Who has the best income protection insurance to meet your…
An income protection deferred period is the time frame that must pass before your monthly payments commence.
Your deferred period will start once you’ve made a claim and will end once a specified period has been reached.
If you’re still unable to work once your deferred period has come to an end, your payments will begin.
With most UK providers, common deferred periods range from 4 – 52 weeks. You’ll decided upon this during the application process.
When setting your deferred period, it’s important to consider other funds you have available, such as sick pay and/or any personal savings.
An income protection deferred period can also be referred to as a ‘waiting period’ or ‘excess period’.
Keep reading this article to find out everything you need to know about income protection deferred period…
What is income protection?
Income protection can pay out a percentage of your usual income if you’re unable to work due to illness or injury.
Reassured Advice can help you compare income protection quotes from the whole of the market, free of charge, with quotes starting from just 20p a day ‡ .
A friendly member of the team will also be on hand to guide you through the application process – including selecting your deferred period.
Benefits of income protection include:
An income protection deferred period works as simply as:
Essentially, if you have a policy with an 8 week deferred period, you’ll need to wait 8 weeks after making your initial claim before receiving any payments. You’ll also still need to be unable to work after this time.
If you make a recovery before this period has been reached, no payments will be made.
Reassured Advice can provide guidance and support throughout the whole application process, allowing you to ask any questions you need. Simply get in touch for your free quotes.
Common deferred periods offered by UK providers include:
It’s important to be aware that different providers will offer varying options.
However, with Aviva it can be possible to secure a policy with a maximum deferred period of 104 weeks (only available with their Income Protection+ policy).
Some providers also offer what’s known as a ‘back-to-day-one’ deferred period which can allow you to claim and start receiving payments within a few days.
Why not use the whole of market comparison service offered by Reassured Advice to compare quotes from all major UK providers and smaller specialists?
There are some key questions you can ask yourself to help determine what’s likely to be the best option for you:
Do you receive sick pay?
Receiving sick pay from an employer allows you to benefit from financial aid for a specified period when you’re unable to work.
However, not everyone receives the same benefits package as some employers will offer a more comprehensive sick pay scheme, while others will simply offer statutory sick pay (which is currently £99.35 per week for up to 28 weeks).
It’s likely you’ll want your deferred period to line up with when your sick pay comes to an end to ensure you’re protected in case of long term illness or injury.
The more generous your sick pay, the longer you could afford your deferred period to be.
It’s essential to understand what you’re entitled to in order to allow your policy to compliment your sick pay schedule, so you may wish to consult your employer or employment contract before securing a policy.
Do you have savings?
If you don’t receive sick pay, you’ll likely want to consider any other forms of income or savings you have and how long this would last you.
Are you part of the 13% of the UK population that currently have no savings or, perhaps you have savings, but they’re intended for something else (such as a new car or house deposit)?
In these situations, opting for a shorter deferred period could reduce the amount of time you may need to rely on your own finances.
What budget do you have?
While considering the above is important, it’s also key to factor in your available budget for financial protection.
As a general rule, the longer your deferred period the cheaper your policy is.
If you’re on a tight budget you could save some money by opting for a longer deferred period. However, if doing this, it’s also important to ensure that you won’t be left struggling financially.
For example, if your sick pay lasts for 3 months and you have no personal savings, it’s not realistic to opt for a 12 month deferred period as you’d need to find the funds to get by for 9 months before you’d receive any payments.
By using the help of a broker, you can compare quotes to find the right policy to meet your needs. Simply contact Reassured Advice today.
The deferred period is often needed as a lot of illnesses and injuries can result in a quick recovery; in which case a claim won’t need to be made.
Having the deferred period helps to avoid unnecessary claims for a minor illness/injury and ensures that the policy only pays out for a long term illness/injury that prevents you from working.
If you have any other questions about income protection, Reassured Advice are happy to help.
A friendly member of the team can answer any questions you may have while helping you find the most affordable quotes.
Your deferred period will impact your policy in the following ways:
The table below shows how your deferred period can affect the price that you pay for cover.
Quotes are based on a non-smoker, in good health, with an annual income of £30,000 per year. The policy has a short term payment period (one year) and provides cover until age 65, with guaranteed premiums.
|Age||Policy with an 8 week deferred period||Policy with a 26 week deferred period|
Although your deferred period can influence the cost of your policy, it’s important to be realistic. Setting a long deferred period could leave you in financial stress if you’re unable to work and have no other funds available.
Why not contact Reassured Advice who can help you select the right deferred period to meet your needs?
A ‘back-to-day-one’ deferred period can allow you to claim after just a few days (most commonly, this is three days).
After this, your payments will be backdated to the first day you were unable to work.
This can be beneficial for those who don’t receive sick pay (such as the self-employed), who also don’t have access to an additional income or savings, and would need to start receiving financial aid as quickly as possible.
However, due to the extremely short deferred period, it’s likely your premiums will be significantly more expensive than with other traditional deferred periods.
It’s also important to note that not all providers will offer a back-to-day-one deferred period.
Hopefully this article has given an insight into what an income protection deferred period is.
If you need guidance or support selecting your deferred period, or any other aspect of your policy, Reassured Advice are happy to help.
Using the services of Reassured Advice, you can compare income protection quotes from all UK providers.
A dedicated member of the team will also be on hand throughout every step of the application to answer any questions you might have.
All quotes through Reassured Advice are personalised, fee free and completely no obligation.
Start your journey today and secure income protection from just 20p a day.
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