Starting afresh, making it relevant and keeping it simple (income protection, but not as you know it)


Justin Harper, Proposition & Marketing Director

As an industry we’re adept at enhancing our core products and adding multiple features and nuances. But there are times when the right thing to do is to stop, step outside the box, start from first principles and place the needs of a specific target market front and centre of product design.

Working lives and ways of working are changing

Nearly 1 in 4 of the working population can be classed as non-traditional or gig-workers (LV= Opinium Survey, June 2020). Your clients are increasingly self-employed, holding multiple jobs and working flexibly… and all with fluctuating earnings.

For mortgage advisers, this can present challenges (but let’s face it, there’s a real appetite to rise to it to help clients buy their new home). When it comes to ensuring clients can keep the roof over their head in the event of a life shock, though, the likes of traditional income protection can be considered too hard, too expensive and, frankly, may not always quite fit.

For many, the regular mortgage (or rent) payment - keeping the roof over their heads and keys to their home - is their biggest outgoing. On average, people spend 18% of their income on mortgage payments and a whopping 37% if they’re renting (English Housing Survey, 2019-2020).

Yet, the classic risk warning ‘your home is at risk if you fail to keep up payments’ is a reality and a worry for some - particularly the more financially vulnerable non-traditional workers. Indeed, over a quarter of homeowners have missed a mortgage payment due to illness or injury (Financial Reporter, 2021), and 76% of employees and 57% of non-traditional workers have said they would last 6 months or less if they were unable to work (LV= Opinium Survey, June 2020).

While traditional income protection works most of the time, it can prove awkward for non-traditional workers who don’t have a regular income, or find it difficult to prove hours worked. This can present challenges, not only at application, but also when your solution needs to deliver when it really counts – in the moment of truth, at claim.

Over the last year, we’ve spent time to understand the barriers advisers face when selling traditional income protection. We identified a gap to deliver a simple-to-explain solution, offering no-nonsense certainty, with a clear focus on helping under-served consumers who are more prone to income shocks.

A fresh new perspective and new ‘IP’ option

Mortgage and Rent Cover is our outgoings-based solution. It protects your client’s monthly mortgage or rent payment, if they’re unable to work due to illness of injury and helps advisers protect more clients who wouldn’t always be suitable for traditional income protection. Its ideal for those with irregular earnings who may struggle to prove earnings or hours worked. And with house prices in the UK increasing by 10.2% in the last year (ONS, UK house price index 2021), it’s also a great starter option for people who are just starting out and getting on, or trying to get on, the property ladder.

LV= Mortgage and Rent Cover adopts an innovative approach, focusing on the importance of protecting people’s ability to keep up their mortgage or rental payments and tackles the challenges we see with traditional IP for underserved and overlooked audiences. So, what makes it different?

1. No financial underwriting is required

 For clients with variable earnings or hours worked, the minimum working hours’ requirement of most income protection policies could be problematic. With Mortgage and Rent cover no proof of income or hours worked is needed at application. Advisers simply need to validate the amount of cover based on satisfactory evidence of the mortgage or rental payments at application (such as mortgage offer or rental agreement).

2. Certainty at point of claim

 Our Mortgage and Rent Guarantee means we’ll pay the full chosen amount of cover, from a minimum of £100 to a maximum amount of £2,000, throughout the claim when your client is unable to work due to illness or injury.

3. Affordable cover with valuable benefits

Mortgage and Rent Cover is an affordable option, and still also includes valuable everyday benefits that provide meaningful and tangible support throughout the life of the policy. Through LV= Doctor Services and our Member Care Line we can provide quick, convenient access to a range of everyday emotional and practical support services – such as 24/7 GP access and expert physio and mental health support.

Helping you with more relevant and memorable protection conversations

There’s an ideal and relevant opportunity to make a proactive protection connection with clients at the point when they’re taking on long term financial commitments, such as a mortgage… which is likely to be the biggest debt commitment of their lives. However, recent research from AMI revealed an alarmingly stark difference between advisers and their clients - 97% of advisers said they’d talked about protection with their clients. Yet, a mere 36% of clients recalled this taking place (AMI ‘A New Protection Challenge’, Nov 2020).

There definitely needs to be one, but what makes a protection conversation memorable? We can help. Because Mortgage and Rent Cover is based on your client’s main outgoing, it can be easily weaved into your mortgage conversation. Even the name helps - it does what it says on the tin. It’s simple, affordable and provides certainty, making it more relatable for your clients and easier to explain, understand and put into place.

So… if you’re not always confident talking about (income) protection or struggle to find the right solution for your clients – there’s a new option available. To find out more, speak to your LV= Account Manager or view our dedicated page on Mortgage and Rent Cover.