This week’s Personal Column – 24 June 2016

By 24th Jun 2016 Apr 26th, 2017 Communications, Personal Column

Welcome to this week’s Personal Column…

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Finance News

Half of those with a UK mortgage left financially exposed

According to a worrying new report from Scottish Widows, half of the UK’s mortgage holders have no life cover in place. This equates to 8.2 million people who have left themselves and their families financially exposed should the worst happen.

The research also found that only 20% have a critical illness policy, leaving many more millions at risk of financial hardship or losing their home if they were to become seriously ill.

33% admit that if they or their partner were unable to work for six months or longer due to ill health or personal injury, they’d be unable to live on a single income. And 43% of those who couldn’t cope with a single wage, say they would resort to dipping into their savings in order to survive.

Yet 43% say their savings would last for no more than a couple of months and 15% don’t even know how much they have.

Just under a quarter (23%) could only afford to pay household bills for a maximum of three months if they or their partner were unable to work, and 23% could make a maximum of just three monthly mortgage payments. Another 15% admit they’re not actually sure how long they’d be able to cope with their mortgage payments.Finance News

Welfare reforms make the case for financial protection all the more pressing. A quarter (25%) of mortgage holders who say they’d be unable to live on a single income, if their partner were unable to work, also admit that they’d rely on state benefits to ensure they could manage financially.

But changes to support for mortgage interest, which is the only safety net in place for many families if they were unable to pay their mortgage, mean that people now have to wait 39 weeks before receiving this benefit instead of the previous 13, which could be too late for many, if they’ve no other protection in place.

Johnny Timpson, protection specialist at Scottish Widows, says: “None of us want to think about the worst, but our findings show that there are an alarming number of mortgage holders who are putting themselves at significant risk by failing to arrange cover for the unexpected.

Many people believe that they’ll be able to rely on the state if the unforeseen happens, but recent cuts to welfare benefits are exacerbating their vulnerability.”

Chris Gowland, mortgage director at Halifax, said: “Taking out a mortgage is the biggest financial commitment many of us will ever make, so it’s concerning to see that only half of the UK’s mortgage holders have taken out life assurance, and even fewer have critical illness cover.

Having a financial plan in place will help protect your home in this type of eventuality, and give greater peace of mind when it comes to what may be your greatest financial investment.”

Source: Financial Reporter (published 20 June)

Half of those with a UK mortgage left financially exposed: bit.ly/2406Client-article1

 

Mortgage News

Kensington launches new large loans range

Kensington Mortgages has announced that it’s launched a new range of higher value mortgages for borrowers with complex incomes and higher service expectations.

Backed by a dedicated team of underwriters, the new products will bring Kensington’s individual, case-by-case approach to borrowers who are applying for loans above £500,000.

The new range offers loans up to £2 million, including a maximum limit of £1 million for first time buyers. Premier customers will also benefit from lower rates than Kensington’s core range. Loans will be available up to a maximum 75% LTV, with rates of 3.44% for a two year fixed and 3.74% for a three year fixed mortgage.

All decisions are made by an underwriter rather than a credit score and every application will receive a call from a named underwriter to discuss the client’s individual circumstances.
Underwriters will consider 100% variable incomes as standard, and will assess self-employed borrowers based on the latest years’ figures.

As part of the Kensington approach, applicants can cite a range of income sources, such as company profits for sole directors. Borrowers will also photo-1415226581130-91cb7f52f071have the opportunity to choose an interest only repayment option, should there be a plausible strategy in place to repay the outstanding loan.

Steve Griffiths, Head of Sales and Distribution, Kensington Mortgages said: “As house prices continue to increase, more and more people are looking to take out larger mortgages, particularly when it comes to securing homes in some of the most in demand areas across the UK. However, large loans are rarely straightforward and it often takes the involvement of an individual underwriter when it comes to assessing the complex incomes that are often associated with these types of mortgages.

It’s always traditionally been harder for the self-employed or contract workers to obtain mortgages with lenders airing on the side of caution when it comes to complex incomes. We believe that anyone who can afford a mortgage should have the opportunity to do so, and should not be penalised for their chosen career.

