The reasons stem back to the tightening of mortgage lending and of course the large deposit required today for a first home, often many tens of thousands of pounds. Not too long ago it was possible to buy a house with no deposit and you could get a mortgage in excess of 100% of the value! Those days are gone but for how long? With current low interest rates people who are saving up a deposit are not getting anywhere fast. The option of renting gives many young people the independence and freedom they so want, while they save for that large deposit. Inevitably it means putting off plans for their first house purchase and perhaps delaying starting families until later in life.


With more people renting, living alone and less buying homes until later in life, there may be an assumption that protection is not needed. Taking out a mortgage has traditionally been when protection would be taken out. This isn’t to say that protection isn’t needed because if these people were unable to work through accident or illness, how would they afford their rent, bills and current lifestyle?


less people getting MArried


The same could be said for those deciding to not get married but cohabit instead. The number of those tying the knot is at its lowest level since 1895 and is declining[5]


customers in these situations protect their finances.


lAter in life fAMilies A time in which protecting finances is front of mind is when people start a family. However many people are choosing to start families later in life with the average age at which women give birth to their first child having gone up from 25 years old, two decades ago to 29 today[6]


born (47%) in 2008 had mothers aged 30 or over[7]


. And nearly half of all babies . With many people not


considering protection until they start a family, this lifestyle change could mean that some people may not now think about protection until later. As a parent there is a natural reaction to want to protect your children and you spend the rest of your lives trying to do this. This is why the need for financial protection is more at the forefront at this time in their lives. However, there are many other reasons why people should have protection before children even come along. People generally wait because of financial insecurity and wanting to progress their career first. These are two areas which both need protecting. If the customer were to become ill or have an accident resulting in time off work would their income and future plans be affected?


the chAllenge So if people are starting families later,


. Once again those not


married may not immediately consider protecting their finances. Without any form of protection in place how would partners who live together survive financially, if one became ill or worse still died? The waters get muddied when it comes to the law of cohabiting couples, so it’s perhaps even more important that


1 www.guardian.co.uk/education/2010/aug/09/universities-clearing-turn-away-students 2 www.fundingeducation.co.uk/cost-of-higher-education.html


3 www.guardian.co.uk/society/2009/apr/15/twentysomethings-staying-at-home-social-trends 4 www.housing.org.uk/default.aspx?tabid=212&mid=828&ctl=Details&ArticleID=3287 5 www.statistics.gov.uk/cci/nugget.asp?id=322


6


www.telegraph.co.uk/news/worldnews/northamerica/usa/1501068/Educated-women-delay-first- child.html


7 www.mothers35plus.co.uk/intro.htm


struggling to get onto the property ladder until their 40’s, and not getting married it is likely that many people will be without protection through their twenties and early thirties. And with many starting out their working life with debts there are very obvious needs to protect their income. The longer they leave it the more expensive it could become and in some cases perhaps impossible if health problems emerge.


As lifestyles and life stages change the need to protect oneself against the financial devastation that is often the outcome following illness, disability or death remains constant.


So the challenge for advisers is to


approach customers as early on in their life as possible which will give advisers the opportunity to review their clients’ protection needs as their lifestyles change. From life’s little steps to life’s big events, protection is needed along the way.


Advisers need access to the tools to target customers early on in their lives and throughout different life stages. Many providers provide a wealth of materials, training seminars and sales ideas all on-line and advisers would benefit from investing some time logging on to see what is available. Keeping on top of these life changes can only be beneficial to the industry. Who’s to say that in another 20 years things won’t have shifted once again? n


mortgage introducer DECEMBER 2010 35


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