What is meant by the excess period for income protection?

I’m looking to take out Income Protection but i don’t understand what is meant by the excess period?

Question asked by Kevin Eves
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Answered by Andrew Jenkinson

Income Protection excess period explained

The excess period for income protection insurance is sometimes known as the waiting period or the deferred period.

This is the time you would have to be off work before the policy would start to pay out. As a general rule, the longer the excess period the cheaper the premiums.

Shortest and longest available excess periods

The shortest excess or deferred period is 7 days and the longest is 52 weeks. When choosing an excess period the question to ask yourself is: “How long could I survive without an income?”

Your sick pay might make a difference

It may be that your employer has an occupational sick pay scheme which will pay you full salary for three months or six months. If this was the case you could set your deferred period to coincide with when your occupational sick pay runs out.

At the other end of the scale some employers do not pay sick pay at all so you would be dependent on government statutory sick pay and savings from day one. Statutory sick pay is only £86.70 per week so most of us would struggle to meet our monthly outgoings on this income. If this is the case then you would need to consider what savings you have available to live off in an emergency and how long they would last. For example you might have enough saved for one month’s expenses in which case you could have an excess period of 4 weeks.

Speak to an expert

If you would like to know more about the excess period for Income Protection or have any other queries don’t hesitate to get in contact on 01273 646 484 or help@drewberry.co.uk

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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.
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