LEGAL & GENERAL RESEARCH. SO WHAT? This is not a consumer advertisement. It is intended for professional use only and should not be relied upon by private individuals or any other persons. Simon Pleasants Account Director

Key learning outcomes from this session: Following the sessions I hope you will agree that far from being a ‘So What?’ this research can be a really valuable aid when talking to your clients and helping you to make sure your clients are making informed choices when it comes to protection. And all this is over and above the mortgage protection that we should all be talking to our clients about as a matter of course. You will be able to explain what the financial stability of people across the UK is, broken down into various regions, the research will be tailored to the region. Be able to gauge how prepared clients are for unforeseen events Measure just how far away clients are from the breadline without some financial planning (in other words their ‘Deadline to the Breadline’), following the session you will know how to produce a client specific document that shows just how long a client will be able to continue if they suffer any financial issues. 2

Key learning outcomes from this session: By discussing this with your clients you will be able to help them understand the importance of financial planning and good advice and to help put some plans in place so that they are fully protected. You will get updated on the cost of replacing a parent and the average cost of raising a child, you will be able to use this information to open up a conversation with their clients around the importance of family protection. You will be reminded of the family income benefit plan and why this should be discussed with parents. You will understand the recent changes L&G have made to their Income protection benefit plan and how these changes will benefit your clients. Using the information, we hope you will discover new opportunities from your existing clients, as well as helping you find new ones. 3

2013 RESEARCH. 4 Value of a Parent Mums £31,627 Dads £23,971 Deadline to the Breadline Deadline 26 Days Average Saving £1010 Business Protection Gap Gap £1.35 Trillion

DEADLINE TO THE BREADLINE

THE UK DEADLINE HAS IMPROVED 6

GEOGRAPHY PAINTS A VERY DIFFERENT STORY 7

TOP THREE SACRIFICES /STRATEGIES FOR COPING WITH FINANCIAL DISASTER. 8

SAVE OR INSURE? 9 66% said they would prefer to save 34% said they would prefer to Insure

SAVE OR INSURE? * Source: Office National Statistics Annual Hours and Earnings Survey Figures assume no interest or investment return. 10 UK Mean salary £27,000* How long to save this? 5yrs = £450 pm 10yrs = £225 pm 20yrs = £ pm

SAVE OR INSURE? All premiums based on a Male 30nb, Non smoker, 20yrs term, Occupational class 1 as at 10/03/ How much to Insure £27,000? To save over 10yrs = £225 pm Life Cover Monthly Premium £6.00 (£87,606 ) Monthly Premium £8.35 (with CIC) Income Protection Plan Maximum benefit £16,200 pa Occupation class 1 4 weeks deferred = £39.53 / £31.80 (Low Cost) 13 weeks deferred = £16.58 / £13.67 (Low Cost) Family Income Plan £2,250 pm (equivalent to £27,000pa) Monthly Premium £15.56 Monthly Premium £61.53 (with CIC) Cover from Day One Life cover of £87,606 = £ 6.00 IPB 4 wks deferred low Cost = £ FPIP Life and CIC = £ £99.33

12 ADVISER CALCULATOR SUPPORT FROM LEGAL AND GENERAL

13 SUPPORT FROM LEGAL AND GENERAL Report Research at a glance Reality Check poster State benefits flyer Lead generation /letter wording Employee benefits checklist

FIND OUT MORE 14 OR VISIT OUR ADVISER CENTRE

VALUE OF A PARENT RESEARCH

VALUE OF A PARENT. 16

KEY FINDINGS. The value of a Mum is £31,627 The value of a Dad is £23,971 The average day-to-day cost of raising a child each week is £165. Over 18 years, this adds up to £154, % of full-time working parents rely on regular help from their children’s grandparents 59% of parents can only afford to work because of grandparents’ help. Fewer Mums (51%) have life cover than Dads (61%) Only 35% of parents regularly review their personal insurance 17 Source: Legal & General’s Value of a Parent research 2013

COST OF RAISING CHILDREN. 18

The average cost of raising a child each week is £165. Over 18 years, this equates to over £154,444. AVERAGE COST OF RAISING CHILDREN EACH WEEK. Source: Legal & General’s Value of a Parent research

ARE PARENTS PROTECTED? 20

PARENTS THAT ARE PROTECTED. 21 MumDadOverall Life Assurance 51%61%54% Critical Illness 27%34%29% Income Protection 13%16%14% Family Income Benefit 12%14%12% SALES OPPORTUNITY The proportion of parents surveyed with any personal protection cover in place is very low. This highlights that there is still a large potential in the marketplace to increase personal protection sales. 46 % of people don’t have Life Assurance. Source: Legal & General’s Value of a Parent research 2013

