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Clients&#39 unemployment &#39can lead to clawback&#39

IFAs who do not recommend unemployment cover risk losing significant amounts of commission to clawback, according to specialist insurer Goodfellows.

The firm interviewed 1,000 of its mortgage payment protection claimants who have been unemployed for longer than four months.

It found that 63 per cent of respondents have been forced to cancel or suspend contributions to their pensions and other financial services products due to financial hardship. This has led to commission being clawed back by product providers.

Unemployment income protection can cover up to 75 per cent of gross earnings for clients unemployed for a per-iod exceeding 30 days.

The insurer is recommending that all IFAs consider providing their clients with this type of protection to cover the costs of their pension payments and other financial products such as endowment policies.

Independent insurance specialist Berkeley Alexander managing partner Ted York says: “For some businesses, there could be as much as a 10 per cent lapse rate on products due to clients being made unemployed.”

Goodfellows managing director Simon Burgess says: “In addition to protecting against clawback, unemployment income protection can provide IFAs with a highly relevant discussion topic for clients and provides a useful springboard for the sale of other more lucrative products.”

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