Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

Advisers urged to make income protection a priority

Monthly Remortgage



The latest LMS Monthly Remortgage Snapshot reported that 46% of borrowers remortgaging were taking on larger loans, increasing their mortgage repayments by an average of $274.53 a month

The Exeter is urging advisers to start discussing income protection with their clients as a priority.

The latest LMS Monthly Remortgage Snapshot reported that 46% of borrowers remortgaging were taking on larger loans, increasing their mortgage repayments by an average of £224 ($274.53) a month.

Many of these clients will take out mortgage protection insurance, but the Exeter is urging advisers to consider the broader benefits of income protection as a more comprehensive safety net if illness or injury prevents a client from working.

Compared to mortgage protection, which pays a lump sum to cover the outstanding mortgage debt should the homeowner die, income protection provides a regular monthly benefit that can be used for mortgage repayments, household bills and discretionary spending.

According to a recent report by Yorkshire Building Society, nearly one in four UK savers have already dipped into their savings to cover monthly living costs.

With the Exeter’s 2021 claims data showing that the average claim duration was 101 weeks, the protection and health insurer  says savings alone are simply not enough to cover outgoings if someone cannot work.

The average age of a UK first-time buyer is 32, according to Halifax, while the average age of an income protection claimant at the Exeter in 2021 was 37.3. This means that the point where an average first-time buyer remortgages from a five-year fixed rate product is also the age they are likely to find themselves unable to work, struggling not only with mortgage repayments but wider bills and a rising cost of living too, the provider says.

At present, 75% of the mortgage market is on fixed rate mortgages, amounting to 6.75m borrowers. As mortgage terms end and borrowers try to lock into a new rate for a high-inflation and higher interest environment, advisers must ensure they are not only discussing the benefits of mortgage protection with clients but income protection too, the Exeter says.

Jamie Page, head of strategic partnerships at the Exeter, said: As people currently remortgaging are often taking on higher costs to free up equity, it’s important that advisers discuss wider protection options with their clients. Mortgage protection has value, but its coverage can only stretch so far. Amidst the rising cost of living, clients need a comprehensive safety net should they lose their most important asset – their income.

Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.



getting money wise

Welcome! Get your FREE access to EVERYTHING we publish…

Our goal is to show anyone how to make investing profitable. You’ll get our FREE weekly newsletter with latest news and information on investment topics along with special offers. Please take time to read our privacy policy . The information you provide us will be processed in accordance with this.