The protection budget - better protection conversations

Vincent O'Connor 11 February 2019

Part five of our 'Five top tips for better protection conversations' series - agreeing the protection budget.

woman with hair standing on end I’ve already talked about a typical mortgage client in terms of their enthusiasm level when you first meet them. If they’re a first time buyer or moving house, enthusiasm will be sky high because they know that the prize at the end of this journey is a home - somewhere to bring up their children and live their lives.

But at the same time, they rarely would have thought about something terrible happening such as a premature death, cancer or some other serious illness. So the enthusiasm level towards buying insurance will be low.

That’s the balancing act mortgage and protection advisers have to deal with and it’s not easy. The objective is to secure the most appropriate mortgage to buy the home, but also to make sure your clients can keep it should the worst happen.

We know this is a real problem because we see claims statistics every year. That’s why providing mortgage advice and protection advice makes sense and goes hand in hand.

Tie the budgets together

During the mortgage process, ask your client for a budget range. A total amount for how much they can afford. Ask them what their ideal budget would be. Then ask them what their maximum total budget would be.

Here, you can use an assumptive style question.

“So, your ideal budget would be X, but what would be the maximum amount you would be happy to spend?”

The assumption is that there would be a ceiling to how much money they would be prepared to spend and could afford. Within this range, you can then get to work on sourcing the most suitable mortgage product, but also build in some mortgage protection solutions because those are easy to identify and relate directly to the amount of the mortgage. And you can build this package all within the budget the client told you they would be happy with and can afford.

The difficulty sometimes for mortgage and protection advisers is that what you want to try and avoid is another payment shock in a few weeks’ time, which will come when you start talking about the cost of protection on top of the mortgage.

So it makes a lot of sense to tie the two budgets together and work towards providing a package of recommendations, which get them the house but allow them to keep it should the worst happen.

About the author

Vincent has worked in Financial Services since 1994 and has experience across a range of different perspectives. He has started out at a life company and then ran his own Mortgage and Protection brokerage. Most recently he worked for a large network where he set up their ‘Protection Academy’ for adviser learning, development and skills training, but is now back at a life company (Royal London); again with a specialist focus on protection. Vincent is involved in developing adviser facing content, presenting, writing articles and commenting for the press. Vincent is passionate about the need for protection, but also about the importance of proper financial advice. Vincent enjoys his holidays, good food and quality time. He also enjoys art and crafts in his spare time!