‘Til death us do part – considering policy types

March 21, 2015 by Brendan O'Neill

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When training to work in the mortgage field, there is a vast wealth of knowledge for you to learn, take on board and implement into your customer interviews. There is the range of mortgage products available, along with the affordability, and other terms and conditions to be adhered to in order to remain compliant.

The affordability is a key part of the interview, as you will be assessing your customers’ personal situation and their ability to repay the debt they are looking to take on when buying their dream home. As part of the interview process, one of the things that you will cover is mortgage related insurances. It is important that your customers can comfortably afford to maintain their repayments, and these insurances are designed to cover the mortgage payments in the event of accident, sickness, unemployment and ultimately death.

There are separate policies for separate events, and your job will be to recommend those most appropriate and affordable to your customer. Think about what they need to protect, what’s important to them, and their budget before making your recommendations.

The main policy types are:

Life Insurance

In simple terms, life insurance is a policy that pays out should the policyholder die. It’s generally available as either term assurance, which runs for a set period of time (such as the length of the mortgage) and so only pays out if policy holder dies during this time, or a whole of life policy that runs indefinitely, and will simply pay out upon death, whenever that may be.

Mortgage Payment Protection

This runs alongside the mortgage, and maintains the payments in the event of accident sickness and unemployment for either a 12 or 24-month period. Policyholder chooses how much they would need each month to cover their mortgage, and sometimes bills too, and the premium is based on that.

Critical Illness Cover

This type of policy pays out a cash lump sum in the event that the policyholder is diagnosed with a serious illness. This can vary between policies and a list will be made available at the time of application, but include some forms of cancer, stroke and loss of limbs. Customers should be made aware that critical illness policies do not provide a monthly payment.

As a mortgage adviser, you will need to have a good understanding and knowledge of the above products in order to best advise your customers on how they can protect themselves.