Archive: May 2016

Mortgage Intelligence adviser update: Could Flood Re help your clients?

Head of Mortgages and Insurance Stephanie Charman takes a look at the new Flood Re scheme, designed to help make flood insurance more affordable for those in high risk areas.

Although an agreement was made between the Government and the ABI in 2000 to make flood insurance widely available across the UK, it did not take into account the affordability issues that recent large scale flooding has highlighted for those in high-risk areas.

That is why the Government has launched the Flood Re scheme, created to offer affordable flood insurance to more than 350,000 high-risk homes. Partly funded by a recent increase in insurance premium tax, the scheme went live as of 4th April 2016.

Scheduled to be in place for a full 25 years, a big part of the scheme will be to help people improve their understanding of their own flood risk level and whether they can help reduce the risk by taking action themselves.

So what will Flood Re do?

The government has confirmed that the scheme’s main goals are:

  • Ensure affordable flood cover is available to households at the highest risk of flooding
  • Increase availability and choice, including insurers and products, for consumers
  • Level the playing field for new entrants and existing insurers in the UK market
  • Increase the flood preparedness of authorities, insurers and communities

After some small businesses suffered affordability issues following the latest winter floods, the government is now also looking at a similar scheme to be available for small to medium sized enterprises as well as homeowners.

This is great news for so many clients that may have struggled to get flood insurance for their home or business because of affordability.

If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.

Mortgage Intelligence Update: Do your clients need the option of Low Cost Income Protection?

National Protection Sales Manager Bernie Buron takes a quick look at how budget income protection can form an important part of the client conversation.

A lesser-known part of income protection is low cost, or budget, income protection. This option can be really useful for clients to both afford protection, and to match a policy more suited to their circumstances. Although providers vary as to their policy options, they all generally limit the payments to 24 months.

Budget income protection aims to pay out a percentage of your client’s income on a regular basis for a shorter period than regular income protection policies. Because every client would be in a different financial situation as a result of being unable to work due to illness or injury, having flexible protection options to discuss with your clients is a great idea.

Who might need Budget income protection?

Even though most clients would need to consider long term income protection first, there may be circumstances that would be more suited to budget income protection. Affordability may also be an issue, in which case some form of income protection would be better than none at all.

People on zero-hour contracts or agency workers may benefit from discussing budget income protection, as their employer most likely has no legal obligation to cover their income if they are unable to work.

Most providers will continue to provide policy cover after the initial 24 month pay-out period has ended, as long as premiums are still being paid. The policy will continue to be live, and the client can claim again further down the line after an agreed period has ended.

What budget income protection options are there?

Although the maximum pay out time is limited to 24 months across the providers, there are options your client may need to consider when choosing their budget income protection policy.

There are two main types of policy option: deferred period and stepped benefits. Deferred periods are a common way to ensure the policy does not start paying out until they really need it. Having a longer deferred period often reduces the cost of the premiums.

It is important your client brings contracts, employer details and other information to your meetings, to ensure they fully understand when and how their employer would cover their income if they are unable to work.

Stepped benefits, also known as split deferred policies, are a good option that some income protection providers offer. In this case, the policy will provide a lower income after any deferred period ends, with a larger benefit paid after a second agreed deferred period. This can work really well for those whose employer pays a fixed percentage of the client’s income (for instance 50%) for an initial period, before withdrawing income altogether.

As with all forms of income protection, there are several circumstances which are not covered in the policy which you will need to discuss with your client. These can range from redundancy and unemployment to self-inflicted injuries.

If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.