Protection experts have warned that an increasing number of people are ignoring or even cancelling protection policies due to rising mortgage payments.
The Mortgage Co. mortgage adviser, Steven Hargreaves, said that as mortgage payments and the cost of living have increased, he has seen a growing number of clients decide to not take out any protection.
He added that customers now see protection as a “luxury”, even when they have children.
Release Freedom director, Simon Bridgland, said: “We’ve seen many people struggling with their bills over the past year or so deep dive into their outgoings and start culling what they deem to be unnecessary payments.
“Sadly, and incomprehensibly, some of those considered for the chop are life insurance and other protection policies, which are a must-have if you have bills to pay.
“Who else is going to pay the mortgage to keep a roof over your head?”
Lawson Financial director, Michelle Lawson, believes that protection “should be compulsory” when taking out a mortgage unless an individual is categorically unable to do so.
Additionally, Shaw Financial Services founder, Lewis Shaw, stated: “Insurance is often an afterthought when it should arguably be a more significant focus than even the mortgage.
“Most consumers have no idea how complex these products are, and online comparison sites are a scourge.
“Consumers often aren't aware that insurance providers know that when people jump online, they will typically be searching by price, so they strip out elements of their cover to make them competitive.”
Shaw described this as a “false economy” which can leave people “high and dry” when they need financial support the most.
However, rising mortgage costs was not the only thing experts blamed for the protection policy cancellations with Sett Mortgages mortgage broker, Elliott Benson, blaming 'Superman Syndrome'.
“People are absolutely not taking mortgage protection seriously enough,” he explained.
“Despite knowing the risks, most people have Superman Syndrome and will not entertain the idea that anything could happen to them, which, of course, it very much can.”
He added that, “for convenience's sake”, a lot of people are also drawn to auto policies on comparison sites and have no clue what they are getting.
Benson stated that they are “effectively paying for something they will never see a benefit from as opposed to speaking to an adviser and doing it properly.”
Thanks to the Newspage community for sharing their thoughts with FTAdviser.
tom.dunstan@ft.com
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