What Is The ‘Payment Period’ For Income Protection Insurance?

I don’t get sick pay so I want to protect myself with income insurance for accident and sickness but in the quotes it says ‘payment period’. I’m not sure what this is, could you explain?

Question asked by Andrew Whittle

Income Protection Payment Periods: Watch Our Expert FAQ Video

You’ll see the term ‘payment period’ on your Income Protection policy documents, but what does it mean? How does it impact your policy? Our very own, Ben Brooks, explains the term so you better understand your cover. Just press play! 👇

What Is A Payment Period?

The ‘payment period’ is the maximum length of time that your policy will pay a monthly benefit should you have to stop working due to illness or injury. For example 12 months.

It’s important to note here that this is for a continuous claim. If you claim and then go back to work, you can still make future claims at a later date. However, you would still only be able to claim for the maximum payment length set out in your term.

To claim again for the same condition you would usually need to return to work for a period of time, which is typically 6 months long.

What Are My Options?

With Income Protection cover you have a number of different options. Typical payment periods are as follows:

  • 12 months
  • 24 months
  • 60 months or,
  • until the end of the policy life (i.e. it does not restrict the claim length).

For the last option (what are known as long-term plans), the end of the policy is typically aligned with your retirement age. This means your benefit amount would pay out until you retire if unable to work due to accident or sickness.

What Payment Period Is best?

You might not think that you need a long payment period, however it’s important to look at the data. Liverpool Victoria released data showing that their average claim payout was for 6 years and 9 months.

With this in mind, it is usually best to opt for a policy that doesn’t limit the payment period. This way you know that regardless of how long you are unable to work for, you will always receive your benefit amount.

Naturally, the payout length may depend on your budget as the longer the payment period the higher the monthly premium charged by the insurer.

To see various options for yourself you can get an instant online quote here or speak to one of our advisers on 02084327333.

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