AIG income protection UK

Please note as of April 2024, AIG Life Limited has been acquired by Aviva. For existing customers of AIG, policies will be passed over to Aviva. AIG life services are closed to new customers [1]. This article will outline the policies that were once offered by AIG.

As a leading organisation both in the UK and overseas, AIG became one of the world’s biggest income protection providers.

Income protection is a policy designed to pay a percentage of your income if you’re too ill or injured to work.

But how did AIG income protection insurance compare to its competitors?

Why not use the services of Reassured's advised team to compare income protection from the whole of the market?

Find the best policy to meet your specific needs, at the right price.

This AIG income protection review page includes:

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Who are AIG?

AIG (also known as American International Group) are a multinational finance and insurance company who employ nearly 50,000 people.

Established in 1919, and embracing international expansion early, AIG have expanded into a company who now serve customers in more than 80 different countries.

Their UK branch was known as AIG Life Limited. Before being acquired by Aviva in April of 2024, they had over 60 years of experience and around 8 million customers within the UK market.

AIG Life had a 5 star rating for their Yourlife plan income protection, and 50% of customers rated them “Excellent” on Trustpilot.

What is income protection insurance?

Income protection is a type of insurance designed to pay a monthly benefit to a policy holder who is either too injured or ill to work.

In this situation, a capped percentage of your monthly salary is paid out, helping replace lost earnings. Income protection policies can be short-term or long-term, depending on the type of policy, and the criteria you would like to cover.

An income protection policy has a deferral period which can last between 4 weeks and 12 months, but can vary depending on the provider. A deferral period is essentially the time you will wait between making a successful claim and receiving your first payment.

Is it worth having income protection insurance?

If you’re worried about an illness or injury preventing you from earning your monthly wage, then income protection can be an attractive policy.

Income protection is valuable to anyone working. However, it can be really beneficial to those who are self-employed and do not have traditional sick pay, as well as those without savings.

However, if you’re unsure how you would financially survive without your salary, then income protection is worth considering.

Income protection could help you to cover:

  • Accommodation payments - By covering your rent or your mortgage, income protection can help you keep up to date with your payments
  • To cover essential bills - Falling behind on council tax or utilities bills could result in you losing your home. Income protection could help to cover these costs until you’re back at work
  • To cover debts - If you have consolidation loans, a debt management schedule or outgoing payments on debts, income protection can help you maintain the required payments
  • Childcare - If you have children and you pay for nursery or additional education expenses, income protection could help to financially safeguard your children’s continued participation
  • Daily to monthly living expenses - Food, travel costs and any other necessities to help you or your family continue living could all be covered by income protection
  • Other - You may need an income to help your recovery, through physio or other medical costs. Or potentially to cover additional leisure expenses for you and your family. Regardless, income protection can be used in any way which will help secure you and your family’s stability

Reassured can discuss and compare all your available income protection options. They’re happy to discuss and answer any queries you may have.

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AIG income protection policy benefits

AIG’s income protection was known as a Yourlife plan and offered the following income protection benefits:

Policy benefitsWhat it doesLength/Amount
Guaranteed benefitIf your income fluctuates during the policy’s term, a sum assured can be guaranteed in your termUp to £1,500
Free cover during underwritingIf you become ill or injured during the period where your premiums and level of risk are decided by the insurer, you will still be coveredUp to £25,000 per annum
Rehabilitation supportHelps your recovery, ensuring you can get healthierSupport recovery during and after the deferred period
Trauma benefitPays a sum of money if you suffer from either a life changing illness or injury that meets one of AIG’s definitions6 months benefit amount, capped at £50,000
Hospitalisation benefitCovers you if you’re incapacitated and have to spend more than 6 nights in hospital during the deferred period£100 for each subsequent night during the deferred period, capped at 90 days
Family carer benefitCovers your partner or child if they suffer from an illness/injury that affect their daily activities (under AIG terms and conditions)After three months or incapacity, either £1500 or the guaranteed benefit (depending on which of these is lower
Death benefitA sum assured if you pass away during the policy’s term£10,000 - Subject to inheritance tax
Terminal illnessIf you have been diagnosed with a condition leaving you with 12 months or less to live, you will receive an advanced payment12 months of benefit amount (policy can be enhanced to avoid the deferred period)
Recuperation benefitHelps to aid in your recoveryCapped at 3 months of your benefit amount
Proportionate benefitProvides a portion of your benefit amount if you return to work mid-month.Included


To ensure you have the cover that your personal circumstances require, it’s important to check AIG’s terms and conditions.

