Income Protection Deferred Periods Explained

What is a deferred period?

The deferred period is the time you must be unable to work before your income protection policy begins paying out. Also called the waiting period or excess period, it is the portion of risk you absorb yourself. The longer the deferred period, the lower your premiums.

Common options are 4 weeks, 8 weeks, 13 weeks, 26 weeks, and 12 months. Some insurers also offer day-one options (very high premiums) and 52-week options (very low premiums).

How deferred periods affect premiums

• 4-week: Most expensive, typically 70–100% more than 26 weeks
• 8-week: Around 40–60% more than 26 weeks
• 13-week: Popular middle ground, roughly 20–35% more than 26 weeks
• 26-week: The baseline for many comparisons, significantly lower premiums
• 12-month: Cheapest option, typically 20–30% less than 26 weeks

A 35-year-old non-smoking office worker seeking £2,500/month cover might pay approximately £60/month with a 4-week deferred period versus £30/month with 26 weeks — a saving of £360 per year.

Matching the deferred period to your sick pay

The most practical approach is aligning your deferred period with your employer's sick pay provision:

• Statutory Sick Pay only: SSP lasts 28 weeks at £116.75/week. A 4-week or 8-week deferred period supplements SSP quickly
• 3 months full pay, 3 months half pay: A 13-week or 26-week deferred period works well
• 6 months full pay: A 26-week deferred period starts cover as full pay expires
• 12 months full pay: Common for some NHS staff and civil servants. A 12-month deferred period keeps premiums very low

Special considerations for different groups

Self-employed and contractors: With no employer sick pay, a shorter deferred period (4 or 8 weeks) is often recommended unless you have substantial savings.

Public sector workers: Generous sick pay schemes make longer deferred periods (26 weeks) cost-effective. NHS staff may receive six months full pay and six months half pay.

Part-time workers: Sick pay is usually pro-rata, meaning a shorter period of adequate cover. Factor this into your choice.

Day-one and back-to-day-one cover

Some policies offer back-to-day-one cover. If your absence extends beyond the deferred period, the insurer pays benefit for the entire period from day one, not just from the deferred period end. A 26-week deferred period with back-to-day-one cover means you receive a lump sum covering the full 26 weeks once the deferred period ends. Not all policies offer this, and it costs more.

Choosing the right deferred period

• Employer sick pay: Match to your provision to avoid gaps or overlap
• Emergency savings: If you have 3–6 months of expenses saved, you can afford a longer deferred period
• Monthly budget: If the premium for a short deferred period strains your budget, a longer one with guaranteed premiums may be better
• Partner's income: A second household income may allow a longer deferred period

Get expert help choosing the right cover

The deferred period is one of the most important decisions when setting up income protection. A specialist adviser can analyse your sick pay, savings, and budget to recommend the optimal option. Nesto matches you with experienced income protection advisers who can tailor the policy to your exact circumstances.