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The difficult market conditions experienced in the last few months have put a squeeze on the volume of business coming to mortgage advisers. Protection products can offer advisers a potentially lucrative chance to acquire an additional income stream and make up for the loss of mortgage business.

Statistics from the Association of British Insurers show the number of protection products sold grew in 2007, with £332m worth of new premiums sold in the final quarter of 2007 compared with £326m in new premiums sold during the same period in 2006.

So has the slowdown in the housing market meant advisers are having a tougher time meeting protection sales targets or has protection become a lifeline for advisers tackling the tougher mortgage market?

Research carried out by ABI showed nearly a quarter of consumers had no idea how they would cope if they lost their regular income. Yet 25 per cent of people will be jobless at some point during their working life.

With difficult market conditions both pushing the price of lending upwards and lenders to tighten the criteria on mortgages, having a safety net for repayments in the event of unemployment or illness has never been so important.

Keith Richards, group distribution and development director for IFA network Tenet Group, said the steadily decreasing numbers of consumers seeking mortgages in the last six months meant advisers had to become more focused and proactive when it came to looking at their client's protection needs.

Mr Richards said: "With the current liquidity issues and shortage of products available to the intermediary sector, many advisers have realised protection products can offer a very effective income stream to compensate for the lost income from lower mortgage productivity."

He said Tenet's protection specialist arm Premier was one example of how protection advisers looked set to benefit from the current market conditions. Premier has seen significant increases in its business volumes compared with the same period in 2007, particularly across life, critical illness and income protection.

Gerry O'Brien, managing director of Chippenham-based mortgage network Home of Choice, said about one-third of mortgages were currently arranged with a protection policy.

He said there was a large protection gap in the market that advisers had the potential to take advantage of. Home of Choice had been selling about half of its mortgage sales with protection but that was at about double the market average, Mr O'Brien said.

He said: "We are going to see an increase in penetration of mortgage life cases and this will in turn create a higher mortgage to life protection ratio. We are already seeing more sales than there would have been at the same time last year."

Joe Wiggins, PR manager for protection and housing for Legal & General, said in the current mortgage market, protection could give advisers something to smile about.

He said: "It offers opportunities, allows access to the valuable corporate market and creates plenty of cross selling prospects."

Dale Tranter, research manager for Sesame, said it was vital intermediaries saw the downturn in the mortgage market as presenting them with an opportunity to increase the amount of protection they were selling to customers.

He said there was no doubt many mortgage advisers had seen their incomes decline since the credit crunch hit.

Mr Tranter said: "Taking out a mortgage obviously represents a great opportunity to sell protection contracts because the client now has additional liabilities that needs protecting and sales boomed on the back of the mortgage market in the first half of this decade.

"However, the two are not 100 per cent correlated and protection sales were down last year even before the credit crunch took hold."

Last month the British Bankers' Association released statistics showing mortgage approvals were at their lowest level for more than six years in March.

According to the BBA, the number of borrowers approved for a mortgage to buy a property sat at 46 per cent less in March 2008 than in March 2007.

This was hot on the heels of of the Bank of England's research that found mortgage lending had slid to a six-month low.

Mr Tranter said: "Mortgage advisers in particular are obviously going to see their income hit by a downturn in completions, which appears to be running at about 20 per cent less year on year at present."

He said arranging protection policies where the adviser may had previously not considered insurance for mortgage clients was one solution to help make up that income gap.

Home of Choice's Mr O'Brien said there was no doubt protection sales had remained steady in the last six months, if not increased.

This was partly due to the fact advisers had more time to focus on protection at the point of sale rather than choosing to revisit the client at a later date to discuss their protection needs.

Mr O'Brien said: "Most mortgage intermediaries now would be able to spend more time on the overall transaction of mortgage life and general business where as in the same period of time last year the demand for mortgages was so high the adviser had less time to spend with the client.

"This should in general mean an increased opportunity for them to identify more of the client's needs and address the client's needs at the one time.

"I would suggest focusing on protection sales is a way advisers can increase their income levels. Providing this advice and using the market conditions now should help them operate in a more disciplined way in order to produce more protection sales."

Mr O'Brien said during the boom of mortgage sales in the last few years, a mortgage adviser would tend to focus on placing their customer with a lender and working through to completion.

While selling protection was generally on an adviser's mind, he said it was not a priority sale and it could often be left until a later date to discuss.

Sesame's Mr Tranter said advisers could also look to cross-sell more than one contract, such as mortgage decreasing term insurance and include either critical illness protection or income protection in the sale as well.

Mr Tranter said: "Most house buying clients are far more likely to be unable to work for a significant period, or get a critical illness, than they are to die within the period of the mortgage so it makes sense to cover these areas of protection when you are approaching a client."

Legal & General's Mr Wiggins said advisers should not be satisfied with selling one-time individual policies but should look to branch out into other potential income sources, such as family protection and business protection.

He said: "While the house purchase market does look to be slowing, there will still be people who need to move for work or family reasons. There will also be people coming to the end of mortgage deals who need to remortgage, so there will be opportunities for advisers to review clients' protection needs.

