Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Strategy. Read the original article for full details.
Critical Illness Cover Often Linked to Mortgages, Study Finds
A recent report highlights that arranging a new mortgage is the main reason most customers take out critical illness (CI) cover. The study also found that many people believe they do not need CI cover if they do not have a mortgage.
According to the report, 56% of advisers said that arranging a new mortgage was the primary trigger for customers to take out CI cover. However, when customers were asked why they did not have a CI policy, the most common reason after cost was that they felt it was unnecessary without a mortgage.
The findings suggest that the conversation around protection policies often focuses on covering the mortgage, potentially leaving households underprepared for other financial risks. The report notes that protection should be considered for the individual and their family, not just for the mortgage debt.
For letting agents and inventory clerks, the study points out that renters could also benefit from income protection (IP) and CI policies. A lump sum payout from a CI policy could help with recovery from serious illness, cover lost income, or pay for everyday expenses and bills. Only 8% of consumers said they would use a CI payout to pay off their mortgage, while 21% would use it to cover lost income and 20% for everyday expenses.
The report also found that nearly six in ten advisers most often refer to paying off a mortgage as a key benefit of protection policies. This suggests that the mortgage remains a focal point in discussions, even though protection needs may extend beyond mortgage debt.
Source: Mortgage Strategy