How can you find the best income protection insurance…
In terms of income protection, the deferred period refers to the period of time between your first sick day and when your payments begin.
It’s a fixed period of time that will need to pass in order for you to receive your monthly income protection payments.
This can also be known as a ‘waiting period’ or ‘excess period’.
These terms can have different meanings depending on the type of insurance you’re taking out.
In this article we’ll be focusing on what an income protection deferred period is, how it works and how long it could be.
Keep reading to find out everything you need to know about an income protection deferred period…
Secure your perfect income protection policy with Reassured Advice
Your deferred period, along with many other policy details will be chosen at the point of application.
Why not have help and guidance throughout the whole application process by enlisting the help of an expert, such as Reassured Advice?
You’ll have the ability to ask all the questions you need and gather all the information required to find your ideal income protection policy.
And the best part is, cover starts from as little as 50p-a-day.
Yes, you’ll set a ‘waiting’ or ‘deferred’ period when taking out an income protection policy.
The type of policy and your chosen provider can have an influence on how long your deferred period will be.
Whereas it can be possible to secure a shorter deferred period with a short term policy.
In some circumstances it’s also possible to have a deferred period as short as 3 days. This is known as a back-to-day-one deferred period.
You’ll be able to make a claim after not being able to work for 3 days and payments will be backdated to your first sick day.
Unlike other types of insurance, income protection won’t pay out to you straight away. Instead, you’ll need to wait for your deferred period to pass.
The deferred period is often needed as a lot of illnesses or injuries can result in a speedy recovery, in which case a claim won’t need to be made.
Insurers also won’t pay out to you if you’re still receiving sick pay from your employer.
An income protection deferred period works as simply as:
Reassured Advice can provide help and guidance throughout the whole application process, allowing you to ask any questions you need.
This way you can have peace of mind that your policy is exactly what you need.
At the point of application you’ll be able to choose your deferred period.
The length of the deferred period is likely to vary from person to person and will be based on your unique circumstances, as well as what’s offered by your chosen provider.
During your deferred period you may need to rely on other forms of finance to keep you afloat financially, so it’s important to consider:
Do you receive sick pay?
If you receive sick pay from your employer, this benefit will provide much needed financial help while you’re off work.
However, it’s important to be aware of how long your sick pay lasts for and how much you’re entitled to.
If you don’t receive sick pay, you’ll likely want to consider any other income or forms of finance available to you (this could be from savings, a second job, from company dividends or from a spouse) and how long this would last while covering all essential costs.
Typical deferred period lengths
Common deferred periods offered by UK providers include:
How long do you receive sick pay for?
Finding out the details of your sick pay benefit can be essential. For example, if your employer offers statutory sick pay, this will last for 28 weeks - meaning a 6 month deferred period may suffice.
However, if your employer has a company sick pay scheme, the length of time you receive sick pay for may vary depending on what your employer offers.
Finding out exactly what you’re entitled to can allow you to set your deferred period accordingly.
Do you have savings?
If you don’t receive sick pay or are self-employed, it’s likely you’ll need to rely on your own savings while you’re unable to work.
Are you part of the 13% of the UK population that currently have no savings? If so, it’s likely you’ll want to set a shorter deferred period to avoid any financial struggles.
For those that do have savings, you’ll want to work out how much you have and how long it’s likely to last you.
Alternatively, if your savings were intended for something else (perhaps a house deposit, holiday or new car) you may also want to choose a shorter deferred period to avoid having to dip into these funds.
Your chosen deferred period will impact your policy in the following ways:
You won’t start to receive any income protection payments until your deferred period has come to an end, so it’s important to choose a deferred period that will match up to when any other available forms of finance you have will come to an end.
Your deferred period also has an impact on how much you pay for your premium.
For example, those with a longer deferred period tend to pay less in premiums than those with a shorter deferred period.
This is because the longer your deferred period, the less risky you appear to the provider.
This isn’t to say you should delay your deferred period to try and save money. It’s important to ensure your deferred period meets your needs so you’re not left struggling financially.
Why not talk your needs through with a friendly member of the Reassured Advice team?
They can help you work out your ideal deferred period while comparing quotes to secure you the most cost-effective deal.
Hopefully this article has given you an insight into what an income protection deferred period is and how you can set this up.
Why not compare income protection quotes from all of the UK’s leading providers to find a policy that meets all of your needs?
Quotes through Reassured Advice are personalised, fee-free and no obligation.
The best part is, income protection starts from just 50p-a-day through Reassured Advice so why not get in touch?
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