Why you should never forget protection when arranging your High Value Mortgage

Have you taken the time to make sure you’ve protected your high-value mortgage? If not, you’re not alone. New research has found that there is a ‘large disparity’ between the number of mortgages arranged by advisers and the number of protection contracts written to accompany them.

A leading industry expert has warned that ‘advisers who recommend mortgages must pay more attention to arranging protection when arranging your high-value mortgage with the figures showing applications for protection products – life, critical illness and income protection cover – fell by 9 percent in the last year.

Keep reading to find out more about this research and why you should pay attention to your protection needs.

Protection applications have fallen by 9 percent in the last year

New research from Legal & General Network has found that there is a ‘large disparity’ between the number of mortgages being arranged by brokers and the number of protection contracts.

Duncan Crocker, the managing director of the network said: “Every time a mortgage is advised on the adviser has a moral duty to explore his client’s protection needs as well. Sadly statistics suggest this isn’t happening as often as it should.

“Mortgage sales are rising and protection sales have fallen this year. In the first half of 2013 mortgage applications have grown by 11 percent. However, protection applications have not followed suit and have shrunk by 9 percent year on year.”

The expert said that the industry performs a ‘vital social purpose’ and that providers and advisers should ‘feel bad about leaving a client after a mortgage interview if protection needs have not at least been discussed’.

The Legal and General research, printed in FT Advisor, found that:

• In 2012 there were 294,116 mortgage applications and 412,993 protection applications
• In 2013 there were 326,630 mortgage applications and 378,532 protection applications

Mortgage applications grew by 11 percent in 2013 and protection applications shrunk by 9 percent.

Islay Robinson, CEO of London mortgage broker and high net worth mortgage specialist Enness Private Clients said: “In my experience, many brokers are too focused on securing the mortgage business and fail to deal with a client’s protection needs.

“There is certainly some truth to the claim that the protection industry is called a ‘vital social purpose’. Ensuring that a client and their family are adequately catered for in the event of death, critical illness or a long-term illness should be something that is always considered, especially if a client is taking out a large mortgage.

“Many clients haven’t given much consideration to what would happen in the event of a serious illness or the death of the main breadwinner. And, even if they have, their circumstances may have changed since they arranged cover which makes their current arrangements inadequate or inappropriate.

“While some brokers find it hard to tackle these difficult subjects with clients it is vital that they explore these issues and arrange the necessary protection where it is needed,” he added.