THE SOLUTION. Easier concept for clients to understand – a monthly benefit to replace an income An affordable alternative to a lump sum It’s easy to introduce as additional standalone cover when arranging a mortgage protection Option to commute to a lump sum Our Family and Personal Income Plan (FPIP) does not just cover the breadwinner it can also cover a house person / partner / civil partner Indexation option keeps monthly benefit in line with inflation Monthly benefit versus lump sum provides a disciplined release of capital Tax-free ‘monthly benefit’ Family Protection Income Plan (FPIP) 22

FPIP – LIFE COVER MOVE YOU RESPONSIBILITY. “If your partner died, what would your responsibilities be?” Time with Children 30.5 Hrs Cooking 8.5 Hrs Tidying up 6.5 Hrs Washing/Ironing 4.5 Hrs Cleaning 4.5 Hrs Driving to activities 4.0 Hrs Washing up 4.0 Hrs Shopping 3.5 Hrs Other House tasks 3.5 Hrs Other 1.5 Hrs Total Hrs Cost (£8.56/hr) £2431 per month Legal & General’s responsibility NIL Or it could be... 23

FPIP – LIFE COVER. “If your partner died, what would your responsibilities be?” Single life £12.13 a month Joint life £17.16 a month Legal & General’s responsibilities To provide a monthly benefit to cover your monthly expenses of £2431 (see previous slide) Based on a healthy female and male 28 yrs. next birthday, non smokers and with £2431 per month life assurance Family and Personal Income Plan (FPIP) for 18 years with no waiver (Quote date: 27/03/2014) 24

25 INCOME PROTECTION THE MARKET.

26 INCOME PROTECTION - THE MARKET. “ Most of our customers have a monthly benefit of between £500 and £2,250” THE MARKET. L&G are one of the top 5 providers of income protection. Lack of consumer awareness = difficulty in closing the protection gap Income protection appears complex and expensive = customers not buying. Income Protection gap is £190bn. Improvements to the housing market present greater opportunities to sell Income Protection. Only 1 in 6 people in the UK currently have income protection. 48% of people in the UK have never had a protection product.

27 INCOME PROTECTION – THE NEED. THE NEED. On average, people in the UK could be on the breadline in just 26 days. For working age families its just 11 days. 33% of people in the UK have no savings. Average UK savings is £1010. Benefit reforms in 2013 have made people question the role the state could play in supporting them when ill. Almost 1 in 3 people have experienced personally (or know of a friend/family member) not being able to work due to illness. What if your client couldn’t work due to illness or injury resulting in a loss of income? How would they pay their bills? Would they have enough savings?

28 INCOME PROTECTION BENEFIT PLAN PRODUCT CHANGES I am delighted to see Legal & General being prepared to take income protection very seriously. Their new product looks very competitive and a lot of thought has gone into developing areas where there was room for improvement like the extension of the own occupation definition and the Income Guarantee. Peter Le Beau, Chairman of the Income Protection Task Force ” “

29 We’ve implemented some great new changes to our Income Protection Benefit Plan (IPB). These changes are a result of our IPB review and our desire to do the right thing and produce good customer outcomes. PRODUCT CHANGES The changes: Own Occupation. Income Guarantee. Deductions of Continuing Income. Deductions of State Benefits. Premium Discount on Exclusions.

30 All occupation classes are to be assessed on an OWN OCCUPATION basis throughout claim*. Housepersons, if working less than 16 hours per week or unemployed at the time of claim remain on Activities of Daily Living assessment basis. *excludes housepersons and restricted to occupations we offer cover for only. OWN OCCUPATION. Certain occupations will see some restrictions applied due to this change: minimum deferred period maximum retirement age Any occupations we do not cover will be declined at quote stage Any occupations we do not currently offer cover to will still be declined Please note – There will be no change to your application journey.

31 INCOME GUARANTEE. To help protect your client’s chosen monthly benefit we’ve introduced an 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 policy. This could be made up of a combination of continuing income alongside the monthly benefit. Please note – There will be no change to your application journey.

