Legal and General Income Protection [REVIEW]

Who Are Legal And General?

In 1836, Sergeant John Adams and five other lawyers formed Legal & General (L&G) in a Chancery Lane coffee shop with the aim of building a better society.

As it closes in on 200 years of experience providing insurance, Legal & General has become a world leader in the protection market. It has more than 10 million customers and manages more than £1 trillion in assets.

Legal & General Income Protection Overview

The main Legal & General Income Protection plan is known simply as Income Protection Benefit.

Policy Overview

• A very comprehensive product with a high maximum monthly benefit.
• Good for providing own occupation Income Protection to individuals in low risk occupations. However, it reserves this definition for low-risk roles only. Rather than offering an inferior definition of incapacity to those in higher risk roles, such as manual jobs, L&G declines cover.
• Provides an Income Guarantee so, if your wages drop between you taking out the policy and claiming, you’re guaranteed to get the lower of your chosen benefit or £1,500.
• High maximum benefit of £240,000 per year. It’s therefore well-suited to higher earners whose income would justify this level of cover.
• Drewberry often recommends Legal & General to clients working for the NHS seeking Income Protection for doctors and surgeons, as well as to other medical professionals such as dentists, nurses and midwives. This is because Legal & General offers a stepped deferred period to match the timing of your payout with your NHS sick pay.

Documentation

What Does Legal and General’s Income Protection Cover?

Key Policy Factors

Income Guarantee

If your salary falls between you taking out your policy and needing to claim, Legal & General guarantees a monthly benefit of the lower of £1,500 per month or the original benefit that you chose.

For NHS dentists, doctors, midwives, nurses and surgeons, L&G doubles this guarantee to £3,000.

Linked Claims

If, after ending a claim and returning to work, you become incapacitated again within 12 months for the same cause, you can continue getting a monthly benefit without needing to wait out your deferred period again.

Proportionate Benefit

If you make a claim and then return to work on reduced hours / in a different role due to your illness / injury, you’ll likely be on a lower salary. If so, L&G pays out a reduced benefit in proportion to the reduction in your salary to top up your earnings.

Continuous Cover

If you become unemployed or decide to take a career break, your cover can continue. However, it will be on an activities of daily living (ADL) incapacity basis. This means that you must be unable to carry out at least three of the daily activities listed in your policy summary and the maximum monthly payment drops to £1,666.67 per month.

If you are on maternity, paternity or adoption leave and become incapacitated, Legal & General still assesses you on an own occupation definition basis.

Increasing / Indexed Cover Available

If you choose to index link your policy to protect your benefit from inflation, your benefit increases each year to match any rise in the Retail Price Index (RPI). However, your premiums will also rise by 1.5 times RPI.

Guaranteed Insurability

If you experience one of the below life changes, L&G lets you increase your benefit without offering additional medical evidence. However, you must inform them of any changes within 6 months of them occurring. Eligible changes include you:

• Increasing your mortgage
• Getting a pay rise
• Seeing an increase in rent from your landlord or as a result of moving in to a new rented property
• Purchasing a property as your main residence and taking out a mortgage (to use this option you must change your policy to L&G’s Income Protection Benefit Plan).

You can also increase your cover on the same terms at every third policy anniversary.

Legal and General Income Protection offers one of the highest maximum benefits in the market.

However, Legal & General aims this cover at those in lower-risk, office roles — workers in higher-risk jobs will therefore likely find other providers more suitable in terms of cost of premiums and coverage.

Matthew Brown
Independent Protection Expert at Drewberry

Additional Benefits

Hospitalisation Benefit

If you need to spend more than 8 nights in hospital, L&G pays 1/30th of your monthly benefit (up to a max of £150) for each night of your stay after the 8th consecutive night. It will pay this benefit for up to 13 weeks or until your deferred period ends, whichever is sooner.

