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Given house prices have fallen again for the fifth consecutive month (down 0.6 per cent in March 2008) it has become a reality.

In addition to the slowdown on approved mortgages, the current economic environment has also resulted in some of the best discount and fixed rate mortgage deals being scrapped.

When people come to renew their mortgage deals in the rest of this year, most will see their monthly repayments increase substantially.

As a result, you may find yourself feeling the pinch with a correlating drop in income from mortgage sales.

But you will also have more time than you did last year to concentrate on other forms of revenue. And there is a wealth of opportunity to discuss protection with your clients.

Thinking back to last year – how many mortgages did you sell? How many mortgage protection products did you sell? There is likely to be a significant difference between the two.

But why? Given all the information that is gathered in the mortgage fact find can be used in the mortgage protection application it should be straightforward to complete the protection business alongside the mortgage.

If your client has just signed up to a sizeable mortgage they should be keen to protect their home in the event of death, critical illness or accident. Given the current economic climate is somewhat uncertain, clients are likely to be more aware of the need for protecting their home and family.

If you would rather follow up with the client and take a two appointment approach with your clients this works equally well. The mortgage fact find and completion can be one visit and the second the mortgage protection application.

Either way, there should be an opportunity to tie in mortgage protection and generate more income for your business. It is a win win for both you and your clients. Your client will benefit from the security of knowing there is enough to cover their mortgage should anything untoward happen and you are providing a more holistic service and building a stronger relationship with your client.

Life cover is a good start, however such a policy will not pay out if you become unable to work because of ill health.

When it comes to renewing your clients' mortgage it may be worth while discussing the benefits of critical illness or even income protection. If they have a family to support you may want to discuss family income benefit.

Most providers offer combination policies or a menu approach to personal protection, allowing you to tailor products to your client's needs.

Examples

For as little as £10 a month, a 30-year-old non-smoking man can buy around £150,000 of level term assurance over a 25-year term(1). On a decreasing term basis, this falls to just less than £8 a month for the same amount of cover.

So the value for money and the benefit to the customer is obvious. And you will receive around £150 commission for the decreasing term benefit.

If you typically complete 10 mortgages a month, you could be looking at a yearly pre-tax income boost of around £18,000. So, your clients get better advice and better protection and as a consequence, you substantially increase your own income.

For less than £25 a month a 30-year-old, non-smoking male could purchase a critical illness policy that would pay out £100,000 on diagnosis of a critical illness(2). This is arguably a small price to pay for the reassurance that they will be able to meet the ongoing mortgage repayments if they were not in receipt of an alternative income because of absence from work due to ill health.

Dispelling some of the myths around protection with your clients can also help the sale. Many clients believe they cannot afford protection with all their other everyday living costs.

This is surprising as many are willing to insure their mobile phones, electrical goods, holidays and pets – all of which are a tiny fraction of the cost of their home, probably their biggest asset.

There are other perceived barriers to sales of protection too. Lengthy application forms and onerous underwriting procedures are all common explanations given for not purchasing protection. But in reality, most applications can be submitted electronically and providers are moving towards simplified underwriting, especially for life cover.

With other support services, including underwriting helplines and high limits before medical evidence is required, these barriers can easily be overcome.

Being aware of these developments and opportunities you, and your clients, can quickly realise the true value of protection alongside the mortgage.

With mortgages arguably being the most relevant driver for clients to consider some form of protection, you are in one of the most enviable positions to secure this extra revenue.

If you embrace the potential the protection market offers, for just a little extra work you will certainly be providing a better service to your customers and, as a consequence, adding value to your business.

You can find more details about mortgage protection at www.aegonse.co.uk/mortgageprotection

Rod McKie is head of marketing for individual protection for Aegon Scottish Equitable

Footnotes

1 Aegon Scottish Equitable, 11 March 2008. Based on 155 per cent Lautro, plus a 10 per cent enhancement for submitting business online.

2 Aegon Scottish Equitable, 10 January 2008.

This communication is for professional financial advisers only. It is not for private customers and should not be given to, or relied on by, them.

Scottish Equitable plc, Registered Office: Edinburgh Park, Edinburgh EH12 9SE. Registered in Scotland (No. 144517). Authorised and regulated by the Financial Services Authority. Member of the AEGON Group. www.aegonse.co.uk.