Changes and cuts to welfare benefits will provide advisers with the perfect opportunity to review client’s protection wants and needs, according to Johnny Timpson of Scottish Widows.
Speaking at yesterday’s FSE Manchester, Timpson outlined the significant cuts that will be introduced to both Support for Mortgage Interest (SMI) and Bereavement Benefit. He suggested that many clients would be unaware of the lack of State support on offer to them and their families should they be unable to work for any reason or pass away.
In terms of SMI, from April 2018, individuals will have to wait 39 weeks before receiving the benefit plus it will be crystallised as a loan rather than a straight benefit, and the State is seeking to place a charge on the property in order to guarantee it will be paid back.
Bereavement reform will also be changing, for example, at present those who are left as a widow/er with children, and dependent on age and sufficient National Insurance contributions having been paid, get a lump sum of £2,000 and £112 a week until the first child is not financially dependent. This could be up until that child goes to University.
Under the reforms, from April next year, this benefit will only be available for 12 months and will only be £100 a week. The lump sum available will be raised from £2,000 to £5,000 however.
Timpson said: “Both these changes give you every reason to review your existing bank of mortgage and protection clients because, quite simply, the State support given is going change a lot. This means reviewing existing and new client’s mortgage protection needs and reviewing their family protection needs, especially those with young children and those who are divorced, separated and cohabiting.”
Timpson urged advisers to educate their customers on these changes and use some of the free resources available, such as 7Families, which offers real-life client case studies. He said advisers should utilise social media, hold separate protection interviews, offer menu-based plans, and operate a dentist-esque reappointment system.