Death Benefit

If you pass away during the term of your policy, Legal & General pays out an amount equal to 12 times your monthly premium to your loved ones.

Stepped Deferred Period For NHS Doctors, Dentists, Nurses, Midwives & Surgeons

Irrespective of your NHS sick pay entitlement at the time of taking out cover, L&G lets you arrange a policy with a stepped deferred period of 6 and 12 months.

Here, you choose to get a different amount of benefit at different times. For example, you could choose to get a lower benefit for your first deferred period, aligning with when your NHS sick pay falls to half. Then, after a second deferred period, when your NHS sick pay stops entirely, you start receiving your full benefit.

Nurse Support Services

Legal and General Income Protection policyholders get access to Nurse Support Services from RedArc.

It’s a telephone helpline with qualified nurses on hand to offer long-term practical advice and support if you or an immediately family member develops a physical or mental health condition, disability, trauma or bereavement.

Help is also available for those caring for a loved one. The support services include:

• Serious illness, disability and bereavement support
  Offers bereavement support, advice on treatments and coping strategies and help sourcing specialist equipment you might need to make life a little easier.
• Second medical opinion service
  If you have concerns about a diagnosis or treatment and want a second opinion, a personal nurse adviser can arrange a face-to-face appointment with a UK-based consultant.
• Mental health support
  Long-term support for a range of mental health conditions including depression, stress, PTSD, bipolar disorder and more.
• Carer support
  Emotional and practical support if you spend time caring for an elderly / sick loved one.
• Help at home
  Following a hospital stay, a personal nurse adviser offers advice and support over the phone while you recuperate at home.
• Eldercare
  Whether you have questions about a relative living independently or in a residential home, Legal & General can support with choosing the best care for an elderly relative and discuss how to keep them safe.

Rehabilitation Benefit

Getting back to work after a serious illness or injury can take its time. That’s why Legal & General provides access to specialist rehabilitation to help you return to work sooner.

You’ll get a structured return-to-work programme from healthcare professionals such as trained nurses, physiotherapists and occupational therapists so you can get back on your feet quicker.

How Does L&G Compare?

High Monthly Benefit

Legal & General’s maximum annual benefit is £240,000 per year (£168,000 per year if you opt for indexation). Alongside other major insurers such as Aviva, this is the highest maximums available on the market. L&G is therefore a good option to consider if you’re a high earner.

Own Occupation Definition of Incapacity Only

Legal and General only offers the own occupation definition of incapacity. As a result, it only covers those in lower risk occupations. Rather than offering an inferior definition of incapacity for those in roles it feels are riskier, it declines cover instead.

If you work in a higher risk occupation, such as one involving manual work, it’s likely another provider will be more suitable, offering better coverage with a superior incapacity definition.

Specialist Cover for NHS Medical Professionals

Legal & General is one of the five main Income Protection insurers which offer cover aimed specifically at doctors, surgeons and other UK NHS medical professionals.

This offers a number of features and enhancements compared to cover for other employees, such as:

• No HIV / AIDs exclusions if you contract it via a workplace needle-stick injury
• Enhanced minimum income guarantee of £3,000 for NHS dentists, doctors, midwives, nurses and surgeons (compared to £1,500 for those in other roles)
• NHS sick pay matching — using a stepped deferred period, you can tailor your policy to match your level of NHS sick pay (which rises with length of service).

Executive Income Protection Available for Contractors and Directors

Legal & General also offers specialist Executive Income Protection for company directors and contractors.

Executive Income Protection works slightly differently from a personal plan because your business owns and pays for the policy. This can offer tax efficiencies over paying for cover as an individual.

You can also insure a higher proportion of your income (up to 80%) due to the fact that HMRC taxes the payout on a claim given that L&G pays the benefit to the business for you to distribute from there rather than you directly.

No Short-Term Deferred Periods

The shortest deferred period Legal & General offers is 4 weeks. This means you must be out of work for 4 weeks or more before you can get a payout.

