Overview of Legal & General's Personal/Mortgage Protection Life Insurance Products

Legal & General’s Life Insurance Product offerings fall under 3 major product categories:

• Mortgage Protection
• Family/Personal Protection
• Business Protection

This article will concentrate on personal/mortgage protection life insurance products and not on business protection products. The products featured in the article are:

• Mortgage Term Assurance (Decreasing, Decreasing with Critical Illness, Term with Critical Illness)
• Level Term Assurance (Life only, Life with Critical Illness)
• Whole of Life Protection Plan

Quick Facts

Mortgage Term Assurance

Family/Personal Protection

Aside from Life Insurance coverage, this line of product also offers:

• Standalone Level Critical Illness Cover
• Family and Personal Income Plan (with or without Critical Illness Cover)
• Family and Personal Income Plan Critical Illness Cover
• Income Protection Benefit

Plan Details

Payment

The policy will pay out the death claim when the Person Insured dies within the plan term and as long as the policy remains in force.

Eligibility

The products are specifically designed for permanent UK residents, including those who are in the Merchant Navy and Crown Employees. Persons outside of the UK can be covered if:

• There is a UK address and bank account
• The person is temporarily traveling within the European Union, USA, Canada, Australia and New Zealand, or temporarily traveling to other countries (this will be evaluated on an individual basis)

Number of Policies

More than one policy can be allowed, as long as the total monthly premium does not exceed the maximum limit.

Cash-In Value

There are no cash-in values for the plans.

Premiums

Premiums can be:

• Guaranteed. Premiums remain the same throughout the life of the policy, unless changes are made to the cover, or the indexation option is selected.
• Reviewable. The premiums will be up for review and may change.

Additional Benefits/Options

Terminal Illness Benefit

The Terminal Illness Benefit pays the Sum Insured when the Person Insured is diagnosed with a Terminal illness. This terminal illness is such that it has no known cure or is advanced or has rapidly progressed into a condition that is no longer curable. Also, the illness is reasonably expected to lead to death no greater than twelve months after the date of the diagnosis.

Other details:

• The terminal illness must be diagnosed before the last 12 months before the policy expires
• If the Sum Insured is decreasing, the lump sum to be paid out will be equivalent to the sum insured at the time the claim is made.
• For joint life cover, only one payment will be made. The benefit will be paid to the one who was diagnosed first.
• Once the benefit is paid, the cover will end and the policy is terminated.

Accidental Death Benefit

This is automatically provided for life policies for free for up to 90 days; while the policy application is being processed (starting from the time the policy application is submitted for underwriting). This benefit will pay the accidental death benefit for up to a maximum of £300,000 or the Sum Insured, whichever is lower.

Other details:

• For joint life policies, the payment will only be on the first life.
• The coverage will continue until the earlier of:
  • The 90-day period
  • The day the terms of offer letter is issued
  • The day the policy application is approved, denied or postponed
  • The day the applicant notifies the company that he is cancelling the application
• Accidental death under the following circumstances is not payable:
  • Attempted suicide or self-inflicted injury
  • Taking part of a dangerous activity, pastime or sport
  • Flying other than as a fare paying passenger in a commercial flight
  • Accidents happening in the course of committing, provoking or attempting a crime or assault
  • War, acts or war or riots
  • Alcohol or drug abuse, unless drugs are prescribed by a doctor that is registered and practicing in the United Kingdom
  • Accidents that occurred prior to the submission of the policy application
  • The policy is designed as a replacement policy and the Person Insured is still covered under the old policy.
  • Only one claim will be paid out, even if the Person Insured has the following cover: Accidental Death Benefit, Immediate cover on the plan and Free life cover.

Free Life Cover

For mortgage life insurance cover, this provides free insurance coverage between the exchange and completion of mortgage contracts. Once the proposed Person Insured commits to buying the policy but the mortgage life cover still is not in force, this will ensure that the family is still able to buy the property from the proceeds of the free life cover.

Other details:

• The cover will be up to a maximum of £300,000 or the amount of cover applied for, whichever is smaller.
• The length of the cover is up to 90 days from the date the contracts are exchanged to the date it is completed.
• The Person Insured must be under 55 at the time he takes out the mortgage.
• Once a claim for free life cover is made, the cover will stop. There will be no further payments for accidental death benefit or Immediate Cover.

