There are many things an average household can live without, but for those considering purchasing property, life insurance is certainly not one of them.
Mortgage brokers have a duty of care to ensure those getting into the property market have fully considered their financial repayment responsibilities into the future. Paying a mortgage is a huge commitment and life insurance provides the security necessary for covering the loan if the unfortunate were to happen. It stands to ensure that families and loved ones aren’t left with the burden of handling a mortgage in the event of death and provides peace of mind and protection of financial obligations. By offering borrowers an option of life insurance, they can be assured that both their mortgage and their families are financially protected.
Perhaps the greatest concern for borrowers when contemplating life insurance is premium costs. However, with so many companies offering readily available personalised life insurance policies and the ability to pay premiums through super, it can be relatively inexpensive. A good financial advisor will explore the market to offer several policy options for clients, similar to the way a broker looks for the best lending options.
An issue facing most mortgage brokers is how to find the right financial planner as a referral partner who is going to look after your clients given you can’t provide life insurance advice.
There are many options available, whether you refer clients to an external business or have an in-house planner. Ensuring you culturally fit and can work with one another is the most important ingredient. We believe it is best to speak to those mortgage brokers in the industry about how it is working for them and make a decision from there.
Brokers don’t need to know the in-outs of life insurance policies, they just need to have a basic understanding of why its required, the types of cover available and how to explain this to clients. Mortgage brokers take clients through some of the most stressful periods of their lives during approval/settlement so clients naturally trust you to have their best interests at heart. Clients will listen, and it makes a planner's job so much easier to provide and implement the advice if the initial discussions have already been had.
Offering life insurance to clients also has the added benefit of providing cross-selling opportunities for mortgage broker businesses. With competition amongst brokers and lenders ever-present and with some lenders offering a greater range of financial products, it is an effective business strategy to implement a more holistic service. The inclusion of life insurance products to brokerage businesses can promote client retention, overall customer satisfaction and the generation of further business.
David is the mortgage and wealth advisor at 1st Street Home Loans.
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