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New and improved AIG income protection is launched

Top UK insurance provider AIG Life has just announced some big changes to their income protection insurance products. Their ‘YourLife Plan’ Income Protection has been streamlined, making it simpler and easier for customers to understand their policies.

There have also been significant improvements introduced such as a new income replacement guarantee and waiver of premium for up to 6 months unemployment. AIG income protection is now available to a wider range of customers including those over age 54, with options for both level and increasing cover.

All these additional options and feature help to set AIG income protection apart and make it a more appealing choice for employed and self-employed workers across the UK.

Income protection insurance is a useful policy offered by AIG Life and a wide range of other insurance providers, which offers financial protection if you can’t work due to your health. With so many options for income protection to choose from, it can be useful to get some advice from an income protection insurance specialist before making any decisions.

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60-Second Summary – New and improved AIG income protection is launched

After paying out on 90% of income protection claims in 2022, AIG has now further improved customer outcomes by making significant changes to their income protection insurance.

  • 71% of people found AIG’s new policy documents easy to read, 62% better understood when they can claim, and there was a 10% decrease in people who found the documents overly technical
  • Newly improved ‘replacement income ratio’ pays out a tax-free monthly sum to cover 60% of initial earnings (up to £60,000 per year) and 50% of anything above this
  • Other changes include policies now available for 54 – 59 year olds, waiver of premium options and redundancy cover for up to 6 months
  • If you need help deciding which income protection insurance policy and provider is best for you, you can get free advice from an income protection expert.

AIG’s YourLife income protection policies are designed to help protect you financially if you can’t work due to injury or illness. This includes common reasons for sickness absence such as stress, autoimmune disorders, diabetes and Crohn’s disease.

AIG Life has completely overhauled their income protection policies to include more popular features plus policy wording that is easier to understand. AIG has tested their new Key Facts document to ensure customers can fully understand how their policy works.

This led to changes including a full introduction page explaining the purpose of income protection insurance in general and inclusion of shorter and simpler to read sentences throughout. Based on the changes made:

  • 71% of customers found the document ‘easy to read’ (was 61% before changes were made)
  • 10% increase in people who felt clear about when they could and couldn’t claim (up to 62% from 52%)
  • 10% decrease in customers who found the policy document wording was ‘unnecessarily technical’ (down to 15% from 25%)

AIG Income Protection Insurance Key Facts Document – CLICK HERE

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The main new feature of AIG income protection is that it now provides a tax-free fixed monthly sum, covering 60% of the initial £60,000 of the your yearly salary and 50% of any amount beyond that.  AIG refers to this as ‘replacement income ratio’ and this applies for both long term income protection and short term income protection customers.

Incapacity definitions have also changed, meaning that whether you are ‘fit to work’ will now be based on your own occupation if you are a full time worker.

There have also been specific changes introduced to make income protection easier to access for both private and NHS dentists, doctors and surgeons. This includes the new ‘increased income guarantee’ which protects you if your income has decreased since buying your policy and the option for sabbatical break cover.

Other notable changes made by AIG Life include:

  • Stay at home carers can insure themselves for up to £20,000
  • Cover is available to buy between age 17 – 59 (previous maximum age was 54)
  • Level and increasing cover options now available so you can choose the one that feels right to you
  • Waiver of premium has been introduced which will pay your monthly premiums for you if you have been unemployed for up to 6 months
  • Covers you for up to £250,000 maximum with a minimum policy term of 5 years
  • You can now claim for redundancy (if you are made redundant for up to 6 months)
  • Claims may be paid out for people on a career break based on assessment of ability to complete usual work tasks
  • Reviewable exclusions can now be applied which makes policies more flexible
  • Brand new guaranteed insurability option allows customers to change their policy after big events such as birth of a child, adoption or marriage
  • Proportionate payment income top-up means that AIG will help cover the difference if you earn less once returning to work after sickness absence
Does income protection actually pay out?

Most income protection policies will pay out for sick leave due to illness or injury, if your claim meets the definitions set out in your policy documents. Many people believe insurers go out of their way to avoid paying out but this simply isn’t true.

AIG in particular paid out for 90% of income protection claims received in 2022.

Are income protection plans worth it?

Whether an income protection policy feels ‘worth it’ will be a matter of personal opinion. They can be incredibly useful though, and can help ensure that you and your family won’t struggle if you need time off work due to illness or injury.

Monthly payments from an income protection policy will usually be far higher than payments received from schemes like Statutory Sick Pay. This can help with your usual monthly expenses and means minimal disruption to the lifestyle you and your family are used to.

How much does income protection cost UK?

Based on our latest research, the average cost of an income protection insurance policy in the UK can range from anywhere between £12 – £135 based on age, medical conditions, occupation and other factors.

The easiest way to find a suitable and affordable price for income protection insurance is by speaking to an income protection insurance expert.

What does income protection insurance cover?

