My Opinion: Fulfil your duty of care

The mortgage conversation is the best opportunity to highlight to clients the financial risks of a critical illness or death


“I am convinced, for sacrifices so small, families and estates can be protected against catastrophes that would otherwise smash them up forever.” These words, uttered by Sir Winston Churchill, neatly sum up the reason for the protection industry’s existence.

When it comes to talking about protection with your clients, there is no better occasion than when they are securing a mortgage. After all, it should be second nature when taking out such a large loan to think about how that money would be repaid if one were to become unable to work.

That said, the UK currently faces a £3tn protection gap. A staggering 59 per cent of mortgages are unprotected and the average Briton has just £1,205 in savings.

Seize the moment

Securing a mortgage is an exciting life event but the application process can be a marathon. The last thing we want to think about is ill fortune, so the need for protection is often pushed to the back of people’s mind.

Some advisers find life insurance a hard sell but the mortgage conversation is the best opportunity to highlight the financial risks of a critical illness or death. And these can be huge.

Nearly 11 million families are at threat of seeing their income drop by a third if they suffer a critical event, while 40 per cent of working families would see their income fall by more than half. What would a critical event mean for a client’s ability to keep up with mortgage repayments, and what subsequent impact could it have on their family?

Key to this is clearing up any misconceptions your clients may have about the value of life insurance. We all have a tendency to assume ‘It won’t happen to me’ and to believe we can rely on the state for support.

Research we conducted found households tended to overestimate how long their savings could last if they became unable to work. While, on average, they expected them to last 77 days, the research indicated they would actually last less than one month.

In order to make the UK’s protection gap more relevant to more people, we need to make it personal to them. Asking the right questions and using the right tools gets the client to experience the reality of their own situation. Indeed, effective questioning should not be underestimated. It is a skill that makes the difference between someone who sells life assurance and someone who gets their clients to buy it. Combine this with research data and you can further enhance the need.

I believe we have a duty of care to all clients to at least highlight the risks and the solutions we can offer them.

Enduring truth

I started this article with a quote from Churchill. He went on to conclude: “It is a duty therefore to arrest the ghastly waste, not merely of human happiness but of national health and strength, which follows when, through the death of the breadwinner, the frail boat in which the family are embarked founders and the women and children and the estates are left to struggle in the dark waters of a friendless world.”

We can make those waters brighter, the struggle less great and the world that little bit friendlier if we take the time to ensure our mortgage clients are properly protected.

Richard Kateley is head of intermediary development at Legal & General