Immediate Cover Facility

While the policy application is being underwritten and evaluated, this provides life insurance cover for up to 60 days. The maximum for this benefit is £3,000,000 or the amount of cover applied for, whichever is lower. The benefit will not cover death due to suicide, self-inflicted injury, being involved in dangerous hobbies and activities and incidents while the Person insured is outside of the UK.

Critical Illness Cover

This pays a specified amount (usually the same as the sum insured) in the event the Person Insured is diagnosed with a covered critical illness. The critical illness must also be included in the list of covered critical illnesses and must meet the definitions provided in the policy. The critical illness cover automatically includes children’s critical illness.

The Critical Illness Cover will pay if the Person Insured is diagnosed with:

• Alzheimer’s disease
• Aorta graft surgery
• Aplastic anaemia
• Bacterial meningitis
• Benign brain tumour
• Blindness
• Cancer
• Cardiomyopathy
• Coma
• Coronary artery by-pass grafts
• Creutzfeldt-Jakob disease
• Deafness
• Dementia
• Encephalitis
• Heart attack
• Heart valve replacement or repair
• HIV infection (only when caught through covered circumstances and in accepted countries)
• Kidney Failure
• Liver failure
• Loss of hand or foot
• Loss of speech
• Major organ transplant
• Motor neurone disease
• Multiple sclerosis
• Multiple System Atrophy
• Open heart surgery
• Paralysis of a limb
• Parkinson’s disease
• Primary Pulmonary Hypertension
• Progressive supranuclear palsy
• Removal of an eyeball
• Respiratory failure
• Stroke
• Systemic lupus erythematosus
• Third degree burns
• Total and permanent disablement
• Traumatic head injury

Partial payments (the lower between £25,000 and 25% of the critical illness cover amount) will be made for diagnosis of the following:

• Ductal carcinoma in Situ of the Breast
• Low grade prostate cancer

Total and Permanent Disability may be based on various definitions (i.e. Own Occupation, Work Tasks etc.) The definition of total and permanent disability will apply to both Persons Insured for joint life policies.

Other cover details:

• The critical illness must be irreversible, one that cannot be cured/improved upon by medical treatment or surgery
• Children’s Critical Illness. This pays for 50% of the sum insured or £25,000 (whichever is lower), if a covered child is diagnosed with a covered critical illness. Total and permanent disability is not included. Only one claim can be made per child, with a maximum of two claims for the children’s critical illness cover. The child must be 30 days old to 18 years old (or 21 if in full time education) while the policy is in force.
• The critical illness must not be one that existed before the policy became effective.
• The life being claimed survives for at least 14 days from the day of the diagnosis.

Guaranteed Insurability Option

This allows the Person Insured to increase the Sum Insured for specific life events. For life insurance cover, the Sum Insured can be increased when:

• The Person Insured marries or enters into a registered civil union
• Becomes a parent, either by natural birth or adoption
• The Person Insured gets a salary increase due to a promotion or a new job
• The Person Insured increases his mortgage due to a new house or recent renovations to an existing property

The allowable increase per life event is the lower of:

• 50% of the original Sum Insured
• £150,000
• The amount of salary increase (or its corresponding percentage)
• The amount of mortgage increase

The maximum amount for all increases is £200,000.

Other cover details:

• The option to add to the sum insured must be applied within six months after the event has occurred.
• The original plan must start before the Person Insured has turned 45 years old
• The original plan must be issued with a standard rating
• The option to add to the sum insured must be exercised before the Person Insured turns 55

Premium Protection/Waiver of Premium

This pays for the life insurance premiums in the event that the Person Insured becomes incapacitated because he is ill or injured due to accident and is unable to earn an income. The waiver of premium will start after the deferred or waiting period.

Benefit details:

• The policy must be issued on standard terms, and
  • For life or critical illness: The Person Insured must be a resident or traveling within the European Union. If traveling outside of the European Union, the trip must not be longer than three consecutive months in any 12 months.
  • For Whole of Life protection plans: The Person Insured must live in or travel within the European Union, as well as the USA, Canada, Australia, New Zealand, the Isle of Man or the Channel Islands. If the Person Insured travels to any part of the world, the trip must not be more than 3 months for every 12 months.
• Premiums must be current and paid regularly.
• The standard deferred period is 26 weeks, where the Person Insured is incapacitated and are not employed in any other occupation.
• The waiver will end when the Person Insured is no longer incapacitated.
• For joint life cover, the waiver will start when both Persons Insured are incapacitated.
• Incapacity can be defined in various ways:
  • Normal Occupation
  • Specified Work Tasks (Inability to perform three or more of the following: walking, climbing, lifting, bending, getting in and out of a car and writing)

Conversion Option

Available only for Mortgage Term Assurance and Term Assurance policies. This is to be selected at the beginning of the policy. This allows the plan to be converted to a Whole of Life Protection plan, without having to provide additional medical evidence.