Lenders need to be more understanding and open to taking on clients with difficult situations. It’s for this reason that we’ve launched this mortgage range, bringing Kensington’s 20 years of understanding real life lending to customers looking to secure larger loans”.

Source: Kensington (email campaign received 17 June), and Financial Reporter (published 20 June)

Reduced Buy-to-Let rates from the Coventry

Cov for intermediaries Land Logo 2 colThe Coventry for intermediaries has reduced their rates on selected five year fixed and flexx for term products across their buy-to-let range at 75% LTV.

Available from Tuesday 14 June, the products offer a variety of competitive rates. All products are booking fee-free.

For full details of their range, simply visit coventryforintermediaries.co.uk

Source: The Coventry (email received 15 June)

Buy-to-Let product news – TBMC

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TBMC has recently launched a new buy-to-let discount mortgage with Hanley Economic Building Society.

The initial rate is 2.89% and there is no completion fee to pay.

This product is available for a limited time only, so please contact TBMC as soon as possible if you’d like to secure this rate.

Find out more here.

Source: TBMC (email communication received 14 June)

 

General Insurance News

A new process for specifying an item of personal possessions

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Paymentshield are introducing a new process for specifying an item of personal possessions or contents.

They no longer require an exact detailed description of the item, they’d only need the following:

  • For jewellery they need to know the gender, precious metal and stone, for example ‘ladies platinum and diamond ring’.
  • For other items, Paymentshield would need the item type and brand, for example ‘Nikon D3 DSLR camera’.

Paymentshield will still have to make sure that the value of the item is accurate as possible, in the event of a claim.

Insurers will always request proof of purchase and a photo of the item, regardless of what the description says on the policy document.

Source: Paymentshield (email communication received 17 June)

 

Protection News

Organ transplants have advance

Aig logo
In the era of fast advancing medicine, it’s important that comprehensive critical illness cover keeps up with developments in organ transplantations.

That is why AIG’s critical illness with term assurance, pays a claim if a policyholder is diagnosed with a medical condition needing a major organ transplant. It can come from either a human, animal or the insertion of an artificial device, or is added to an official UK transplant waiting list.

Click here to read more.

Source: AIG (email received 09 June)

New occupation class tool

royal london logo

Royal London have introduced a new tool that lets you carry out a quick pre-sale check on your client’s occupation to find out the potential underwriting outcomes for each of their cover types.

The tool creates transparency with their underwriting approach toward different occupations. It also highlights any new areas of cover that weren’t covered before.

With income protection for example, Royal London have targeted cover where it matters and widened the coverage of those in the types of occupations who often look for income protection.

Take a look at their tool.

Source: Royal London (email communication received 20 June)

Income Protection plan now available from Legal & General

Legal & General (L&G) have introduced a new two year, low cost income protection benefit plan.

Their new two year payment term is designed to meet the growth in the low cost market.

For individuals looking to protect their income until their selected retirement age, L&G’s standard product will cover individual’s long term. For those customers wanting to protect their income for a shorter period, L&G’s new two year low cost option is now available should they become ill or incapacitated and suffer a loss of income.

L&G have also improved the replacement ratio for both the standard and low cost versions of the product, which is used to calculate the maximum benefit based on annual earning.

New limits will be set at 60% of the first £60,000 of gross annual income, and 50% of income in excess of that figure.

This is designed to provide customers with a monthly benefit that equates to a greater percentage of their salary than previously permitted.

Source: Legal & General (email communication received 13 June)

 

Wealth News

Savers ignoring FCA risk warnings on pension freedoms

Pension savers are showing total disregard for the FCA’s risk warnings that were brought in to protect retirees from the most damaging choices at retirement.

New figures produced by Citizens Advice show just 1.6% of people who received the warnings – which are delivered by providers – changed their mind as a result.

The survey of 500 over-55s who accessed their defined contribution pots, reveals the so-called ‘second line of defence’, brought in just a month before the reforms went live, isn’t working.

