Mortgage obsessions hindering your protection pipeline?

Paula Pearson, Strategic Account Manager at Aviva, shares her thoughts on how an obsession with mortgage customers is hindering the protection pipeline
 

In 2022-23, there were around 874,000 recent first-time buyers in England, around eighty thousand fewer compared to 2020-21 .  The private rented sector makes up 4.6 million (about 19% of households) .  The lower rate of first-time buyers means more people are renting for longer. The private rental market represents a great opportunity for advisers to talk about protection. With the purchase of a first home not as much of a life trigger as it previously was, advisers are facing the challenge of creating new opportunities.  Is the obsession with mortgages as the only route for protection conversations on its way out? 

Future pipeline of customers

30% of private renters had dependent children in 2022-23.[3] This means that just under a third of renters have someone relying on them for a stable lifestyle. Children are a known life trigger for people seeking protection advice and rental market customers are no different, needing guidance to the options available.

Aviva's research into Gen Z, those born between 1997 and 2012 (ages 12 to 27 in 2024), shows that currently, 49% of Gen Z are renting, 24% are homeowners and 19% are living rent free. Whilst 75% of Gen Z are not currently homeowners, they are optimistic about home ownership. When asked, "when do you expect to buy a house?" 55% of Gen Z non-homeowners said in their 20s or 30s, with a further 25% wanting to buy but are not sure when. Only 19% were unsure if they ever will buy a home.

With the next generation of homeowners staying longer in rented homes, research found renters have a particular fear of the future.[4] This presents an opportunity to champion products which provide flexible security. The younger that income protection is taken out the easier it is to obtain cover, as an industry it vital we explore new ways of reaching out to new customers.

So how can advisers reach out to renters?

One suggestion is to team up with your local lettings agent and work together to support their customers by introducing tenant protection into their business. From young singles, to couples, to families and older singles the protection gap exists. Having a protection conversation as part of securing a rental property can help support financial resilience. A face-to-face meeting with potential renters before they agree to lease a property is recommended but if this isn’t possible, work with your local letting agents to instead email prospective rental customers.

Another suggestion is for financial advisers to speak to their current customers who are landlords about referring their tenants for advice about protection. Policies such as income protection are linked to earnings so can provide tenants a safety net in case of illness or injury. It’s not just mortgage clients who need this cover, renters do too.

For Gen-Z specifically, family are the essential trusted resource for guidance, and, when prompted, financial-led resources are the second go to for advice[5] . Make the most of this opportunity and speak with your existing customers who have Gen-Z children about how you can support them and their children in access to protection advice.

For support helping renters get the protection they need visit our tenant protection hub.

References

[1-3] English Housing Survey 2022 to 2023: headline report - GOV.UK (www.gov.uk). Contains public sector information licensed under the Open Government Licence v3.0

[4&5] Gen Z_Insight. The research was conducted by Brand Potential on behalf on Aviva between 01.10.2023-31.01.2024. 16 Qual Interviews: Pre Interview, a mock experience with proposition including Advised/Non-Advised with IFAs, and Direct channels & post interview. A 20 minute online survey for N=1200 consumers, with a focus on aged 24-27, plus consumers aged 18-23 and 28-40 for context. All respondents including those screened out; age weighted to national proportions

.