Alternatively, you can contact Reassured's advised team and a friendly team member will be happy to walk you through any queries, or find you a no-obligation, fee-free quote.

AIG income protection policy conditions

AIG income protection included the following terms and conditions:

Length of policy - Policies could be taken out by UK, Channel Islands, Isle of Man and Gibraltar residents aged between 17 - 54 years old.

The length of a policy could be anywhere between 5 - 53 years. However, the policy must have ended before your 70th birthday.

Deferred period - The income protection deferred period is the length chosen by you to determine the period between a successful claim and receiving your first claim.

AIG deferred periods were 4, 8, 13, 26 and 52 weeks.

Premiums - Premiums (the monthly payments you pay for the policy) are dependent on the above information, plus key factors about your personal circumstances, including your medical history, occupation, and smoking status.

Premiums were fixed for policies unless you amend your level of cover.

Types of cover - You could choose either a full payment term, or limited payment term policy with AIG.

Full payment terms cover every successful claim and monthly payment until you return to work. Limited payment terms pay successful claims for a maximum of 24 months and are a short-term income protection insurance.

More claims can be made within the policy’s term but only if you have been working for 26 weeks between claims.

The amount of cover - If you’re currently in paid work, you could take out cover up to 60% of your pre-taxed income up to £30,000. If you earn between £30,000 - £100,000 annually, an additional 55% of your pre-taxed income within this amount is included, as well as 45% of your pre-tax annual income over £100,000.

This amount is divided by 12 to show the maximum amount you would be eligible for.

For example, if your annual income is £38,000, pre-taxed you would have been entitled to up to the following:

  • 60% of £30,000 = £18,000
  • 55% of £8,000 = £4,400
  • £18,000 + £4,400 = £22,400 divided by 12 = £1,866.66 per month maximum entitlement

The monthly benefit was capped at £20,833 for those in paid work and £1,667 per month for those who weren’t. If you were working at least 16 hours a week when you made a successful claim, but you would usually earn more than £1,500 per month with the above calculation, then you would receive a guaranteed income protection of £1,500 per month regardless.

The monthly benefit was fixed for level term policies unless you amended your level of cover. For increasing cover, your monthly benefit could increase up to a maximum of 10% a year in line with RPI (Retail price index).

Reassured can help compare income protection quotes, so why not get in contact?

AIG group income protection

AIG offered group income protection, designed to cover 3 or more people if someone is incapacitated due to illness or injury. This was primarily designed for businesses and their employees.

With this policy up to 80% of the employee’s income could have been be paid out, including employee pension contributions if a successful claim was made, and had a payment period which ranges from 2 years to when the policy ends.

Essentially, group income protection is aimed at businesses and those seeking personal income protection would not be applicable.

Group income protection is not something Reassured currently offer.

How long does income protection insurance pay out for?

The length of your income protection is determined by the following:

  • Policy length, which can be between 5 - 53 years
  • Payment period and type of cover, which results in payments lasting either up to 24 months, or until the policy ends
  • If you’re no longer classified as incapacitated
  • If a terminal illness benefit is paid out, in which case the policy is terminated
  • If you stop paying your premiums or cancel your policy
  • If you pass away, in which case the policy is terminated

What does AIG income protection pay out for?

Below is what was wasn't covered by AIG income protection:

CoveredNot covered
Terminal illnessPre-existing illnesses
HospitalisationUnemployment
DeathRedundancy
Incapacitation through an illness or injury (under AIG’s terms and conditions)Self-inflicted injuries
If you’re signed off work by a medical professionalInjuries caused by alcohol or drug abuse

How much income protection do you need?

There’s no universal answer for how much income protection someone needs or how much does income protection cost. The amount required depends on your personal situation and circumstances.

Ideally you want the highest monthly benefit amount for the most affordable premium.

When establishing how much cover you need you may wish to calculate the cost of your key financial commitments.

