Legal & General Income Protection Benefit
Legal & General (L&G) has introduced three important updates to its existing IP plan:
A new two year benefit period plan is now available. This option allows customers to choose a more affordable IP option and replaces the previous five year benefit term option. Multiple claims are possible, and each one is limited to two years’ payout.
The maximum insurable benefit has been raised to 60% of the first £60,000 of gross annual income. In addition, 50% of income in excess of that can be insured too.
A Price Beater service has been introduced across L&G’s income protection and other protection products range. Terms and conditions apply to this option and it only applies if the insured benefit is between £2,000 and £16,667 (or £8,333 if cover is indexed) a month. Price Beater means simply means L&G will beat the standard premium offered by a competitor on a like-for-like product.
L&G also has an income guarantee and, if the customer’s income falls, the policy will pay out the lower of £1,500 a month or the insured benefit if lower.
A Guaranteed Insurability Option (GIO) allows cover to be increased in certain circumstances without further underwriting. Other benefits in the plan include waiver of premium, hospitalisation benefit, housepersons cover, continuous cover, proportionate benefit, linked claims and life cover.
L&G applies an own occupation definition applies to all customers except housepersons. Full and partial premium discounts are included for some mental health and spine exclusions. Premiums are guaranteed throughout the policy term.
The plan is available from age 17 (in some situations) up to age 60 at outset and the policy end date can be from age 50 to 69. Deferred periods can be 4, 13, 26 or 52 weeks and benefits may be indexed to the RPI. The maximum benefit is £200K pa.
Comment: Price Beater could be a game changer in that it means that in some situations L&G can’t be beaten on price. Moreover, smaller insurers may find it hard to compete – especially as advisers are well placed to see if anyone can offer a lower premium whereas, left to their own devices, supermarkets have proved that many consumers just don’t bother to check or to claim back money.
The increase in maximum benefit will be useful for those to whom it applies but the decision to replace the old five year benefit term option with a two year one and not to simply offer both is the sort of decision many insurers would not make. But, L&G tends to often have simpler propositions and sees that as a strength, rather than trying to be all things to all people.
Plus points: Price Beater follows the supermarket model and means that in some situations L&G cannot be beaten on price; New two year benefit option replaces old five year option; New higher maximum benefit.
Not so plus points: Price Beater comes with conditions; Five year benefit term no longer available; Overall, relatively minor changes.
Website: www.legalandgeneral.com.
Rating (max 10): Innovation: 9. Overall: 8.5. Gold