A guide to PROTECTING YOUR INCOME with PG Mutual The one protection policy every working adult in the UK does need is the very one most of us don t have income protection Which? Consumer Website January 2014 www.pg.co.uk
PG Mutual has designed this guide, providing an overview of the Income Protection Plan we offer, to help you decide if this type of insurance is suitable for you. If, after reading this guide, you decide you need income protection insurance, please ask for a copy of our Application Pack or visit www.pg.co.uk Who are we? PG Mutual is a not-for-profit membership organisation specialising in providing income protection for healthcare professionals since 1928. As a Friendly Society, we don t have outside shareholders, and therefore return any profit to our Members. What do we offer? PG Mutual offers an Income Protection Plan which will pay you a regular income if you can t work due to illness or injury. The plan also includes an investment element which pays out at maturity of your policy. Key features: Protection that can start from the first day you are incapacitated and lasts until you recover or reach 65, whichever comes sooner No penalty for making a claim and no restrictions on the number of claims you can make We pay a claim until you can return to your professional career You can review your cover at any time, and apply to increase it, up to the age of 60 If you want to take a career break, you can suspend cover for up to two years and then resume at the original level without re-applying Members can leave at any time by giving one month s notice in writing Benefit payments from PG Mutual and the investment element are free from Income and Capital Gains Tax under current legislation. Why do I need to protect my income? Most of us depend on the ability to earn a regular income to maintain our lifestyle. Even short-term illness can have serious financial consequences if you have not made provision for when illness or accident stops you from working and could mean you may face: Not having enough money to pay your rent or mortgage Not having enough money to meet your existing bills Not having enough money to maintain your lifestyle. 2 www.pg.co.uk 3
What State Benefits are available? There are currently two types of State Benefits, Employment Support Allowance (ESA) for the self-employed and State Sickness Pay (SSP) for employees. Employment Support Allowance If you are self-employed you may be eligible for ESA which pays up to 71.70* a week and is subject to terms and conditions such as: Having paid adequate NI contributions Has to be claimed The first three days of each claim are not covered ESA is only payable for the first 13 weeks of incapacity. It is then subject to medical review by a government-appointed GP ESA ends if you can perform any work regardless of your profession or whether a suitable job exists. State Sickness Pay Employees may be eligible for SSP, which is a compulsory payment by a business to a qualifying employee who works at least 25 hours a week. SSP pays 87.55* a week and is subject to the same restrictions as ESA. * Source DWP website, April 2014 What level of cover do I need? Cover can be tailored to suit your personal circumstances. Consideration must be given to the following: The amount of income you need to receive each week (up to 60% of your gross earnings or 920 a week, whichever is lower) When you want the payments to start: choose cover from the first day of incapacity or a range of deferment periods: 7 or 14 days, 1, 3 or 6 months How important is having an investment element? Members share in any profits PG Mutual makes; these are apportioned back to Members based on how many shares they hold The amount of long-term benefit you receive. Level Benefit Pays out until you are well enough to resume your professional career or reach 65, whichever comes sooner. Year 1 Year 2 Year 3 Year 4...to recovery or age 65, whichever comes sooner 920 per week throughout the duration of the claim Around 300,000 UK workers fall into the welfare system because of health-related issues each year, with those on long-term sick leave missing out on 4 billion a year in lost earnings. www.gov.uk, February 2014. Reducing Benefit A less expensive option than the equivalent amount of Level Benefit, this pays out at 100% for the first two years of a claim, reduces to 50% in year three, and then 30% for as long as you remain incapacitated. The two-year period starts afresh with every new claim, subject to PG Mutual s terms and conditions. Year 1 Year 2 Year 3 Year 4 920 per week 460 per week...to recovery or age 65, whichever comes sooner 276 per week throughout the duration of your claim 4 www.pg.co.uk 5
Shares and Units All Members are allocated shares, which provide a measure of Income Benefit and a share in any profit made by PG Mutual. Units only provide Income Benefit and have no effect on your investment. There are three options as to the mix of shares and units that make up your Income Benefit: 1 Share to every 4 Units (1:4) 1 Share to every 12 Units (1:12) 1 Share to every 20 Units (1:20) The higher the share/unit ratio selected, e.g. 1:4, the higher your contribution but the greater the investment you can expect at maturity. Please ask us for a personal illustration if you would like an indication of costs. Who can join? We are specialists in serving the needs of those working in healthcare professions but we also encourage applications from other professionals. Cover limits The maximum amount of weekly cover is 920 a week or 60% of your gross earnings, whichever is lower. We hope that you find this guide to PG Mutual s Income Protection Plan useful. If you would like to know more, please contact us or visit our website: call 0800 146 307 email info@pg.co.uk What our members think I see income protection as a fundamental part of business contingency planning and simply couldn t be without it. Samantha Melrose PG Mutual Member since 1999 PG Mutual has been a lifesaver the staff are the most caring set of people I ve come across and have always been there when I needed them. Phillip Fenton PG Mutual Member for 15 years and now retired I find PG Mutual s service excellent and responsive to my needs. I am so glad PG Mutual exists and will continue to recommend you. Rizwan Alibhai PG Mutual Member since 1993 6 www.pg.co.uk 7
Tel: 01727 840095 Fax: 01727 832710 Email: info@pg.co.uk PG Mutual is the trading name of Pharmaceutical & General Provident Society Ltd. Registered office: 11 Parkway, Porters Wood, St Albans, Hertfordshire AL3 6PA Incorporated in the United Kingdom under the Friendly Societies Act 1992, Registered Number 462F. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority, Firm Reference Number 110023. January 2015 A guide to Protecting Your Income