MDTA is designed to cover a mortgage debt and the sum assured decreases over the term of the policy, roughly in line with the mortgage as the capital is repaid. Previously, Legal & General based its pricing on one interest rate, but now there will be four to allow advisers more flexibility according to their clients' requirements, budget and appetite for risk.
When an adviser generates a quote for their client they can input their desired interest rate into the portal or Legal & General's own OLP Connect system. Legal & General will automatically match it to the equivalent or next highest of the four interest rates available. A lower interest rate will offer lower premiums but a higher interest rate will offer more cover.
Bonnie Burns, Legal & General's protection product technical director said: "We're offering a far greater degree of flexibility than was previously available to balance affordability with risk. Some clients want cheap monthly premiums and will be happy not to hedge against possible high interest rates in the future. Other clients, particularly those for business protection, may want to choose a higher interest on which their cover is based and will be happy to pay more for that added peace of mind. This is evidence of our ongoing ambition and intent in the IFA market."
The four interest rates that Legal & General offers for MDTA can change in the future for new business and will be altered according to economic conditions and the interest rate environment.
