HELPING CLIENTS WITH EXPERT ADVICE

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1 INCOME PROTECTION ADVISER GUIDE HELPING CLIENTS WITH EXPERT ADVICE People are well aware of what could happen if they were unable to work, so they also understand the value of a protection product. However, the product details can be confusing. That s where you can help. This is not a consumer advertisement. It is intended for professional financial advisers and should not be relied upon by private investors or any other persons.

2 CONTENTS UNDERSTANDING THE BENEFITS SELLING INCOME PROTECTION KEEPING CLIENTS FINANCIALLY PROTECTED HOW IT WORKS MAKING A CLAIM I would want face-to-face advice about this I need to be confident I fully understand it. Legal & General Income Protection Consumer & Adviser Research 2014, Gusto Research 92% OF ADVISERS THINK THAT INCOME PROTECTION IS UNDERSOLD How would your clients cope if they were unable to work due to long term illness or injury? This document contains the information you need to help them find the right level of cover to protect themselves and their loved ones financially.

3 HELPING YOUR CLIENTS UNDERSTAND THE BENEFITS OF PROTECTION The information in this brochure can help you take your clients through the basics, what is and is not covered by our Income Protection Plan. INCOME PROTECTION BENEFITS PLAN Our plan provides a monthly benefit for your clients should they be unable to work due to incapacity caused by illness or injury. The monthly benefit is paid until they recover and can return to work, or they no longer qualify. Your clients can use this monthly benefit in any way they like: Helping towards their mortgage payments Household bills For medical care To help maintain their lifestyle. However, the benefit calculations and different options available can often confuse clients. This is where you can best help them to understand that this product could be the right one for them. Only one in six have income protection 48% have never had any protection products * *Legal & General Income Protection Consumer & Adviser Research 2014, Gusto Research USE OUR ONLINE BENEFITS TOOL To help you with the monthly benefit calculations we have a maximum benefit and stepped benefit calculator that s available on our adviser website. 03

4 SELLING INCOME PROTECTION Recognising which of your clients could benefit from income protection is the first step. If your client is someone who works and/or manages their households, the question is: if they were unable to work because of illness or injury that resulted in a loss of income, what would the impact be on their daily lives? THE RIGHT ADVICE AT THE RIGHT TIME Our Income Protection Benefit Plan offers clear advantages for your clients. Highlight these and many will find it s the right solution for them, making it an easy and profitable recommendation for you. FAMILY LIFE Our plan can offer relief by helping to pay medical bills, childcare costs and even school fees. Any client with a family, including single parents, want to know their partner and/ or children are financially protected. Earning a salary, looking after children and housekeeping are demanding enough, but if they or their partner falls ill, or suffers an injury, who takes on the family responsibilities? SINGLE LIFE Our plan can help give them the security they may need to help cover any lost income. It may seem that single people are free of many of life s responsibilities. It s more than likely they have a mortgage or rent to pay as well as household bills. What happens if they re unable to earn an income if they become ill or injured? CHANGING JOBS If your client is promoted or changes employers, this is a good time to review their protection needs. They could be entitled to a different level of company sick pay or be earning significantly more or less than previously. Are they still sufficiently covered? SELF-EMPLOYED Our plan offers a valuable safety net to help protect your self-employed clients. If your self-employed clients find themselves unable to work, it could be financially disastrous for them. Without sick pay, their whole livelihood could be at risk. Many turn to their savings to support themselves and their businesses, but this is usually only a short-term solution. BUYING A HOUSE Taking out a mortgage is a big commitment, our plan helps provide peace of mind. If affordability is an issue, your client could use our plan to simply cover their mortgage repayments should they be unable to work. 04