There are insurers which offer deferred periods of 1 week or even 1 day, which may be a better option if you have little in the way of savings and don’t get much sick pay.

Daily Work Activities Definition

If you’re working less than 16 hours a week, aren’t receiving a regular wage or are unemployed at the time that you claim, you may still be eligible for a payout if your incapacity prevents you doing some activities under L&G’s ‘Daily Work Activities’ definition.

In this situation, to make a successful claim you must be unable to do at least three of the below daily activities due to your incapacity:

• Walking more than 200 metres on a level surface
• Climbing up and then down a flight of 12 stairs, using a handrail if needed
• Lifting an object weighing 2kg at table height and holding it for 60 seconds before replacing the object on the table
• Bending or kneeling to touch the floor and straightening up again
• Getting in and out of a standard saloon car
• Write legibly using a pen or pencil or type using a desktop keyboard.

Lower Benefit for the Newly Self-Employed

Although Legal and General’s Income Protection offers a maximum monthly benefit of £20,000, (£14,000 if you choose an indexed benefit), for self-employed workers who’ve been self-employed for 12 months or less at the time of application, Legal & General limits your benefit to 35% of your annual earnings.

Newly self-employed workers are therefore likely to find another provider more suitable.

Change of Occupation Cover

Unlike some insurers, L&G does not require you to notify them if you change occupation, as your incapacity definition and terms are based on the occupation you held when you took out the policy. This means policyholders won’t be affected if you move to a higher risk occupation at a later time.

Low Death Benefit

Many insurers offer a death benefit alongside Income Protection. The payout is usually a multiple of your monthly benefit. However, Legal & General’s death benefit is a multiple of your monthly premium, which will likely be notably lower than a multiple of your monthly benefit.

If a death benefit is particularly important to you, you may be better off with a different provider or taking out Life Insurance alongside your policy.

Low Start Income Protection Option

As well as its standard Income Protection offering, Legal and General also offers a ‘Low Start’ option, which is aimed at those looking for a lower cost cover. It has many of the same features as the standard cover, however the premiums start of lower and increase each year with age.

The Low Start option allows you to cover up to a maximum of £120,000 per year (£10,000 per month). However this amount will lower to:

• £84,000 per year (£7,000 per month) if increasing cover is chosen
• £20,000 per year (£1666.67 per month) if considered a house person.

Low Start Documentation

How Much Does Legal And General Income Protection Cost?

To provide an estimate of how much you can expect to pay for Legal and General Income Protection, we’ve provided example premiums based on varying ages below.

To calculate these quotes we have assumed that the individual looking for cover wants a monthly benefit of £1,250 and:

• A 4 week deferral period
• Is in a low risk office based role
• Has no pre-existing conditions
• Is a non-smoker.

Get Legal & General Income Protection Quotes & Expert Advice

Legal & General is one of many income protection providers in the UK. With all the terminology and differences in cover it can be a bit of a minefield when taking out a policy for the first time.

If you get stuck our team of experts are on hand to help make sure you get the most suitable cover for your needs. Don’t hesitate to pop us a call on 02084327333 or use our quote tool to compare the leading insurers here →

Why Speak to Us?

We started Drewberry™ because we were tired of being treated like a number.

We all deserve a first class service when it comes to issues as important as protecting our health and our finances. Below are just a few reasons why it makes sense to talk to us.

• There is no fee for our service
• We are an award winning 🏆 independent insurance broker who works with all the leading UK insurers
• You’ll speak to a dedicated expert from start to finish
• We are very proud of the 3150 and growing independent client reviews rating us at 4.92 / 5
• Claims support when you need it most.
• We are authorised and regulated by the Financial Conduct Authority. You can find us on the financial services register here 🧐

For help and fee-free Income Protection advice, please don’t hesitate to get in touch. You can reach us on 02084327333 or email help@drewberry.co.uk.