Legal & General Income Protection Benefit
L&G is a major income protection (IP) player and has now updated its IP plan, introducing a number of changes and improvements. They add up to both simplifying the plan and to offering wider cover for many people. There are four key changes are:
• All customers in occupation classes 1, 2, 3 and 4 now get an own occupation disability definition. That is, only housepersons still have an activities of daily living (ADL) definition. The ADLs themselves have also been updated and are now consistent with the specified works tasks definitions on L&G’s critical illness plans.
• An income guarantee of the lower of £1,500 and the monthly benefit applies.
• Employment related non-means tested State benefits are no longer deducted from monthly benefit payments.
• A 5% premium discount applies for customers who have a full spinal and mental illness exclusion, or 5% if they have a partial spinal exclusion.
Two types of cover are available - standard (which runs up to retirement age) or the low cost option, which offers a limited benefit period of up to five years. Customers can also have a stepped benefit. In effect that gives them two deferred periods, which often fits better with what their employer’s sick pay arrangements. Premium rates are guaranteed.
The plan also includes a hospitalisation benefit, guaranteed insurability and a range of other benefits.
Comment: IP insurers have in recent months begun to attack some of the ‘givens’ that have always applied when looking at why IP is so complex. So, it turns out that an own occupation definition can be applied to most people and that not every customer has to be financially underwritten again because they have now claimed. Those battles may have been hard fought but they are adding up to a simpler IP proposition and that is good news not just for customers, but also for their financial advisers.
L&G’s changes all make the product more appealing – offering not just wider cover for some, but greater simplicity too. It adds up to a strong set of changes.
We did have a couple of concerns on the website though (not helped by L&G getting its own website address wrong on its press release…). The front page for customers going online to look at IP shows (or did on 23 May) an out-of-date figure for Carer’s Allowance. That’s an odd benefit to highlight anyway, as someone unable to work is much more likely to look first at Employment Support Allowance (and may be entitled to other State benefits too).
Second, the website reports there are over 11 million people in the UK with disabilities. That may be true (actually, to be pedantic, the figure was for Great Britain not the UK), but less than half of those are of working age. Given that IP is targeted primarily at working age people, such over-egging of statistics is misleading as well as being unnecessary. Both criticisms can easily be addressed though (and we hope have been by now) and don’t affect the quality of the plan itself.
Plus points: All customers in occupation groups 1-4 now get an own occ disability definition; The ADL definition has been updated too; £1,500 a month income guarantee avoids claims financial underwriting for many; The other changes also make the plan simpler and better.
Not so plus points: Own occ does not apply to housepersons; The income guarantee will be less than 100% for larger insured benefits; Not all exclusions will see a premium discount.
Website: http://www.legalandgeneral.com/.uk.
Rating (max 10): Innovation: 8. Overall: 8. Gold
Tags: Legal & General; IP