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No CI cover could damage pension pot, says L&G

Legal & General is urging people to consider the impact that having a critical illness could have on their ability to save into their pension.

The life and pensions company estimates that someone aged 30 would need to save £292 per month in order to live comfortably in retirement.

However, if the same person were to delay paying into a pension for 10 years as a result of a critical illness and drop in income, they would have to save £635 a month to achieve an equivalent pension.

L&G protection product marketing director Bonnie Burns says the proceeds from a CI policy could be used to make regular payments into a pension plan. For a 30 year old at £292 gross a month, an average CI payout of £60,000 would provide two years worth of monthly pension savings and still leave over £50,000.

He says: “It’s well documented that many people do not save enough for their retirement. However, if you are unfortunate enough to suffer a critical illness then you may never get your pension plan back on track.

“The earlier in your career you take out a policy, the cheaper it is and you can protect your most important years in terms of savings capacity.”

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