5 MAKING THE SALES PROCESS AS SIMPLE AS POSSIBLE 1 Help your client recognise their need for income protection and introduce the income protection product. Our Income Protection Benefit Plan The Basics brochure could help you do this. 2 Find out their salary and determine their maximum monthly benefit. Use our calculator to help you do this. Low Cost Option Standard Product Increasing cover or non -increasing cover Increasing cover or non -increasing cover Monthly Benefit NO Stepped Benefit Deferred Period 4, 13, 26 or 52 weeks Expiry Age YES First monthly benefit and first deferred period. Second monthly benefit and second deferred period. Use our calculator to help you do this. REMEMBER It s always important to contact your existing clients for financial reviews. 05

6 KEEPING CLIENTS FINANCIALLY PROTECTED. Taking an overall look at protection products can often reveal solutions for your clients. WHY CLIENTS OVERLOOK INCOME PROTECTION Some clients believe the state will look after them, or they re already covered by critical illness cover. However, it may be risky to rely on these alone. FILLING THE GAPS OF CRITICAL ILLNESS COVER Our income protection products are a good supplement to critical illness cover. In fact, both can work well together to help protect your client s quality of life. Where critical illness cover only pays out for specific conditions, income protection will pay the benefit regardless of the illness or injury, as long as your client is unable to work due to incapacity. Critical illness cover pays out as a one-off lump sum, whereas our Income Protection Benefit Plan is paid monthly. OF THOSE SURVEYED 1 in 3 people have either a friend/family member or have themselves been unable to work due to illness or injury. 60% who experienced being out of work due to illness were unable to work for more than three months. Legal & General Income Protection Consumer & Adviser Research 2014, Gusto Research 06

7 THESE STARTLING FACTS HIGHLIGHT THE IMPACT ILLNESS AND INJURY CAN HAVE ON YOUR ABILITY TO WORK: In Great Britain, nearly 1 million people a year are off work long-term sick. 1 The most common causes of long-term work absence are stress, mental health and musculoskeletal injuries. 2 Musculoskeletal injuries are particularly common for manual workers, while stress is more common for non-manual workers. 2 THE TOP FIVE CONDITIONS WE PAID OUT CLAIMS FOR IN Musculoskeletal Mental health Cancer Neurological Stroke 1 Long-term sickness absence in GB review by Department for Work and Pensions 2 CIPD Absence Management survey report Legal & General Claims DepartmentINCOME 07

8 HOW IT WORKS Helping your client understand our Income Protection Benefit Plan, including what it does and doesn t do *. THE PREMIUM The premium your client pays each month depends on their individual circumstances. THE MAXIMUM MONTHLY BENEFIT If your client is in work, the maximum benefit our plan offers is 16,667. Everyone s maximum monthly benefit is different, as it s based on their earnings. If your client is a houseperson, the maximum they can receive is 1,667 per month. THE DEFERRED PERIOD This is the time between the date from which your client is unable to work until we start to pay their monthly benefit. It s up to them how long they choose to wait it can be 4, 13, 26 or 52 weeks, but they ll need to choose this at the start of the plan. We ll pay their benefit one month after the deferred period ends, and then we pay them monthly in arrears. *These are simplified descriptions of the features. For a detailed explanation of the product and its features, please refer to the Policy Summary document. Terms and conditions apply. 60% + 50% of the first 60,000 gross annual income of gross annual income over 60,000 MAXIMUM MONTHLY BENEFIT OPTIONAL FEATURES STEPPED BENEFIT Allows your client to choose two deferred periods, and two different monthly benefits, all within one plan. Sometimes an employer reduces an absent employee s income after an initial period of incapacity. This means they may only need a small amount of benefit at the start of a claim, as they are still receiving some income. After their income is reduced, they can receive a higher amount of benefit. (Stepped Benefit is not available on the Low Cost Option.) INCREASING COVER The Increasing Income Protection Benefit Plan increases your client s monthly benefit in line with inflation. The benefit will increase in accordance with changes to the Retail Prices Index (RPI) up to a maximum increase of 10% in any one year. If the RPI increases by 1% or less in any one year, we won t increase the benefit at that time. LOW COST OPTION This will reduce the premium of the plan, however the benefit is only paid out for a maximum of two years for each individual claim. Multiple claims can be made. WORK IT OUT INSTANTLY, ONLINE Starting with their income, you and your clients can use our calculator as a guide to help work out what s right for them, including: Their maximum monthly benefit Stepped Benefit amounts. 08

