David Quick, Managing Director of CETA explains: “The vast majority of MPPI policies sold today are of the ‘one size fits all’ variety. But as we all know, clients are not all the same. Policies therefore need to be designed which are flexible enough to satisfy the different needs of borrowers.
“For example, we frequently come across Government employees who, if they are ill, receive full pay for 6 months and then half pay for the next 6 months. In these circumstances a policy paying benefit back to day one is an unnecessary expenditure. We’re working with insurers at the moment to develop a new breed of flexible MPPI products which can be tailored to meet borrowers specific needs and which therefore represent better value for money. We will be launching the first of these next generation products before Christmas.”
Last year, nearly 1 million MPPI policies were sold, compared with just over half-a-million 5 years ago. 37 per cent of all new mortgages were protected by MPPI policies last year and nearly 26% of all mortgages are now protected by an MPPI policy. In 2003, MPPI policies paid out approximately £300 million to borrowers in difficulty.
David Quick concludes: “Providing ‘best advice’ means that brokers should be taking the time to spell out to borrowers the risks which face them, based on an analysis of their individual financial circumstances. Clearly, a self-employed builder faces a completely different set of financial risks to a civil servant and the recommendations made should reflect these differences. It is not good enough to simply sell a standard MPPI product in future – brokers need to be able to demonstrate that the product they are recommending is the best fit for their client.”