Income protection insurance covers you in the event that you need time off work due to illness or injury. There are several types of income protection insurance policy available which are:

  • Short term income protection: Pays out for 12 or 24 months at most, to protect you financially for shorter periods of long term sickness absence
  • Long term income protection: A more comprehensive policy which can pay out either until the policy ends or you retire if needed.
  • Personal accident insurance: Personal accident insurance is a lower cost policy which pays out a cash lump sum if you are injured accidentally and pays out for things like broken bones and hospitalisation
  • Guaranteed sick pay: A cheaper alternative which will pay out a guaranteed income for 6 months at most if you cannot work because of your health

AIG Life is one of the UK’s biggest insurance providers and is a popular choice for income protection among UK consumers.

As well as all the newly introduced and improved income protection features, AIG customers have access to various member benefits. You will have access to rehabilitation and wellbeing support to get you back into work, as well as the AIG ‘SmartHealth’ app which can be downloaded from the Apple Store or Google Play Store. AIG SmartHealth allows you to access 24/7 online GP services, nutrition advice and much more, plus it is available to use for your entire family.

While AIG Life policies do offer attractive benefits and features, you should always think carefully about your own situation and if they feel like the right provider for you.

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The simplest way to buy an income protection policy is with the help of an independent insurance specialist.

Our team of income protection experts can quickly and easily compare the best AIG income protection insurance policies to save you time and money. We will also look at the best offers from other providers to ensure you get the right level of cover and lowest price for your policy.

For free advice about your cover, you can speak to one of our experts on 0800 009 6559 or  click here.

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Is it worth having income protection insurance?

Income protection insurance can be extremely useful and very important for anyone who is unable to work due to sickness or an injury (e.g. from an accident, sports, work etc.). Essentially, income protection insurance pays out monthly to replace any lost earnings while you are unfit or unable to work.

Payments for income protection insurance can be used to pay your mortgage, rent, other credit commitments, food bills, utilities and other regular outgoings.

Common myths about income protection insurance:

  • Income Protection Insurance won’t pay out
  • Statutory Sick Pay (SSP) from the government will cover me
  • The cost of Income Protection Insurance is high
  • People with medical conditions can't have Income Protection Insurance
  • My employer will help support me
What does income protection insurance cover?

As a rule of thumb, income protection insurance will pay out a regular monthly tax-free payment to you if you can’t work and you are signed off by a doctor. You will need to provide supporting evidence from a medical professional such as your GP and proof of income from your employer or accountant.

Example: Sarah was involved in a car accident which resulted in a serious back and neck injury that prevented her from being able to drive for 6 months. She was able to claim on her income protection policy after 4 week for the remaining 5 months until she was able to move and drive again. She would also usually be able to claim for rehabilitation and physiotherapy to help her to return to work as planned.

Do I need income protection insurance for a mortgage?

Income protection insurance and mortgage life insurance are not compulsory for getting a mortgage in the United Kingdom. Some mortgage lenders might ask for you to get insurance as a condition of the mortgage offer in some circumstances but this is rare.

It is strongly recommended to have insurance to protect you and your family if you have a mortgage and other credit commitments. If you consider what the financial impact would be if you were unable to work due to accident, sickness or injury, and even if you were to die.

Most common mortgage protection insurance policies:

  • Buildings insurance
  • Mortgage life insurance
  • Income protection insurance
  • Critical illness insurance
  • Mortgage payment protection insurance (Accident, Sickness & Redundancy
Is income protection insurance tax free?

Payments from an income protection insurance claim are almost always tax-free, apart from some business income protection policies. This is because you pay tax on the premiums for personal income protection insurance at source (i.e. the premiums are paid from your net monthly salary).

The same applies to life insurance premiums and payouts, effectively you have already paid tax on the premiums that you have paid. There are some other possible tax implications that may apply in certain circumstances so you should seek proper advice or guidance if you have any specific questions.

Which is the best income protection insurance UK?

It’s very difficult to say overall which income protection insurance policies or providers are the best, simply because there are so many different options and types of cover. You can get income protection insurance from an even wider range of insurance providers than life insurance, so your choice is even greater.

The most common income protection insurance policy is:

  • Short term income protection insurance (24 months)
  • 4-week deferred period (pays out after 1 month of absence)
  • Guaranteed premiums (fixed premiums)
  • Underwritten income protection insurance

There are several other cover options for income protection insurance (e.g. long-term, age rated, reviewable premiums, guaranteed acceptance and 0 weeks to 12 months deferred periods).

The top 5 income protection insurance providers according to research by Defaqto are:

  1. Aviva (Trustpilot score: 4.0 out of 5.0)
  2. British Friendly Society (Trustpilot score: 4.1 out of 5.0)
  3. LV= (Trustpilot score: 4.5 out of 5.0)
  4. Royal London (Trustpilot score: 4.0 out of 5.0)
  5. Shepherds Friendly (Trustpilot score: 4.3 out of 5.0)
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