As mortgage and protection experts, at Mortgage Advice Bureau, we have a process that we recommend our advisers follow to help them talk about protection with customers.
In short, at the beginning of a mortgage appointment with a customer – whether that’s telephone or face-to-face – the conversation starts with: “Hi, I’m a specialist in mortgages and can help you find the most suitable product for your needs and I also specialise in helping you keep up the repayments on the mortgage once we’ve arranged that for you. To start with, we look at your mortgage requirements and later we will look at ensuring you can keep up the repayments – is that ok?”
It’s simple but we find this the most effective way to put protection on the agenda early on – without mentioning protection directly. As we know many customers don’t even understand what we mean when we say “protection”! It’s extremely rare that a customer asks us to arrange their mortgage and all protection needs to cover the mortgage. However, it is also rare (if we ask the customer the above question) that they say they aren’t interested in keeping up the repayments on their mortgage.
By gaining their agreement at outset, there are two distinct parts to the mortgage process which means the agenda is set and customers tend not to change their mind later.
The different types of protection
Not only does the word protection confuse customers so do many of the product names – IP, CI, FIB all lead to confusion, so if you’re now wondering exactly how we then approach the subject of protection and associated products – here’s a brief summary:
When the mortgage is being applied for, point out to the customer the statement on their documentation that says “your home may be repossessed if you don’t keep up your repayments”.
This is the stepping stone from the mortgage to the protection conversation.
- Ask the customer what could stop them keeping up their repayments.
- Document their answers. This now gives you a list in the customer’s own words of what could stop them paying their mortgage. Many of the things they tell you are the very things we can help them with such as being off work sick, seriously ill, accidents or death.
The next step is to talk about these areas, what the consequences would be and how long could they keep paying their mortgage for should any of those things happen. Clearly understanding any existing provisions to help in these areas is extremely important.
All of this conversation can be done we no reference to actual products – remember the product name is not important, it is what the product does to support the customer that is important.
All our products do one most important thing – they pay cash to the customer when they need it most.
Focus on that and the benefits rather than talking about a product called “income protection” etc. This will help customers prioritise the gaps they will see for themselves.
How much does protection cost?
The final piece of the puzzle is to establish how much the customer is willing to spend per month to cover the gaps that most will have when it comes to keeping up the repayments on their mortgage.
As advisers, we normally say about 10-15% of the mortgage payment. However, it is worth converting this into actual monetary amounts. So, for example – your mortgage is £900 a month and we find that the usual amount required to fill the gaps costs about 10-15% of that – so in your case £90 - £120 p/month. Where would you fit between those amounts?
With an agreed budget you are now able to go away and create a protection portfolio and come back with solutions for the customer that work. This is the next phase of the protection journey which I won’t go into detail right now…
If a customer is stuck when it comes to protection, you can always provide them with pieces of information such as this article explaining the different types of protection.
Or you can speak to your usual Royal London contact who will be more than happy to help support you with the protection conversation.