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The Dirty Little Secrets About Mortgage Protection Insurance

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Contributor:
Brian Dalley
Brian Dalley

Are Banking Consultants and Mobile Mortgage Managers being encouraged to sell life insurance to meet sales targets and to qualify for bonuses?

Is this really happing?  Sure if the person selling the policy is prepared to spend the time required to understand the client’s needs and has sufficient knowledge of the policy they are selling then I don’t have a problem with them doing so however, first and foremost it should be about client needs, NOT commission and or sales targets.

Having sold insurance in the early 90’s when I owned Citiwide Mortgage and Insurance Brokers I became very familiar with the industry and to this day, I remain sceptical when it comes to insurance as often it is sold on FEAR rather than necessity. That is why I feel the process should be less confrontational such as online applications whereas people can simply tick boxes rather than questioned by a stranger, which could leave the applicant feeling vulnerable?

Ask yourself these questions, three or so years ago when the risk was greater than it is now, why wasn’t mortgage protection given much thought, yet today it ranks right up there with the must haves.

Don’t get me wrong, not all people are hawking insurance for the wrong reasons and most insurance policies offer value for money. Note the word most!.  However, I have on numerous occasions and unfortunately more often than not, come across people that either are over insured, under insured, or not insured at all. It is as if they have been given a dart and been told to close their eyes and throw, treble 20 well done, sign here.

Fleeced recently was a young guy that had been paying into his insurance policy for years because that is how retirement plans were sold back then, but now as he intends to purchase an investment property he phoned is advisor to see what he should do. Simple, increase your policy he was told, feeling a little stupid for asking such a dumb question he went ahead and did just that.

Firstly, he was not being stupid asking, and one should never think that way, instead he was taken advantage of as the advice given was weighted to benefit the wrong person. He was already over insured and could in fact reduce his cover and channel the savings into reducing his debt much sooner resulting in significant savings.

As a result of the many examples I come across, far too many to list here; we are starting to partner up with insurance companies like Pinnacle Life that offer online systems so you can see for yourself without the added pressure of a salesperson what is on offer.

Sure, we get a commission from Pinnacle Life but as they are at the lower end of the commission scale, its peanuts compared to what some are paid. Soar grapes, not at all, we could choose to do what others are doing, but choose not to.

Bottom line - even if Insurance is a condition of your loan that doesn’t stop you from shopping around for the best deal. The leader cannot condition a loan that requires insurance to be taken out with them but can condition it be assigned to them. I am not anti insurance in fact I recommend it is reviewed annually I am simply encouraging people to read the fine print and question the salespersons motives.

Brian Dalley is a leading Property Consultant | former NZMBA Mortgage Broker, and Real Estate Agent. You can read more of his views and opinions on his website www.propertyprofit.co.nz.

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