How long should I set my income insurance deferred period?

What is a typical deferred period for income protection insurance? Is there anything I should consider when setting the length of time?

Question asked by Judith Bottrill
Compare Top 10 UK
 Protection
Insurers
 
Takes approx. 60 seconds
Type of Policy
Income Required
per
month
Date of Birth

Answered by Andrew Jenkinson

The deferred period for Income Protection explained

Firstly, the deferred period (sometimes known as an excess period, waiting or deferment period) is the period of time for which you need to be off work for the policy to start ‘accumulating benefit’.

For example, with a 4 week deferred period the plan would start accumulating benefit after 4 weeks and make its first payment after 8 weeks (for the 4 week period preceding).

It is very important to set an appropriate excess period as the monthly premiums can come down significantly as this period is extended. Furthermore, if you are still receiving an income from your employer most plans will not payout during this period, even if you have surpassed the deferment period.

Deferment Period for Accident and Sickness Cover

The typical deferred period for accident and sickness cover (whether for income protection or payment protection) will depend on whether you receive any period of full sick pay from your employer and your current level of savings.

If you employer were to pay, say, two months of full sick pay it usually makes sense to set the waiting period equal to this length of time. Upon making a claim the insurer will assess your income at that time and will not usually start paying out until you are no longer receiving full pay from your employer.

Additionally, if you have a level of savings that could be used to support yourself for a period of time should you have to cease working due to illness or injury then it may make sense to extend the deferred period in order to bring the monthly premiums down. With income protection it is typical for the premiums to come down by over 30 per cent if the excess period is extended from 4 to 13 weeks.

Deferment Period for Unemployment Cover

When it comes to setting the waiting period for unemployment protection it is important to consider how much redundancy pay you would receive and the level of savings you have.

If you would have enough capital to survive for a period of time due to redundancy pay (usually paid as a lump-sum upon being made redundant) or savings then it may make sense to extend the deferred period in order to bring the monthly premiums down.

For more information please see the guide: Setting your deferred period.

income protection deferred period
 
excess period
 
This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 02084327333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.
Compare Top 10 UK Insurers
  Takes approx. 60 seconds
 - 
Need help? 
Call us on 

Frequently Asked Income Protection Insurance Questions

 
I’ve got Critical Illness cover and was wondering if this includes any accidents that i might have...
 
I’m looking to take out income protection insurance and currently researching all the aspects of...
 
What insurance can cover my salary if I suffered sickness or had an accident? I do get some sick pay...
 
A friend has told me about Income Protection insurance and i think i should get it. Would i be covered...
Need Help? Live chat now and get an instant answer from our Experts...

Neil
Pensions

Victoria
Insurance
Our Latest Reviews
Edward Brampton
13/01/2018

They were patient thorrgh and good value for money. I regret not using them before and I will use them again in the future.

Fiona Katumwa
11/01/2018

Very excellent service and informative. All options were offered and I had to make my own decision at the end. Would recommend.

Graham Mccollum
14/01/2018

Very efficient and well instructed service with polite staff, I felt Drewberry really did do their utmost to find the best deal for me personally.

We are rated 4.9/5 based on 1320 independent client reviews.
To read more of our independent client reviews click here →
REVIEWS
EXCELLENT
4.92 / 5 Average
1397 Reviews
S Cutter
Overall Rating
Very professional and easy to deal with. Jake treated me like a human being and made me feel like a valued customer.
P
Overall Rating
Applied for an income protection plan and owing to medical condition had to make a few changes and Victoria from drewberry was really helpful
P Monaghan
Overall Rating
Courteous, prompt and clear service
D Lewis
Overall Rating
I was having trouble finding a suitable income protection policy online and was unclear about what I should be looking for, so I contacted Drewberry. The process was very quick and straightforward. They called me and explained how this type of insurance works, and then went through series of questions about my circumstances to try and find the right cover for me. They came back to me the next day with several suitable options and emailed all the relevant information clearly laid out. Michael Barrow, the advisor I spoke to, was happy to explain things in detail and answer any questions I had. I would definitely recommend Drewberry as they took all the hassle out of a confusing search.
R
Overall Rating
The service provided by Victoria was second to none. She made my experience of sourcing income protection simple and seamless. I would highly recommend Drewberry!