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The Big Story: Why brokers do sell creditor insurance: Part II

Ask brokers why they don’t sell creditor insurance. Now prepare yourself for a barrage of answers. We heard many of them in part one. Now industry players answer why brokers do sell it. On today's Big Story and Part II of our look at creditor insurance, we spoke to Kim Luxton of ING Direct, Ian Tenggardjaja of The Mortgage Centre Mortgage Professionals, Kelly Price,of Mortgage Protection Plan and Mauro Di Cosola of Dominion Lending Centres Mortgage Village. Selling creditor insurance usually centres around the idea of making sure the client is covered, while working with a third party is also something brokers should take a look at.  Brokers should also recognize the limitations of their knowledge and ensure they have a complete understanding the benefits of creditor insurance. Find out on today’s The Big Story, on MortgageBrokerNews.ca TV, your home for industry news, opinion and analysis.

Video transcript below:

John Tenpenny, Mortgage Brokers News TV
John Tenpenny:
 Hi, I’m John Tenpenny, Editor of CMP Magazine and welcome to the Big Story on Broker News TV.

Ask brokers why they don’t sell creditor insurance, then prepare yourself for a barrage of answers.  We heard some of them in Part I. Now industry players answer why brokers do sell it and it usually centres around the idea of making sure the client is covered. DLC’s Mauro Di Cosola.

Mauro Di Cosola, Broker, Dominion Lending Centre, Mortgage Village
Mauro Di Cosola:
 Yes, I recommend mortgage insurance to my clients.  Actually it’s a two pronged approach that I use.  Initially I explain the insurance that I have in front of them. I let them know that it’s underwritten by Manulife and that they have 60 days to cancel for a complete refund.  The second approach that I offer them is that I refer various financial planners to them, so that when they have time they can sit down with their financial planner for a more holistic approach to review their insurance needs.  I view it like you wouldn’t buy a brand new vehicle and drive it off the dealership lot without insurance, you shouldn’t do the same with the biggest investment of your life.

John Tenpenny:  Working with a third party is also something brokers should take a look at. Kim Luxton of ING calls it refer and insure.

Kim Luxton:  So the analogy of refer and insure is publicly a great idea whereby they can set them up on a creditor insurance first and then utilising that third party or the insurance person could then turn around and offer more of a economical insurance like a whole life or a term insurance and then cancel the creditor insurance down the road.

John Tenpenny:  Working knowledge of the product is important but equally important for brokers is recognizing the limitations of their knowledge.  The Mortgage Centre’s Ian Tenggardjaja.

Ian Tenggardjaja, Agent, The Mortgage Centre, Mortgage Professionals Inc.
Ian Tenggardjaja:
 So when it comes to a mortgage professional’s offering creditor insurance, there is three, basically three aspects they have to consider.  One it’s definitely important for a mortgage professional to have a working knowledge of the creditor insurance available from lenders because it is part of a loan disclosure process.  Two we have to recognise the limitations that we don’t have access to all the Insurance Products are available in the marketplace, which essentially limits our ability to deliver the same standard of professionalism when recommending Insurance Products to a client that we do, and that’s same standard and care when we recommend our Mortgage Solutions.

John Tenpenny:  Understanding the benefits of creditor insurance from the broker’s perspective is also an important consideration. 

Kelly Price, Creative & Marketing Director, Mortgage Protection Plan
Kelly Price:
 The three big reasons why brokers should get in the boat and always offer a mortgage protection product.  The first one is the scariest one or that is a very real possibility that they are going to find themselves in a lawsuit if they don’t.  When people find that they don’t have enough insurance and they are desperate financial straits, they come looking for somebody to blame and somebody has to be accountable and the broker does not want to be that person who is being held accountable for the fact that the clients didn’t have insurance.  

Even if they’re not sued, nobody wants to be on the phone with someone and say, “oh gee, I am really sorry to hear about your husband and ... huh your mortgage isn’t insured”.  Certainly a much better conversation to be able to tell the client, “yes you absolutely did take the insurance, here is your information and you can call in and set your claim going right now”.  And last but not the least it is probably one of the easiest revenue opportunities that I would think presents itself.  There’s lot of talk in the media about how competitive the business is, the banks are just ripping it up, this is another way to make more money from a client that’s sitting right in front of you and why not take that opportunity.