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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.
The main Legal & General Income Protection plan is known simply as Income Protection Benefit.
Legal & General Income Protection Coverage | |
|---|---|
Maximum Cover | 60% of gross earnings up to £60,000 plus 50% of gross earnings above £60,000. Maximum benefit of £20,000 per month / £240,000 per year (£14,000 per month / £168,000 a year if you opt for indexation).
|
Premium Type | |
Maximum Claim Duration | Full Term Benefit Short Term Benefit |
Incapacity Definition | |
Deferred Period | 4 / 8 / 13 / 26 / 52 weeks |
Indexation | Optional |
Waiver of Premium | Automatically included — L&G won’t collect premiums after your deferred period ends and you start to get your benefit. |
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.
Rauri Taylor
Independent Protection Specialist
When looking at Income Protection companies, it’s important to compare the key features of each provider’s policy. Below are the Legal & General’s key policy features for its Income Protection product.
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.
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.
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.
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.
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.
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:
You can also increase your cover on the same terms at every third policy anniversary.
When you take out a personal protection policy, you’ll often get access to a suite of additional free benefits alongside your core cover. Legal & General’s Income Protection product comes with the following additional benefits.
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.
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.
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.
Legal and General Income Protection policyholders get access to Wellbeing Support, a service provided by RedArc Assured Limited, which provides a range of practical and emotional assistance when you need it the most. The support services include:
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.
Getting answers quickly is so important when you are faced with a potentially serious health issue. This is why if you are referred to cardiology, oncology or neurosurgery specialists, Legal and General’s Private Diagnositics service will give you access to some of the UK’s top specialist consultants and diagnostic test centres to investigate your symptoms. This additional benefit does however come at an extra cost of £4.50 per month.
If you were to fracture a bone in your body, such as wrist, collar bone or skull, Fracture Cover would provide you with a cash lump sum which you can put towards recovery. This additional benefit comes at an extra cost of £5.90 a month and it’s important to note that in order to make a successful claim the injury you sustain must be one that is specified in your policy.
When looking at Income Protection companies, it’s important to compare the key features of each provider’s policy. Below are the Legal & General’s key comparison points for its Income Protection product.
Legal & General’s maximum annual benefit is £240,000 per year for level cover (£168,000 per year for increasing cover). 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.
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.
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:
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.
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.
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:
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.
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.
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.
There’s plenty to consider when choosing an Income Protection provider. Some products might be appealing at a glance, but may not be suitable for your unique situation. It’s essential to figure out what you really need before committing to a provider.
Danny Gill
Independent Protection Specialist
When you’re looking to compare Income Protection providers, there are lots of points to consider. With so many factors and a lot of different terminology at play, it can be tricky to do an accurate like-for-like comparison between providers.
Are you reviewing an existing Income Protection policy? Or setting up a new plan? Give us a call on 02084327333 or email help@drewberry.co.uk to talk through your options with one of our friendly advisers. Our advice is fee-free, and we’re not tied to any single provider – meaning we can find you the right policy at the right price.
When it comes to protecting yourself and your finances, you deserve first-class service. Here’s why you should talk to us:
