He noted that protection conversations are often too brief, with advisers sometimes asking only whether a client wants life cover, critical illness cover or income protection without exploring the client’s full circumstances, including dependants, income, employment position, existing cover, savings, sick pay arrangements, debts and wider financial responsibilities.
The FCA’s Pure Protection Market Study interim report has identified a significant protection gap among UK homeowners, with a 2024 survey cited in the report showing more than 40% of mortgage holders lack life insurance. Separate research by LifeSearch and the HomeOwners Alliance found that over a third of mortgage holders had no life, critical illness or income protection cover, even as Vitality polling found that 56% of homeowners would not be able to keep up with mortgage payments for longer than six months if their income stopped.
McMath said Consumer Duty has brought greater scrutiny to this issue, as firms are required to consider foreseeable harm when recommending a large mortgage commitment. He said clients are entitled to make their own decisions on cover, but should do so with a clear understanding of the risks and options available.
“The key is not to frighten clients or pressure them,” McMath said. “The key is to help them understand the reality of the commitment they are entering into and what options exist to protect themselves and their families.”
McMath pointed to differences between client circumstances, such as first-time buyers focused on deposits and monthly payments, home movers stretching affordability, self-employed clients with limited sick pay, and families with young children, as reasons why protection conversations need to be personal and relevant.
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