Other details:

• The term of the contract must not be less than 10 years and the Person Insured must be younger than 55 at the start of the plan.
• The converted policy will have a sum insured that is equal or less than the sum insured of the original policy, with a maximum sum insured of £1,000,000.
• The conversion option will only be applied once and done before the Person insured turns 60.
• This option is not available if Critical Illness Cover, Indexation or decreasing cover is added to the policy.

Indexation Option

This is available for term assurance, mortgage term assurance and whole of life protection plan. This increases the Sum Insured in line with the inflation rate as indicated by the Retail Prices Index, without the need for providing further medical evidence.

Other details:

• The option must be taken out at the start of the plan, It cannot be added afterwards. If the Person Insured refuses the increase, he can no longer avail of the indexation option and the Sum Insured will remain level for the rest of the term of the policy.
• The policy must be issued at standard rates.
• The maximum increase is 10% annually, with a maximum increase in premiums of up to 15% (with premiums increasing by the change in RPI multiplied by 1.5). If the increase to the RPI is 1% or less, the Sum Insured and premiums remain the same until the next review.

Separation Option

This is for joint life policies. This allows the Persons Insured to get separate cover when:

• The Person insured divorce or dissolve a registered civil partnership
• One Person Insured takes over an existing mortgage (in one name) or takes out  a new mortgage (in one name)

The original policy is cancelled and a new single life policy is issued for each Person Insured.

Other details:

• The request to apply the separation option should be done within 6 months after the dissolution or new mortgage occurred.
• The separation option will no longer be available if one of the Persons Insured has already made a valid claim for Ductal carcinoma in situ of the breast and low grade prostate cancer.
• When applying for this option, the Persons Insured must show evidence of the divorce, dissolution of civil partnership or the documents related to the relevant mortgage.
• Both Persons Insured must provide their consent that the separation option be applied.

SmoothMove

This benefit is a 24-hour rescue service provided when the Person Insured and his immediate family is moving in to a new house whose mortgage is covered by Legal & General’s Mortgage Term Assurance.

This includes benefits of up to £750 on the day of the move:

• Roadside repairs and towing or rental fee of a similar vehicle, if the Person Insured’s car breaks down on the way to the new home
• Car recovery
• Rescue removal van (if the designated moving van fails to arrive by the end of the moving day)
• Emergency purchase of toiletries and other personal necessities if things don’t arrive at the new house on the day of the move
• Hotel accommodation (up to three nights, and can including kenneling for pets)

This includes benefits of up to £250 for up to 90 days after occupation of the new residence:

• Free legal advice
• Home emergency cover (for emergency repairs and additional costs to secure the home from further damage)

Exclusions

The cover will not pay for:

• Failure to disclose relevant information
• Claims after the policy has lapsed due to nonpayment of premiums

How to Make a Claim

When making a death claim, Legal & General will usually require the following:

• Completed claims form
• Death certificate
• Birth certificate of the life insured
• Proof that the claimant is indeed the one to which the benefit is to be paid
• Police reports/doctor’s reports, where applicable
• Other documents that will help Legal & General properly assess the claim

For critical illness claims, Legal & General may require a medical examination and the diagnosis must be made by a medical specialist that is a consultant at a UK hospital and whose specialty covers the sickness being diagnosed.

Approved countries include Australia, Austria, Belgium, Bulgaria, Canada, the Channel Islands, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Hong Kong, Hungary, Iceland, the Isle of Man, Italy, Japan, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, the Netherlands, New Zealand, Norway, Poland, Portugal, Republic of Ireland, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, the United Kingdom and the United States of America.

The content of this article is provided for informational purposes only and is not created to be a financial advice. Contact Legal & General (http://www.legalandgeneral.com) directly for details about their offerings.
Updated on: 14.09.2012

To secure your family's future, fill in the form on the right and get your term life insurance quote now.