When setting up Income Protection, it’s important not to over-insure by going over the insurer’s limit for cover (which ranges from 50% to 65% of gross earnings, depending on the insurer) as you would be paying additional premium for an extra level of benefit that would never be received.
For example, if the deferred period was set at six months and you covered up to the insurer’s limit, then the insurer wouldn’t pay out the full level of cover during the second six months of incapacity where you were still receiving 50% of your salary.
This is where a split deferred period comes into play. With a split deferred period, one level of benefit would kick in after six months to top-up the sick pay received and then the remainder of the cover would kick in after one year when your sick pay entitlement has ceased.
It’s best to chat through your specific situation with one of our specialist advisers, so the exact figures for each section of the policy can be calculated accurately. Call 02084327333 or email help@drewberry.co.uk.
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