32 INCOME GUARANTEE. The table below has some examples of the benefit payable in the event that the policyholder’s salary is lower at claim than it was at outset. The examples include both a benefit that is lower and higher than the income guarantee amount of £1,500 per month, with and without continuing income. ORIGINAL SALARY MONTHLY BENEFIT CHOSEN SALARY AT CLAIM MAXIMUM BENEFIT AT CLAIM MONTHLY BENEFIT PAYABLE CONTINUING INCOME (60% OF GROSS) MONTHLY BENEFIT PAYABLE BENEFIT CHOSEN ≤ £1,500 £28,000 £1,400 £22,400£1,120 £1,400 £300 £1,100 £30,000 £1,500 £24,000£1,200 £1,500 £300 £1,200 BENEFIT CHOSEN > £1,500 £32,500 £1,600 £26,000£1,300 £1,500 £300 £1,200 £35,000 £1,700 £33,000£1,625 £300 £1,325

33 Currently, continuing income (net amount) is added to the monthly benefit and deductions are made based on the proportion that exceeds the maximum benefit limits at claim. DEDUCTIONS OF CONTINUING INCOME. *Deductions will be made based on the proportion that exceeds the maximum benefit limit, or the income guarantee, whichever is the greater. The following continuing income will be deducted* from the monthly benefit at claim stage: 60% of any gross income from an employer such as sick pay; 60% of any gross income from a business including dividends; 60% of any gross income from investments if this was taken into account by us in determining the earnings for the monthly benefit level; 60% of pension or ill-health early retirement schemes (received due to the same incapacity); Any regular payments from any other insurance policies (received due to the same incapacity).

34 We will no longer deduct employment related non-means tested state benefits (such as the Employment & Support Allowance) from monthly benefit payments. The impact of this change is that the monthly income protection benefit payable could impact payment of means tested state benefits. DEDUCTIONS OF STATE BENEFITS.

35 In the event of a spinal or mental illness exclusion(s) being applied to the policy a 5% discount will be applied to the premium. The discount applicable for a partial exclusion will be lower than for a full exclusion at 3%. PREMIUM DISCOUNT ON EXCLUSIONS.

36 HOW MUCH DOES IT COST? THE AVERAGE COST FOR OUR IPB IS £34 PER MONTH. Your client may be able to pay even less if they choose a longer deferred period or the low cost option. GenderAgeMonthly benefitOptionsMonthly premium Low Cost premium Female30£1,80052 weeks deferred period £26.15£19.06 Male35£1,20013 weeks deferred period £31.71£22.95 Female25£1,50026 weeks deferred period £22.32£16.38 Male45£1,0004 weeks deferred period £78.15£62.26 Female40£80052 weeks deferred period £19.80£15.13 Here’s a few examples of IPB plans with premiums:

37 WORKING OUT THE MONTHLY BENEFIT. The maximum monthly benefit our plan offers anyone in work over 16 hours per week is £16,667 per month. Each client’s maximum monthly benefit is different, as it’s based on their earnings. The monthly benefit your client would need and when to receive it is based on a few factors, including: their income; the benefits their employer may provide; how long these benefits might last; when they need the benefit to start paying and; the number of years that they want income protection WORK IT OUT INSTANTLY ONLINE.

38 OUR SALES SUPPORT. OUR NEW MAXIMUM BENEFIT AND STEPPED BENEFIT CALCULATOR Visit for more information Works out key amounts that are important to selling income protection. Show your clients real figures they can relate to. Find the calculator on our adviser website.

39 OUR SALES SUPPORT. We have a range of sales support material designed to help you position and explain the product to your customers and make the sales process as easy as possible. Visit for more information

40 WHY CHOOSE US? Our customers always come first. Our call centres are based in the UK and our staff are experienced, friendly and helpful. We aim to offer products and services that meet customer needs and offer great value for money. We aim to keep things simple, straightforward and easy to understand. If you need to make a claim, we’ll help you every step of the way to help reduce any stress. 7.9 million people (as of 31 December 2013) already rely on us for protection, pensions, investments and general insurance plans.

Key learning outcomes from this session: Following the sessions I hope you will agree that far from being a ‘So What?’ this research can be a really valuable aid when talking to your clients and helping you to make sure your clients are making informed choices when it comes to protection. And all this is over and above the mortgage protection that we should all be talking to our clients about as a matter of course. You will be able to explain what the financial stability of people across the UK is, broken down into various regions, the research will be tailored to the region. Be able to gauge how prepared clients are for unforeseen events Measure just how far away clients are from the breadline without some financial planning (in other words their ‘Deadline to the Breadline’), following the session you will know how to produce a client specific document that shows just how long a client will be able to continue if they suffer any financial issues. 41

Key learning outcomes from this session: By discussing this with your clients you will be able to help them understand the importance of financial planning and good advice and to help put some plans in place so that they are fully protected. You will get updated on the cost of replacing a parent and the average cost of raising a child, you will be able to use this information to open up a conversation with their clients around the importance of family protection. You will be reminded of the family income benefit plan and why this should be discussed with parents. You will understand the recent changes L&G have made to their Income protection benefit plan and how these changes will benefit your clients. Using the information, we hope you will discover new opportunities from your existing clients, as well as helping you find new ones. 42

Thanks for listening.