3 things to understand about defer periods – ip awareness week day 1
In the first of our dedicated income protection content to coincide with the IPTF’s IP Awareness Week, we bring you 3 insights focusing on the defer periods. Selecting the right defer period to match a clients needs is an important consideration when arranging an income protection plan. For some clients the length of defer period will be dictated by their work sick pay, whilst for others it may be based on how long they’ve are able to manage on their own savings, before they need a policy to pay out. As well as determining when the benefit payments will commence, the defer period can have a big impact on the premium the client pays, with the cost reducing the longer the defer period is. In the 3 insights we look at different defer period options, very short defer periods and some of the unique options available for doctors and teachers.
We’ll be bringing you a range of insights each day, focusing on different aspects of the income protection journey, so look out for tomorrow’s round-up which will focus on benefit amounts.
INCOME PROTECTION DEFERRED PERIODS – WHO OFFERS WHAT?
Advisers will often say they see clients from all walks of life with different jobs and budgets to spend on income protection plans. No two clients are alike. Income protection plans need to reflect those differences in enabling advisers to select from a range of deferred periods when recommending an income protection plans for their clients. In this insight, we look at the length of deferred periods that insurers offer and whether these will be waived for clients who have a terminal illness.
WHICH INSURERS ARE STILL OFFERING SHORT DEFERRED PERIODS?
Selecting the right deferred period is one of the most important considerations when recommending an income protection plan. Insurers offer a range of different options to meet client needs, however the COVID-19 pandemic had led to some insurers making changes and removing shorter deferred period options or applying exclusions. In this article we examine the current availability of short defer periods (i.e. 1 day and 1 week) and on what terms insurers will offer these.
WHO OFFERS SICK-PAY MATCHING DEFER PERIODS FOR NHS MEDICS AND TEACHERS?
When arranging an income protection policy for NHS medical professionals and some teachers, one of the challenges advisers may face is matching the defer period to the clients sick-pay arrangements. Currently the standard option offered by most insurers is a fixed defer period of either 4, 8, 13, 26 or 52 weeks, which doesn’t always allow for the necessary flexibility in aligning the defer period with the sack pay provision offered in certain professions. Fortunately some insurers have recognised this and offer sick-pay matching defer periods, for NHS medics and teachers. In this insight we explore those options in more detail.
