Aviva has told the government to make discussing protection a compulsory part of the mortgage sale process in new research published today (27 May).
Mortgage advisers should be required to discuss protection needs when carrying out a mortgage sale, according to Aviva, as part of a duty of care to new homeowners who are taking on a significant financial burden.
Only four out of 10 families have life insurance in place, the insurer warns in a new report which outlines a series of measures it claims need to be made law by the government to make sure the nation is fully protected against unexpected financial shocks.
While efforts to improve the protection market by publishing transparent claims data and making the claims process quicker and simpler are gradually helping to build consumer confidence, Aviva argues opportunities to remind people of their need for protection are still being missed.
First-time parents should be given information about protection when they have a child, according to Aviva, as only one in five families review their need for life insurance, income protection or critical illness cover when a new baby is born.
Aviva also argued there should be an official process to provide parents with information about financial protection at this crucial trigger point in their lives.
Protection should also be a required discussion point when a couple determines the details of their divorce or separation settlement, according to Aviva.
The insurer stated only one in four of the families who receive support for their children from a former partner know for definite that this partner has protection in place, therefore safeguarding the payments they receive.
Aviva argued that couples who divorce or separate should be required to discuss protection issues as part of any financial settlement.
Income protection should also be offered through a workplace scheme, Aviva’s report argued, pointing to the crucial role employers have played in helping millions of consumers to save for the future through pension auto-enrolment.
Aviva, hot on the heels of Canada Life which argued for auto-enrolment for protection, stated there is now an opportunity to encourage employers to offer other financial products, such as income protection.
Louise Colley, protection director for Aviva, said: “Protection is the bedrock of financial planning and gives families the confidence that they can build their futures without fear of the unknown.
“We believe every family deserves to understand the financial risks they face and the importance of protection. By working together, the government and the industry can make sure that families have the stability they need.”
