Legal & General have recently advised Financial Advisers and Mortgage Brokers to go back through their old client files and highlight clients who declined Critical Illness Cover on the basis of affordability. As mortgage interest rates have reduced significantly recently, so too would monthly mortgage payments provided the clients were on a tracker or variable rate deal. In theory Legal & General should be quite right. Critical Illness cover should be more affordable now but will clients see it this way in the current climate?
This recession is not unlike the recession we had in the late eighties and early nineties. Mortgage rates then were far higher but ours now are lower than ever before. Inflation is dropping quickly. In fact most things are cheaper now than they were a year ago so will clients see this as an opportunity to take out Critical Illness Cover?
As long as consumer confidence stays low then those people who shunned Critical Illness a while ago probably won't see the sense in it now which is a shame as it's when times are hard that insurance policies prove to be most valuable.
Warren Buffet (one of the world's richest men) once said that he was fearful when others were greedy and greedy when others were fearful. In other words, he would see the current climate as a time to spend and invest. Maybe if everyone had that kind of attitude towards Critical Illness Cover (and other commitments) a recession could be potentially limited. It's spending that gets us out of recession, not saving.
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