Stephanie Charman
Stephanie Charman takes a look at the upcoming changes on shared ownership, which means good news for first time buyers.
To further bolster the dreams of home ownership in the UK, the government has revealed plans to loosen the rules around shared ownership. As of April 2016, the changes will open the previously limited scheme to 175,000 more households in the UK, with a deposit as small as £1,400 enough to start owning a home.
The restrictions imposed by councils on who is eligible to apply for the shared ownership scheme will be relaxed, opening up the way for many more people. Up to now, only those in certain public sector professions, such as key workers, were able to apply for the shared ownership scheme. But after the changes, the only restriction in place will be a maximum household income of £80,000 (£90,000 in London).
All part of Mr Cameron’s promise to build a “nation of homeowners”, the relaxed shared ownership rules will mean more people will be able to part-rent, part-buy a home. Currently, the rates of home ownership have fallen steadily over more than a decade, from 71% in 2003 to only 63% in 2013-14. Some experts believe that this move may see many social landlords actively developing their tenure, based on the knowledge that demand will increase.
These changes were originally planned to be part of the Help to Buy: Shared Ownership Scheme in 2018, but in the face of increasing house prices Cameron has pushed it forward to encompass existing homes as well as those built under other governmental programmes. In an effort to create a more stable and promising environment in which developers can build, the government continues to spur demand across the housing sector in 2016.
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.
Head of Mortgages and Insurance Stephanie Charman explores the key highlights from the upcoming Stamp Duty changes from the government.
Plans to raise the Stamp Duty Land Tax (SDLT) on second homes were initially announced in 2015’s autumn statement from Chancellor George Osborne. Now the changes are approaching fast, and as of 1 April an extra 3 per cent stamp duty levy will be weighed on buy-to-let purchases and second homes (over £40,000). This could initially cause an increase in applications as people rush to complete purchases before the increase comes into effect.
Since the announcement on stamp duty in November, more details have emerged over the festive period. Although the specifics surrounding married couples, joint ownership, businesses, foreign ownership, multiple holdings and low value transactions are still being consulted over by the government, experts have already suggested that the stamp duty rules surrounding most areas affected are tighter than expected.
One of the more controversial specifics is that the additional stamp duty levy will be applied on all purchases, even those up to the value of £125,000, that fall under the criteria of a second home. This is a surprising move as even a main residential purchase on the first value band is not subject to any stamp duty land tax at all. Now as of 1 April, rates of stamp duty will be as high as 15 per cent for certain high value homes, which could indeed cause many investors to pull out of the industry altogether.
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.
Head of Mortgages and Insurance Stephanie Charman highlights the value of unpaid work and how protecting your clients could extend beyond just the breadwinner.
It is easy to assume that financial cover is only needed for those in employment, to ensure loved ones are protected if they are unable to work. But provider Legal and General have challenged that assumption and calculated the ‘value of a parent’, revealing that protection is very much needed for unpaid work parents do at home as well.
This raises the possibility to discuss protecting the non-breadwinner of the household with your clients. After all, if they were unable to do the important unpaid work they do due to long term illness or even death, the breadwinner will most likely need to take time off or pay to cover the necessary chores and look after children.
The real cost of parenting
In a 2015 report, Legal and General found that most people underestimate the value of the unpaid work that they do. When asked to calculate the overall cost of raising a child to the age of 18, parents on average estimated the cost to be £123,365, when in fact it is as much as £184,392. This breaks down to £10,244 a year, or £197 a week. Most people underestimate the sheer number of hours they spend on unpaid work such as chores and childcare.
The value of Mum and Dad
To put things into perspective, Legal and General also calculated the annual salary that the unpaid work equates to for parents in the UK. On average, a mum’s value is £29,535 a year, with the value of a dad coming to £21,601. When asked to estimate this figure, people perceived the “salary” to be £16,796 for mums and £16,120 for dads, some way shy of the actual cost.
Potential client scenarios
Has your client considered what would happen if the non-breadwinner of the household was unable to do the unpaid work? If a couple were to prioritise the breadwinner’s protection, how would they cope if either of them were unable to do the unpaid work for an extended period?
These scenarios are very much worth considering with clients when talking about protection, such as critical illness cover and life insurance. Solutions such as Legal and General’s Family and Personal Income Plan (FPIP) pays out a monthly benefit to deliver the financial support if a policyholder is unable to do any kind of work due to illness or death, whether paid or unpaid.
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.
Head of Mortgages and Insurance Stephanie Charman takes a look at how policy options such as ‘Vitality Optimiser‘ could change the way clients engage with protection in 2016 using new trends such as wearable technology. Steph also suggests how both appointed representatives and directly authorised advisers could benefit from the added-value and direct consumer interaction protection providers offer their clients.
When it comes to protection, I believe saving your client money whilst increasing the value of their policy could be the key to sales in 2016. But with obesity and other health issues on the increase, your client’s BMI or general health could affect the cost of the policy, leading to loaded premiums and possible affordability concerns.