Income protection is commonly used to help with:

Mortgage

Mortgage/Rent - If you’re too incapacitated to work, would you be able to afford your monthly payments?
Planning the funeral your way

Utilities and council tax - These combined with other important bills also need to be paid and can also be a big portion of your monthly income.
Age

Food and travel - Food is an essential both for survival and aiding your recovery. Meanwhile, you may not need to travel to work if you’re claiming income protection, but you may need to travel to hospitals, doctors, or other locations. Furthermore, you may also have a repayment plan on a vehicle - something which income protection can help cover.
Family Protection

Your family - If you have a partner or children, you need to ensure you have enough to also cover their needs - especially if you’re the main breadwinner. Your partner may also need to help with supporting your recovery and any children will still have life and education costs which require payments.
Inhertiance

Savings and sick pay - If you have savings, you need to consider how long these would last if you couldn’t work. Adequate savings could either mean you can have a longer deferred period or not need as big a monthly benefit. Both could result in a lower premium cost. Sick pay is also worth considering, as if you’re covered for a set period, you can set a later deferred period on your income protection insurance. Self employed people may also benefit from this, due to the majority lacking traditional sick pay benefits.
Health

Your recovery - While it’s difficult to determine the period it would take to get better, having enough money to cover medical costs, physio support, medication or to afford carers can help aid your recovery.
Income protection

Your salary and budget - Under AIG’s income protection terms, you would be entitled to a percentage of your salary on a successful claim. However, if your current budget cannot cover the monthly premiums for your maximum allowance, it’s worth considering a lower amount.

How much AIG income protection insurance do you need?

Enter your monthly financial commitments to calculate the level of income protection cover you require.

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£723 a month is the average monthly mortgage payment in the UK, with the average monthly rental price coming in at £700.

The majority of our monthly income will go towards rental or mortgage payments.

For this reason, it’s essential to have precautions in place to ensure you could keep up to date with your payments if you weren’t receiving your usual income.

Monthly income protection payments can help to cover this large expense and ensure you can stay in your home.
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According to the Money Advice Service, the average household spends £340 a month on household bills.

This includes electricity, gas, TV and broadband.
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Childcare costs are on the rise with it now costing £137.69 per week for part-time nursery for a child under the age of two.

That’s over £550 per month - is this an amount you’d be able to keep up with if you were unable to work?

Becoming ill could also result in the need for additional childcare while you attend doctors’ appointments or medical treatment.
£
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The average household in the UK spends around £97 a week on their food shop, totaling £388 a month.

While this may seem like a small amount in comparison to some of the other expenses mentioned, the food shop is often where we try to scrimp and save when we fall on hard times.

Income protection can take care of the cost of your weekly food shop, as well as many other essential costs.
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At the beginning of 2020, credit card debt in the UK was at £2.1 billion, with almost 27 million UK residents in some kind of debt.

Becoming unable to work could make it hard to keep up with credit card or loan payments (including car finance or other financed goods).

Failure to keep up with payments could result in additional interest being incurred or late fees issues - resulting in a higher total needing to be paid.
£
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The average spent on public transport each month comes to an average of £94.

This includes the cost of public transport, as well as petrol and diesel vehicles.

While this amount may reduce while you’re unable to work as you won’t need to commute there may be additional spending on public transportation if your illness or injury leaves you unable to drive.
£
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Your total cover estimate

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What impacts income protection?

There are several factors that can impact your income protection cover and amount. These include:

  • Age - On average, the younger you are, the cheaper your income protection policy will be
  • Smoking status - On average, smokers pay more for their cover
  • Medical history - Any current or previous inflictions will be taken into consideration
  • Occupation - Jobs deemed a higher risk will require higher premium costs
  • Length of cover required - Short-term cover is, on average, cheaper than long-term cover over time

Smart Health

Smart Health is a non-contractual benefit that was included with AIG income protection policies. It was offered through AIG by Teladoc Health and was designed to provide access to health and wellbeing experts 24 hours a day, 365 days a year.

