Mortgage holders are seriously under-protected according to a national poll carried out by MORI...
Mortgage holders are seriously under-protected according to a national poll carried out by MORI Financial Services. The findings suggest IFAs can target this area as a potential source of business.
The poll, carried out on behalf of lifestyle protection specialists, Scottish Provident found that more than two thirds of mortgage holders have no critical illness cover, eight out of ten have no disability cover and over three quarters have no unemployment benefit.
Interestingly, the majority of mortgage holders, 63%, did have death benefit. The popularity of death benefit is probably due to the fact that it is taken out at the point of mortgage purchase whereas other forms of protection such as critical illness and income protection can be neglected at this stage.
Ifas have the opportunity, even responsibility, to alert homeowners to possible scenarios, other than death, that can complicate their meeting mortgage repayments and help provide a more robust safety net.
Comparing the 2002 figures to the same research from 2000 shows the financial protection market among mortgage holders has remained remarkably static over the past two years. Critical illness insurance was the only area that has seen a notable increase, even then only from 26% to 30%.
Nick Kirwan, Head of Product Development and Marketing at Scottish Provident, commented: "The bad news is that there is still around 7.7 million homes without any form of financial protection against critical illness. People may find themselves without adequate protection simply because they don't understand what protection they should take out, or it could be that Britons are facing 'choice anxiety' so do nothing."
Kirwan concluded: "The research shows that most people who hold a mortgage are seriously under-protected. Britons cannot rely on the State or their employer to look after them if they fall ill. We realise that protecting your home from every eventuality can be complex which is why it's important to get sound financial advice. We are approaching house-buying season, which is exactly the right time for financial advisers to ensure that mortgage-holders have the best type of mortgage protection whether it's for a new mortgage or an existing one."
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