Sales of protection insurance products reached record levels in the first quarter of 2016.
Equifax, the business data organisation, has reported that protection insurance sales for the first quarter of 2016 were £118.4 million. This is a £7.2 million or 6.5 per cent rise compared to the first quarter of 2015.
The largest increase in sales is for critical illness cover which provides a lump sum if a serious illness is diagnosed. This is useful for keeping up mortgage payments if a person is unable to work due to long term illness. Sales of critical illness insurance increased by 14.8 per cent.
An alternative for covering mortgage payments is mortgage protection insurance, but sales have declined by 6.8 % in the last few months. This is due to the slowdown in mortgage applications as house sales have decreased due to rising house prices.
House prices in London are strong and should continue to rise which is why the London property market attracts global investment.
According to Paul Smith of estate agents Haart, property prices may have hit a ceiling and house sales could soon pick up. He summarised the situation by saying:
“While there is a certain level of uncertainty in the property market which will further reduce demand in the short run, in the longer term, this will simply be a slight blip in an otherwise powerful property market.”
If this forecast is correct, then a rise in mortgage protection insurance will follow increases in house sales.