It offered six services to AIG policy holders, their partners, and their children (up to 21 years old). You could access this through a phone number and an active policy:

  1. GP consultation - You can discuss any non-emergency health related issue with a UK registered GP at any time. General medical advice, sick notes, specialist referrals, issuing prescriptions (under AIG’s guidelines) and more is included
  2. Expert case management - Designed to ensure you can get a second opinion on a diagnosis or help if you’re struggling to obtain a diagnosis. A GP case manager will be assigned to answer any queries you may have about treatment plans and assist with your recovery. This service primarily evaluates serious or complex cases, including cancers, neurological diseases and those that require surgery, among others
  3. Health check - A personalised report tailored to your health goals, with recommendations on amendments needed to your diet and lifestyle. It can also provide information on available tests and screening programmes and help you form future healthy habits
  4. Nutrition consultation - A team of specialists is available to answer any questions about either nutrition or diet. If you’re struggling to reach your nutrition goals, bespoke meal plans are available, as well as advice about weight loss, allergies and food intolerances, weight loss and more
  5. Fitness programme - A programme based on your current health and lifestyle to help you improve your fitness. A 4 or 8 week plan, designed by sport coaches and nutritionists, can help you lose weight, improve your health and fitness and reach any goals you’re trying to achieve
  6. Mental health support - This is a support service which provides professional help if you’re dealing with depression, anxiety, trauma, stress, or bereavements. A team of psychologists and psychotherapists provide confidential support and consultations remotely, meaning you can receive support in the comfort of your own home

How do I cancel my AIG policy?

If you have taken out income protection cover with AIG, you have the right to cancel through them at any time.

Within the first 30 days from when you receive your cover information, you can cancel directly with AIG. AIG will refund any premiums you have paid - providing no benefit has been claimed.

If you cancel after this period, your cancellation will take effect from the day before your next premium date. This also ensures that no additional premiums will be collected for the policy.

AIG will not refund any monthly premiums paid, though you may be entitled to a partial refund if paying through annual premiums.

AIG income protection FAQs

Does income protection cover redundancy?

No, income protection insurance for redundancy is not something AIG offers.

Is income protection taxable?

For UK residents, any income protection benefit paid is usually free from income tax and capital gains tax.

Those who receive a benefit while outside of the UK may be required to pay tax under that country’s laws and regulations.

In the UK, this is subject to law and regulation changes by the government, which AIG, or an income protection broker like Reassured, can't be held responsible for.

What is the maximum income protection benefit?

Your income protection benefit will be capped at 60% of the first £30,000 of your pre-taxed income, followed by 55% of pre-taxed income between £30,000 - £100,000 and 45% of pre-taxed income over £100,000.

Payments are capped at £20,833 per month for those who are employed for a minimum of 16 hours a week before a successful claim.

For those who were unemployed before taking a policy, the maximum amount of cover is £1,667 per month.

Can I have two income protection policies?

You can have as many income protection policies as you want. However, the income protection benefit will still be capped.

This means that regardless of how many policies you have, you will only get a maximum of 60% of your monthly income. Policies cannot be stacked to pay out more.

Is stress covered under income protection?

Stress on its own would not be covered under your income protection. However, any mental health issues or physical illnesses which have been caused by stress and is not a pre-existing condition has the potential to be covered - providing it’s within AIG’s terms and conditions.

Does income protection cover reduced hours?

If you have an incapacity which results in you being unable to work your full hours, you will still be entitled to income protection.

If you were entitled to over £1,500 per month income protection, based on your salary, but would now be calculated at receiving a lower amount due to being unable to work your full hours, you will either be entitled to £1,500 per month or your benefit amount, depending on which is greater.

If your hours are reduced not through an incapacity issue, then this is not covered.

Which is better life insurance or income protection?

Neither product is better than the other. The benefits of these policies are dependent on your personal circumstances and requirements. However, one may be more beneficial to your situation than the other.

You can contact Reassured for life insurance policy information and Reassured for additional income protection information.

We'll be able to answer any queries to help you decide which policy is best for your circumstances.

For more information read our dedicated article comparing income protection vs life insurance policies »

AIG income protection quotes

Reassured's advised team offer a whole of market comparison service, meaning you can compare quotes from all the leading UK providers.

Using this service can ensure you find the best and most affordable policy for your situation. Our broker service is FCA-regulated, and any quotes given are fee-free, personalised and no obligation.

Quotes start from as little as 20p-a-day. Get in touch with a friendly member of the team to start your journey today.

Please note: AIG Life has now been acquired by Aviva and is no longer open to new customers. This review is for informational purposes and details the income protection products that were once available.

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Sources:

[1] https://connect.avivab2b.co.uk/adviser/articles/news/protection/avivas-acquisition-of-AIG-Life-Limited-is-now-complete/

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