I want an income protection plan as I only get 6 months of full sick pay and then half pay for another 6 months, and I’m worried that I wouldn’t have any income after that. Someone at work said I would need a plan with a split deferred period but they didn’t really know much more than that, what does this mean?
In can be common for Doctors and other employees in the public sector to have sick pay at 100% of salary for the first 6 months of incapacity and then 50% of salary for another 6 months, before receiving no further wages. Naturally, the same reasoning applies for other sick pay lengths.
When setting up Income Protection it is 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 6 months and you covered up to the insurers 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 6 months to top-up the sick pay received and then the remainder of the cover would kick in after one year when sick pay entitlement has ceased.
Please contact us to run through your specific situation so the exact figures for each section of the policy can be calculated accurately. Our team of experts is available on 02084327333.
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