What is deferred period?

A deferred period (often referred to as a deferral period) usually refers to the length of time from making a claim on your insurance policy, until the point at which a pay out is made.

Whilst typically used in conjunction with income protection, other forms of insurance incorporate a deferral period. The type of insurance will vary the definition.

Keep reading for a comprehensive understanding…

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Deferred period in insurance

A deferred period is most commonly associated with income protection and refers to the length of time you're unable to work before your first pay out will be received.

This is usually a minimum of 4 weeks but can be as long as 12 months[1].

Income protection provides you with protection to replace your lost income if you were no longer able to work.

Your deferral period won’t begin until your provider has been informed, and therefore, it's essential to make them aware of your incapacity to work as soon as possible.

Deferred period life insurance

With regards to life insurance, a deferred application and referred application are often used interchangeably.

If your application is deferred/referred by an insurer, it generally means that the application has been put on hold whilst more information is gathered.

This could involve accessing your medical records so that your risk can be fully assessed, awaiting recovery from a recent surgery or medical investigation, or if you have recently been diagnosed with an illness and time is needed to determine how the condition will progress.

In 2020, the number of referred life insurance applications has increased by 8% and is likely to be a result of the recent COVID-19 pandemic.

Many life insurance providers have incorporated Coronavirus focused questions into their applications, meaning that it's likely applications are being deferred for a specific period of time until any associated symptoms have been overcome.

At Reassured, we compare quotes from market-leading providers and can suggest who is most likely to accept your application.

We work with specialist insurers and have helped find cover for 45% of customers declined elsewhere.

Simply get in touch today for your free quotes.

Waiver of premium deferred period

Many life insurance policies come with the option to add a waiver of premium.

This means that if you're unable to work for a specified period of time, your cover won't lapse due to missed premium payments.

This option tends to bring with it a deferred period, meaning that you must be unable to work for a specified length of time before the waiver of premium benefit comes into play.

The deferred period associated with this option will vary depending on your policy and therefore, it's essential to review your individual terms and conditions.

If interested in arranging the waiver of premium benefit, please mention this to our highly trained staff during your application.

Deferred period vs waiting period

The deferred period and waiting period are often confused.

Whilst the deferred period refers to the length of time you must be incapacitated before pay outs will begin, the waiting period tends to be used more frequently in conjunction with life insurance; pparticularly over 50s plans.

When arranging an over 50s plan, your policy will likely incorporate a waiting period between 12-24 months depending on the provider.

No medical information is required to be accepted on an over 50s plan.

So, to manage the level of risk to the insurer, before a full pay out can be made as a result of death, you'll be required to survive a minimum of 12-24 months.

At Reassured, we can arrange over 50s plans from as little as 20p-a-day, simply get in touch for your free quote.

Mortgage payment protection insurance deferred period

As opposed to protecting your salary, mortgage payment protection insurance (MPPI) will cover the costs of your mortgage repayments should you no longer be able to afford them.

This may be as a result of falling ill or becoming incapacitated and unable to work or losing your job.

However, as with income protection, the deferral period refers to the length of time you must be out of work before payments will commence.

In this instance, this is also often referred to as the excess period and often requires being out of work for at least 30 days[2].

Unfortunately, we don't arrange mortgage payment protection insurance or income protection insurance at Reassured.

Arranging life insurance

At Reassured, we can provide you with all of the information you need to make an informed decision, whether this be the cheapest quote or the shortest waiting period.

We have helped protect over 814,000 families across the UK.

Simply get in touch today for your free, no-obligation quotes.

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Sources:

[1] https://www.aviva.co.uk/frequently-asked-questions/faq/answer/4149/

[2] https://www.drewberryinsurance.co.uk/mortgage-protection-insurance/faqs/what-is-an-excess-period-for-mortgage-payment-protection

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