That’s why saving clients money when buying the policy and then encouraging them to stay healthy during the term itself could also be crucial to protection sales over the next year. I think that one of the providers currently making their mark in this respect is Vitality, especially in combination with Vitality Optimiser: their flagship policy option that rewards consumers for actively engaging with their protection cover.
Staying fit and saving money
Did your clients receive any wearable technology under the tree this Christmas? If they did, they could be taking advantage of the latest benefits offered by policy options such as Vitality Optimiser. By offering rewards and even discounts to consumers if they stay fit and healthy and improve their “Vitality Status”, consumers can now actively engage with their policy, taking control of their own health-tracking using a points system. Reward can be a big incentive for clients, as they look to increase their “Vitality points” and monitor their healthy lifestyle every year.
Globally, wearable technology sales are expected to rise from 17 million in 2013 to 187 million by 2020. Sales are also on the increase in the UK, as we catch up with the engagement of the new trend in the US and China. I think it is inevitable then that more providers will embrace this consumer-focused market that helps clients directly reduce their premiums and increase their health, a win-win situation for provider, consumer and adviser alike.
Increasing client engagement can optimise sales
I understand that income protection faces possibly the strongest customer objections, despite being a vital cover for consumers. Protecting your client’s income is very real, but income protection accounts for less than 1 in 10 protection sales.
Tackling assumptions about state and employer support, as well as the surprisingly affordable cost of income protection, can often be the best start to the conversation. To help you even further, Vitality are offering an additional 5% discount on premiums on income protection policies with Vitality Optimiser, up until 29 January 2016. This means that consumers now have the potential to receive up to a 30% discount with Vitality Optimiser.
I believe that with the upfront discounts offered and the activity-tracking encouraging constant engagement with the brand, advisers will find that clients are also more likely to renew their plan, increasing your sales further.
If you want to find out more, there is a sales aid available to help you explain exactly how Optimiser works with your clients. Alternatively, call our National Protection Sales Manager Bernie Buron on 07764856553 to talk about how you can increase your sales in 2016.
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.
Head of Mortgages and Insurance Stephanie Charman investigates whether the increasing number of covered conditions has made the critical illness industry too complicated for consumers and advisers alike.
When Critical Illness (CI) cover first arrived in the UK in the 1980s, it was a concise concept that originally covered just four conditions. We have now come a long way in ensuring that as many conditions as possible are covered, which is for the most part a positive thing for consumers. But has it now had a detrimental effect on the industry, over-complicating it for consumers and advisers alike?
Does Critical Illness needs reviewing?
Despite published claim statistics and the improvements to cover, CI sales in general have remained stagnant. As a result, the protection gap in the UK has also remained unchanged. This begs the question: has the continuing addition of conditions conversely dampened the attitude towards CI?
For a number of years, providers have been engaged in competition known as “condition counting”. This has been exacerbated by the general adviser preference to go with the policy that covers the most conditions, providing a perceived “value” to the protection. But this has led to a complex and confusing market for both advisers and consumers, as they struggle to understand and absorb information regarding the most obscure conditions.
However, experts suggest that we are reaching peak saturation of condition counting, and surely all a client is looking for is surety that providers will pay out when they need it most.
Ensuring clarity for consumers and advisers
Currently the five main conditions (cancer, heart attack, stroke, MS and Children’s Critical Illness) account for 88% of all Bright Grey’s claims, which highlights the importance of these central conditions. Munich Re’s Julie Scott suggests: “One simple answer could be for insurers to consider realigning the features of the product with its actual name and focus once more on the truly critical conditions that have a fundamental impact on consumers’ lives.” This would certainly help advisers to use relevant statistics to support their client conversations, such as the recent research regarding cancer survival rates in the UK.
Since MMR the onus on the intermediary has become even heavier and providers must ensure that the brokers benefit from protection change as much as the consumer. This means ensuring advisers have the means to effectively match consumer circumstance to policy options, so that consumer outcomes are effectively and consistently met. This will in turn result in more positive protection stories with substance, instead of simply publishing statistics that are read by few outside of the industry.
Creating a brighter future for Critical Illness
Providers need to simplify and expand at the same time. This may seem contradictory, but if expanding means offering more than just financial protection, then the simplifying can happen within policies. I wrote last month about Friends Life’s Global Treatment, which is the sort of outside-the-box thinking that is becoming vital as we move into an era where advanced treatment means more people are surviving disease and illness.
Some experts believe in a more radical approach to changing CI. But as long as the condition counting ends, definitions become more concise for consumers and providers continue to vary how cover is delivered, we will hopefully witness a shift in attitudes. Advisers are financial experts, not medical, which is why there is currently some timidity to enter a CI market saturated with complicated and esoteric criteria. To help you, we have a protection helpdesk of experts ready to assist in locating those tricky cases and deal with obscure conditions.
If you are interested in becoming an appointed representative of our award-winning Mortgage Network or a member of our Mortgage Club, contact the Broker Support Team today on 0845 130 7446 opt 1.