Retirement Advantage pensions technical director Andrew Tully says: “It looks like people have decided what they want before they even get the guidance. Once people have made up their minds, it’s really difficult to change them, and any intervention at that point is probably too late.”

In contrast, 20% of consumers changed their plans after an initial conversation with a provider, the research also shows.Wealth News

Citizens Advice suggests the regulator are considering changing the rules so consumers are given warnings earlier in the process.

Citizens Advice chief executive Gillian Guy says: “Risk warnings are the last line of defence in protecting consumers from making poor choices about their pension, so it’s concerning they’re having a very limited impact on people’s decision making.

“The FCA was right to introduce risk warnings, and it’s good to see they plan to deliver these earlier to consumers wanting to access the secondary annuity market.  To help consumers choose the best option for them, risk warnings should come earlier in the process across all pension options and be tailored to a person’s circumstances.”

Just Retirement group communications director Stephen Lowe says: “Risk warnings are part of a package of consumer protection measures and should not be looked at it in isolation.

He adds: “People have saved for what may be as long as 40 years, and there’s a chance their savings may need to support them for a further 40 years, so taking 40 minutes or 4 hours to work through the options and ensure they’re equipped to make an informed decision does not feel disproportionate.”

Source: Money Marketing (published 17 June)

Savers ignoring FCA risk warnings on pension freedoms: bit.ly/2406Client-article2

Events

Protection and Mortgage Sales Workshops – What did you think?

Thanks to all who were able to join us for one of our Protection and Mortgage Sales Workshops.

So that we can provide our members with an even better experience at future events, we’d like to hear what you thought of this new workshop. Your feedback will help us shape our future events.

Please click here to tell us what you thought.

 

North West Regional Meeting

Our next regional meeting will take place at Cottons Hotel & Spa, Knutsford on Thursday 10 November.
The North West Regional Meeting is packed with hints, tips and support in continuing to drive good customer outcomes.

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Preview

Here’s a preview of what the events will bring:

  • Presentations by subject matter experts.
  • Buzz sessions giving insight into various hot topics.
  • An opportunity to ask questions about the latest technology advances.
  • An exclusive strategy update from a member of the executive team.
  • Networking opportunities with the board and other key Personal Touch staff, as well as other successful advisers.

Book your place

Registration is still open for you to book your place.

 

And finally…

UK government borrowing fell slightly in May

Government borrowing fell slightly in May compared with the same month a year ago, according to official figures, but it was still higher than expected.

The Office for National Statistics (ONS) said borrowing, excluding support for state-owned banks, was £9.7 billion in May, down £0.4 billion from the same month last year.

It was the lowest May total since 2007, but economists had forecast £9.5 billion.

The ONS revised down its estimate of the amount borrowed in the 2015-16 financial year to £74.9 billion. But for the financial year so far – covering April and May – borrowing has reached £17.9 billion, £0.2 billion higher than the same period a year ago.

Receipts from income, corporation and VAT taxes in May were all higher than a year earlier, but the government’s total current expenditure also rose.

The ONS said that total public sector net debt – excluding banks – by the end of May stood at £1.606 trillion, the equivalent of 83.7% of gross domestic product.

The ONS says annual borrowing has been falling in general since the peak reached in the 2009-10 financial year.

The Office for Budget Responsibility, which produces economic forecasts for the government, has estimated that the public sector will borrow £55.5 billion during the financial year to March 2017; a reduction of about £20 billion for the previous financial year.

Chancellor George Osborne has pledged to fix the public finances, and in March insisted that the UK was still on track to return a budget surplus by 2020.

But both the Treasury and Bank of England have said the economy has been hit due to uncertainty of the EU referendum.

Capital Economics economist Scott Bowman said that the chancellor still “had a long way to go” to meet his projections.

“Admittedly, we’d take the figures for the first few months of the fiscal year with a pinch of salt as they’re often revised in time, due to being largely based on forecast data.

“And if the UK votes to remain in the EU, then GDP growth should rebound in the second half of this year, paving the way for a more rapid improvement in the public finances,” he added.

And finally

Source: BBC News (published 21 June)

UK government borrowing falls slightly in May: bit.ly/2406Client-article3