If you’ve read any of my articles on Income Protection Insurance, you’ll know by now what it’s all about and who offers it. But with so many insurers out there it can be difficult to determine which insurer is the best. In this article I’m going to be having a more indepth look at the Income Protection policies offered by 3 insurers that I think are the best around. The statistical information within this article is factually correct – whether or not they are the best is simply my professional opinion. Remember that before you take out any kind of insurance policy, I always recommend that you speak to an independent financial advisor. So…
Income Protection Insurance is designed to pay you a monthly amount to cover your wages and allow you to continue to support yourself and your family should you be temporarily unable to work. There are many insurers out there offering Income Protection, but I believe that the top two policies are offered by Legal & General, and Aviva. Let’s take a look at why:
How Good Is Their Cover?
Legal & General’s Income Protection Insurance is one of the most comprehensive policies around, particularly for those in low-risk jobs and higher earners, as they have a maximum benefit cover of up to £200,000 per year. Also, like AIG, they offer a second medical opinion service should you need it and will donate up to £300 to cover your consultation. Sounds good, but what about those all-important defaqto ratings?
What Is Legal & General’s Defaqto Rating?
It is of course 5 stars, and won the title of Best Income Protection provider at the Cover Excellence Awards in 2012 and 2015. They have continued to be one of the top three rated providers ever since, including in 2020.
And what about those extras? Of course Legal & General have lots of incentives on offer that have kept them consistently in the the top three for so many years, such as:
- Hospitalisation Benefit – Legal & General will pay up to £150 a night, for a maximum of 13 weeks if you are hospitalised. This benefit is payable until the end of the deferred period or until you leave the hospital – whichever is sooner.
- Continuous Cover – This little extra means that your Income Protection cover will continue even if you become unemployed or go on maternity/paternity leave.
- Linked Claims – if you return to work after making a claim and are then incapacaitated again for the same reason within 12 months, the deferred period will be waived and you can resume receiving monthly payments.
- Proportionate Benefit – If after having to make a claim you return to work but at a lower salary or to a different job as a result of the illness or injury you suffered then you will be paid a reduced monthly benefit.
And how do Legal & General compare when it comes to paying out on their Income Protection Policies…pretty well you would think….
And you’d be right: Legal & General have paid out on 95% of Income Protection Insurance claims in the last few years, with the other 5% not being paid out due to non disclosure on forms, where customers haven’t been completely honest about their claim or lifestyle.
All sounds good so far, and you’re probably already feeling spoilt for choice, but, in the words of Yoda, ‘There is another…’
Another one of the ‘big three’ is Aviva, and is the largest insurance group in the UK. Created by a merger of Norwich Union and CGU plc, Aviva can trace its history back to 1696 and serves 44.5 million customers in 28 countries worldwide. So let’s take a look at what sort of cover they have to offer:
How Good Is Their Cover?
Aviva’s Income Protection is, again, one of the most comprehensive in terms of cover, and any payouts you receive when you make a claim are not affected by any employment support allowance you might receive. If your incapacity ends halfway through a month, Aviva will pay a daily benefit amount to cover the period, and, like Legal & General, if you have to claim twice for the same medical condition within 12 months, Aviva will start paying the monthly benefit straight away – without you having wait until the end of the deferred period. And their defaqto rating? Don’t pretend you haven’t already guessed..
What Is Aviva’s Defaqto Rating?
It is of course 5 stars, and the fact that they’re award-winning insurers won’t come as any surprise to you either. Aviva were finalists in every single category at the 2019 Insurer Excellence Awards, and were crowned ‘Best of the Best’ insurers overall.
But of course, you know by now that none of these insurers have made it into my top three by being ‘basic’….so how about those extras:
- Support Plus – This gives you access to BUPA Healthline and the Best Doctors App, as well as to counselling and carer support.
- Fracture Cover – Your Income Protection policy with Aviva will pay up to £6,000 if you were to suffer from a specified fracture, and all for just an extra £4 a month.
- Global Treatment – Again, for an extra £4 a month on top of your premiums, Aviva will pay for overseas treatment worth up to £1m for certain illnesses such as cancer.
- Trauma Benefit – With this extra, Aviva will pay up to £40,000 (6 times the monthly benefit) if you were to suffer from one of six listed traumas, including blindness or loss of a hand or foot.
But how does Aviva measure up when it comes to their claims statistics? How likely are they to pay out on your Income Protection Insurance?
Aviva Claim Statistics
Aviva paid out in 88.8% of Income Protection claims in 2018, and while this is marginally lower than Legal & General and AIG, those claims that were not paid out were, as with the other insurers, down to customers not being forthright on their applications or claims forms.
And so there you have it; what I believe to be three of the best Income Protection providers around. Of course there are other insurers out there, and I would always recommend that whatever type of policy you want to purchase, you should seek the advice of a financial advisor first.
If you have any insurance-related questions, Critical Illness cover or otherwise, please do get in touch. Our advice is free, and one of our qualified advisors would be more than happy to help.