Legal &General has updated its income protection (IP) plan, introducing a number of changes and improvements to both simplify the plan and to offer wider cover for many people. The key changes are:
* All customers in occupation classes 1, 2, 3 and 4 now get an own occupation disability definition. Now only housepersons get an ADL (activities of daily living) definition, and that has been updated to be consistent with L&G’s similar specified works tasks definition used on its critical illness cover 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 get a full spinal and mental illness exclusion, or 5% on partial spinal exclusions.
Cover available is standard (which runs up to retirement age) or for a limited benefit period of up to five years (low cost option). Customers can also have a stepped benefit with, in effect, two deferred periods (which often fits better with what their employer would pay them if they are unable to work).
The plan includes a hospitalisation benefit, guaranteed insurability and a range of other benefits too.
What They Say
Senior product manager Georgina Shield said: “Our research confirms that complexity of the product can sometimes create confusion for the consumer so, therefore, advice remains a key part of the purchase process. Our hope is that these improvements and our supporting material will help advisers and consumers make informed and well researched decisions.”
What We Say
"Remember the old mnemonic WYSISYG (what you see is what you get)? You don’t hear it much today, but it might well have been in L&G’s mind as it looked to update its IP plan.
"It has not gone as far as some, but L&G now offers own occ to the four main occupation groups, with an income guarantee that avoids the previously awful situation whereby someone could pay for years for cover and then be denied benefit simply because they had not earned enough immediately before they became ill or disabled. In addition, State benefits are no longer deducted and if you have one of the major exclusions you now pay a bit less, reflecting the lower cover you get.
"It adds up to not just a more attractive package but a simpler one too and, combined with disclosing claims statistics, should help customers trust their IP insurer more too. Just as importantly, such changes put pressure on other insurers to adopt similar measures – all of which is good for advisers as well as for their clients.
"However, we do have a couple of minor gripes on the website. First, the front page for customers looking at IP shows (or did on 23 May) an out-of-date figure for Carers Allowance (and ignores a number of other State benefits they are more likely to qualify for). Second, it says there are over 11 million people with disabilities in the UK. Although that is strictly correct (actually, it applies to Great Britain, but now we’re just being pedantic!), more than half of those are not of working age - the group this plan is aimed at. Such over-egging of statistics is not necessary or desirable. That said, both can easily be changed and we hope will be by the time you check online…
"Overall though, WYSIWYG is not a bad driver of change and we applaud the changes."