As the cost of living continues to climb, leading UK protection and health insurer The Exeter is urging advisers to start discussing income protection with their clients as a priority.
The latest LMS Monthly Remortgage Snapshot reported that 46% of borrowers remortgaging were taking on larger loans, increasing their mortgage repayments by an average of £224 a month.1
Many of these clients will take out mortgage protection insurance, but The Exeter is urging advisers to consider the broader benefits of income protection as a more comprehensive safety net if illness or injury prevents a client from working. Compared to mortgage protection, which pays a lump sum to cover the outstanding mortgage debt should the homeowner die, income protection provides a regular monthly benefit that can be used for mortgage repayments, household bills and discretionary spending.
According to a recent report by Yorkshire Building Society, nearly one in four UK savers have already dipped into their savings to cover monthly living costs.2 With The Exeter’s 2021 claims data showing that the average claim duration was 101 weeks, savings alone are simply not enough to cover outgoings if someone cannot work.3
The average age of a UK first-time buyer is 32,4 according to Halifax, while the average age of an income protection claimant at The Exeter in 2021 was 37.3 This means that the point where an average first-time buyer remortgages from a five-year fixed rate product is also the age they are likely to find themselves unable to work, struggling not only with mortgage repayments but wider bills and a rising cost of living too.
At present, 75% of the mortgage market is on fixed rate mortgages, amounting to 6.75m borrowers5. As mortgage terms end and borrowers try to lock into a new rate for a high-inflation and higher interest environment, advisers must ensure they are not only discussing the benefits of mortgage protection with clients but income protection too.
Jamie Page, Head of Strategic Partnerships at The Exeter, comments:
“As people currently remortgaging are often taking on higher costs to free up equity, it’s important that advisers discuss wider protection options with their clients. Mortgage protection has value, but its coverage can only stretch so far. Amidst the rising cost of living, clients need a comprehensive safety net should they lose their most important asset - their income.
“Our figures show that the average claim duration for a full term income protection policy – 101 weeks – means clients can expect a prolonged period where their income could be impacted due to illness or injury. During this time making up a shortfall in income can be challenging and well beyond the scope of many people’s savings. Advisers must therefore discuss the expanded benefits of income protection to help maintain their clients’ financial security”.
ENDS
Notes to Editors
- LMS Remortgage Snapshot, March 2022
- Yorkshire Building Society, Inflation Nation Report, May 2022
- The Exeter Income Protection Claims report 2021
- Halifax First Time Buyer Review, 2021
- The Guardian, ‘What the Bank of England’s base rate rise means – in numbers’, 05/05/22
PR Contact
Tom Stewart-Walvin
T: +44 (0)7855 689 302
About The Exeter
The Exeter is a leading protection and healthcare insurer who have been supporting UK families in the event of ill health or injury since 1888.
Formerly known as the Exeter Friendly Society and Pioneer Friendly Society, The Exeter is a mutual friendly society. This means it is owned by members and run for their benefit, rather than shareholders.
The Exeter is a trading name of Exeter Friendly Society Limited, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Register number 205309) and is incorporated under the Friendly Societies Act 1992 Register No. 91F with its registered office at Lakeside House, Emperor Way, Exeter, England EX1 3FD.
310522/2456