9 AUTOMATICALLY INCLUDED FEATURES OWN OCCUPATION This means we ll pay your client if their illness or injury stops them from doing the essential duties of their occupation. Occupation classes 1 to 4 will have the Own Occupation definition of incapacity for their entire claim. LINKED CLAIMS This feature covers your client if they return to work after claiming. If they re then unable to work again within 12 months for the same or related cause as their previous claim the payment of their benefit will start immediately. PROPORTIONATE BENEFIT If your client returns to work on reduced earnings, we ll continue to pay the monthly benefit in proportion with the shortfall in earnings. CONTINUOUS COVER If your client is on maternity, paternity or adoption leave, becomes unemployed or goes on a career break, at the time of becoming incapacitated, they ll still be able to make a claim. MAKING CHANGES The Guaranteed Insurability Option lets your client increase their monthly benefit when certain key life events happen. They can also change their deferred period, change the plan term and decrease the monthly benefit. WAIVER OF PREMIUM If your client is making a claim on their plan, they won t have to pay their premiums while we re paying the monthly benefit. HOSPITALISATION BENEFIT A stay in hospital can be expensive. This additional benefit can help by paying 1/30th of the monthly benefit (up to a maximum of 150 per night) for each night s stay, if your client is spending more than seven consecutive nights in hospital during the deferred period. EXAMPLES OF WHAT THE PLAN DOESN T COVER If your client doesn t review their plan regularly, there could come a time when their cover is not enough to meet their needs. The monthly benefit we pay out under your client s plan may affect their claim to benefits paid out under other income protection plans. Tax laws may change which could affect the monthly benefit your client s plan pays out. This product does not include unemployment cover and therefore will not pay out if your client becomes unemployed. INCOME GUARANTEE To help protect your client s chosen monthly benefit, we have the Income Guarantee. This means that if your client needs to make a claim, and their salary is lower than it was when they bought the product, the monthly benefit we pay will be based on the lower of 1,500 per month or the monthly benefit on their plan. This could be made up of a combination of continuing income alongside the monthly benefit. 09

10 Now you ve explained this I understand it. But it s quite hard to get your head around it without support. Legal & General Income Protection Consumer & Adviser Research 2014, Gusto Research

11 MAKING A CLAIM Our Income Protection Benefit Plan offers more than just financial assistance. Our dedicated Claims Service team is on hand to offer practical and emotional support to your clients throughout a claim. When your client makes a claim, they ll be assigned a claims assessor, trained by the Samaritans. Along with training to manage each individual claim compassionately and treat every claimant with respect and empathy, the Samaritans have provided our claims assessors with effective tools and techniques, to equip them with the skills and confidence to handle emotional situations. STATE BENEFITS We won t deduct any employment related non-means tested state benefits (such as contributory Employment and Support Allowance (ESA) and Statutory Sick Pay) from the monthly benefit or guaranteed benefit amount. However, the benefit we pay may affect your client s ability to claim to some means tested state benefits. YOUR CLIENTS CAN MAKE A CLAIM ONLINE OR BY CALLING OUR CLAIMS DEPARTMENT We ll then send them a claim form to complete and return to us. Monday to Friday 9am to 5.30pm We may record and monitor calls. 11

12 FOR MORE INFORMATION Please speak to your usual Legal & General contact. Legal & General Partnership Services Limited Registered in England and Wales Number Authorised and regulated by the Financial Conduct Authority. Legal & General Assurance Society Limited Registered in England and Wales Number Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered office for both firms: One Coleman Street, London EC2R 5AA Q /17