"The economic environment is tough at the moment. Easy mortgage-related sales are going to be hard to come by but advisers need to look at further opportunities in terms of family protection and business protection."

Writing more family protection business is all about being able to sell the concept, Mr Wiggins said.

He said: "Paying off a mortgage is all well and good but a family still needs to pay the bills. Common objections might be that cover is too expensive but this is not necessarily the case.

"Advisers need to point out the state will not always provide everything you need to maintain a lifestyle and even those families with savings would soon find themselves struggling without a monthly income."

Mr Wiggins said business protection was an area that was waiting to be taken advantage of by mortgage intermediaries, particularly as the cases often involved high sums that needed to be assured.

Business protection could provide intermediaries with good levels of commission, Mr Wiggins said. He said many advisers would find they already had potential business protection customers on their books that they have arranged a mortgage for. Alternatively, he said they could proactively produce leads by local networking links with the local Chamber of Commerce or solicitors.

Mr Wiggins said: "Business protection is an area waiting to be taken advantage of. The cases are often high sums assured and advisers can therefore earn good commission.

"A good plan is to work closely with providers who can offer support in terms of dealing with technical queries. This could be on trusts and tax, for example.

"With clear guidance from the provider's help desk, advisers can increase their knowledge and start to gain a foothold in this sector. An expert provider will ensure the underwriting process is as smooth and efficient as possible, including arranging any medicals in a convenient and timely manner for the client."

Sesame's Mr Tranter said another way advisers could maximise their protection sales potential was to revisit mortgage clients that either did not take contracts out at the time their mortgage completed or may have slipped through the net.

However, he said this had a potential to backfire as with rising costs not only occurring for mortgage holders but also in general household bills and expenses customers may be less likely to accept another monthly expense than they would have this time last year.

Mr Tranter said: "Revisiting mortgage clients who did not take out protection contracts at the time may be another solution, although convincing a cynical or cash-strapped client that it has suddenly become important to protect a mortgage now when it apparently was not perhaps two years ago may be difficult in some cases.

"Obviously if affordability was the problem then and the client has more money now then that objection will fall away."

Mr Tranter said advisers could also seek opportunities through the millions of people who will be coming off fixed rate mortgages in the next few months and who, in the current climate, are likely to be in need of advice more than ever.

These clients will be likely to be willing to revisit the idea of protection, he said.

Mr Tranter said: "Getting them the best remortgage deal is a pretty good way of creating ongoing value in the relationship as well as being symptomatic of treating customers fairly."

Tenet's Mr Richards said as the industry began to focus on having embedded the FSA's treating customer fairly requirements, it was a perfect time to revisit clients and make sure they had received adequate advice on their protection provisions.

He said: "This is especially important where the client was only advised regarding their mortgage requirements. There are a significant number of protection products available that meet a wide range of needs from pure life, personal lines and specialist products."

However, not all advisers may find it easy to make the transition to selling more protection products.

Home of Choice's Mr O'Brien said more established advisers who came from a background of financial sales would find it easier to shift protection products and those that came into the sector in the last two to three years may find it more difficult.

He said: "Many mortgage advisers four or five years ago came from a background in financial sales and were able to operate in the mortgage sector and write a good level of protection sales.

"However, given the high demand for mortgages in 2005, 2006 and 2007 the new advisers who joined the industry were asked to focus very heavily on completing the mortgage transaction, which was the customer's first port of call.

"So many of the advisers who have been operating in the mortgage sector in the last few years have no experience of selling protection. Many of these may have found it more difficult to get into protection sales and so it could certainly be viewed as a lifeline for them in terms of being able to now generate that additional income."

For advisers who are looking at focusing more strongly on protection but need a helping hand, there are companies that can provide training support, both on a product technical and a skills basis.

Mr Richards said under the TCF principles it was important advisers had a solid understanding of both the features and the benefits of protection products and had the required skills to effectively position these policies with their clients.

Advisers wishing to make the most of this potentially lucrative opportunity have the opportunity to take on further training or attend workshops designed to help advisers brush up on or fill any knowledge gaps, he said.

Mr Richards said: "The workshops set out to address a number of pertinent issues, including the fact that advisers are bombarded with training on product features. What is equally as important is effective needs identification and positioning of a solution.

"The FSA take very seriously the initiative of TCF and the demonstration of ongoing client support, it is therefore even more important than ever that customers are offered relevant protection products when choosing a mortgage or making other financial commitments.

"Training can help advisers gain skills and confidence in this area, fulfilling their TCF responsibilities.

"Both inexperienced advisers who had never sold protection and experienced advisers who needed to refresh their skills have found value in the courses and proof of the pudding is that some attendees are now writing more life insurance than ever."

So with a well-recognised protection gap in the market and the number of mortgages being taken out dropping month-by-month, the proof will be in the pudding as to whether advisers are able to make the most of the opportunities available.

Whether the credit crunch will act as a catalyst to increase the take up of protection sales policies or stifle the market completely we have yet to see.

What is clear is ongoing development and training and the ability to adapt could mean the difference between sinking and swimming in challenging market conditions.