Income protection deferred period

Income protection can pay out a percentage of your usual income if you’re unable to work due to illness or injury.

Reassured can help you compare income protection quotes from the whole of the market, free of charge, with quotes starting from just 20p a day ^‡ .

A friendly member of the team will also be on hand to guide you through the application process – including selecting your deferred period.

Benefits of income protection include:

• Protect between 50% - 70% of your usual earnings
• Receive monthly, tax free payments
• Keep up to date with financial commitments if you’re unable to work due to illness or injury
• Short term and long term protection options available

Do you receive sick pay?

Receiving sick pay from an employer allows you to benefit from financial aid for a specified period when you’re unable to work.

However, not everyone receives the same benefits package as some employers will offer a more comprehensive sick pay scheme, while others will simply offer statutory sick pay (which is currently £116.75 per week for up to 28 weeks^[1]).

It’s likely you’ll want your deferred period to line up with when your sick pay comes to an end to ensure you’re protected in case of long term illness or injury.

The more generous your sick pay, the longer you could afford your deferred period to be.

It’s essential to understand what you’re entitled to in order to allow your policy to compliment your sick pay schedule, so you may wish to consult your employer or employment contract before securing a policy.

Do you have savings?

If you don’t receive sick pay, you’ll likely want to consider any other forms of income or savings you have and how long this would last you.

However, more than 11 million UK residents have less than £1,000 in savings^[2] or if you do have savings, perhaps they're intended for something else (such as a new car or house deposit)?

In these situations, opting for a shorter deferred period could reduce the amount of time you may need to rely on your own finances.

What budget do you have?

While considering the above is important, it’s also key to factor in your available budget for financial protection.

As a general rule, the longer your deferred period the cheaper your policy is.

If you’re on a tight budget you could save some money by opting for a longer deferred period. However, if doing this, it’s also important to ensure that you won’t be left struggling financially.

For example, if your sick pay lasts for 3 months and you have no personal savings, it’s not realistic to opt for a 12 month deferred period as you’d need to find the funds to get by for 9 months before you’d receive any payments.

Your deferred period will impact your policy in the following ways:

• When it will start to pay out to you - you won’t receive any income protection payments until your deferred period has come to an end. This is why it’s important to evaluate any other funds you have available (such as sick pay and/or savings) so you’re not left struggling financially while waiting for your deferred period to end.
• How much you pay for your premium – the deferred period is a policy factor that can influence the price that you pay for your monthly premium. Typically, the longer the deferred period, the cheaper the premium.