over the phone in a tele-underwriting interview. The customer can often get an instant decision on their application there and then.

This frees up the mortgage adviser to spend time bringing in new business, and means no embarrassment from having to ask customers the details of their private lives.
The customer benefits too, often finding it easier to talk about sensitive personal details to an anonymous expert on the phone than face-to-face with their adviser.

The way the tele-underwriting system works also gets cases on risk quicker. Unlike a standard application, the tele-underwriting system can automatically bring up even more questions to get all the information needed.

This means customers are less likely to need GP reports or medicals, so around three quarters can go on risk in five days or less.
This translates into commission being paid to the adviser quicker. The extra questions also mean less non-disclosure of evidence that could lead to a claim being declined in the future, meaning customers can have peace of mind and confidence in what they’re buying.

In these days of Treating Customers Fairly, advising customers how to protect their investment in their new house is vital.

Selling more protection cover won’t solve the problems of the credit crunch, but it could help mortgage advisers survive the downturn.