Insurance products agents should recommend to clients

by Neil Sharma21 Jun 2019

Merely becoming a homeowner isn’t enough to ensure one remains in their home. Tragedies, like death or debilitating illness, often occur in the blink of an eye and can lead to foreclosure.

“People think their home is their largest asset, but their ability to earn an income is actually their largest asset, so it’s critical that people think responsibly about protecting that asset,” said Kyra Wong, Manulife’s district VP.

Canadians, added Wong, have a propensity to buy insurance in backwards order.

“The way most people buy insurance is they’ll first get life insurance, then critical illness insurance, and then disability insurance,” she said, “but, statistically, they’ll most likely get disabled, then have a critical illness, and then die. So most Canadians buy insurance in reverse order of how they’ll statistically need it.”

According to Manulife statistics, one in three Canadians will be disabled for 90 days or more before turning 65; one in two Canadians will develop cancer in their lifetime; 10 months is the average length of time disabled claimants are off work; 57% of homeowners identified a medical debt or other medical cause as the reason for their foreclosure; and 75% of Canadian households would have difficulty with everyday living expenses, like their mortgage, if their primary wage earner passed away.

“Most lenders are reasonable about the client making up those payments over a period of time,” said Wong. “They still have to make up the payments, but lenders often try to work with clients to facilitate payments and having disability insurance is one of the most important products for clients to have because it’s the most likely thing to happen to them, unfortunately.”

Credit protection insurance (CPI) is another product that could help homeowners remain in their homes. Deren Hasip, co-founder of Mortgage Scout, says in most cases it takes two incomes to purchase a home, and if one of the income-earners is felled by illness or worse, CPI is a difference maker.

“If you’re borrowing to purchase and you don’t have the means to buy this thing outright, if something happens and your financial circumstances change for the worse, having credit protection insurance makes all the difference in the world,” he said.

Young, single, high-earning homebuyers may not need life insurance, but that doesn’t mean other products shouldn’t be recommended, added Hasip.

“With younger customers who don’t have any dependents, we steer them towards living benefits like disability insurance or critical illness insurance, and some of our lender and insurance partners offer these insurance policies.”

 

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