The Association of Mortgage Intermediaries (AMI) has warned clients may cancel their protection insurance direct debits as a result of financial difficulty during the coronavirus crisis.
In collaboration with the Protection Distributors Group (PDG) and Income Protection Taskforce (IPT), the trade association has released a guide on how advisers can offer support and guidance to their clients to ensure that cover is maintained.
It suggests clients should be reminded of the features and benefits of their policy, as well as looking at options to keep some level of cover in place.
It also tells advisers to warn clients that the cost of future cover could rise and levels of cover could decrease if there are any differences in underwriting.
The AMI’s guide also suggests advisers should point to alternatives to cancellation if clients can no longer afford cover, such as removing policy features or asking if the insurer can temporarily waive premiums.
Paul Yates, product strategy director at iPipeline, said: "More than ever before, advisers have been asking for support in this area and as an industry, we need to provide advice to our customers, especially those facing financial pressures.
"Advisers have been asking for help and support in this area and the guide provides a very pragmatic vehicle to inform and provide options to clients looking at cancelling policies and we will point advisers to this resource."
Alan Knowles, managing director of Cura and chair of the PDG, said he hoped clients would not jump to cancelling their policies as had happened in the past.
He said: "The PDG created this guide with AMI and the IPTF, to help advisers who may be facing an increase in client cancellations or missed premiums.
"Protection isn't every adviser's main focus and we wanted to share our experience of what can help to retain customers some cover, especially when they might need it most.
"Hopefully we will not see the spike of cancellations that came with the credit crunch of 2008, but by being prepared we hope that advisers can help customers keep these valuable policies."
Robert Sinclair, chief executive of AMI, added: "Before Covid-19 hit, income protection policies sales were increasing and the ‘Access to Insurance’ sign posting agreement made positive strides to help clients with disabilities and medical conditions find suitable cover.
"It is important that this momentum is not lost, as protection needs continue to exist. The value that intermediaries add is crucial to ensuring clients realise the far-reaching effects that cancelling cover could have on their lives."
Roy McLoughlin, associate director at Cavendish Ware, said: “There is an element of deja vu regarding the attitude to protection policies in 07/08.
"Whilst the circumstances are different the feeling of insecurity is not. What worked well previously was to take the bull by the proverbial horns and engage with clients.
"The danger is if the powerful messages that protection gives have been forgotten then that might be the first direct debit to be cancelled.
"Re- enforcement and clear reminders of the benefits are crucial and the adviser needs to be on the front step.
"What did happen was the reduction in some cover but this is more preferable to cancellation. Also in times such as these people will inevitably look to their own mortality so discussions around revising cover are doubly important.”
chloe.cheung@ft.com
