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What is an Income Protection Deferred Period?

how long before income protection kicks in

What is a Deferred Period on an Income Protection Insurance Policy?

The deferred period on an income protection insurance policy is the period of time, chosen by you, between the first day you can’t do your job due to illness/injury up until the insurer will payout on your policy.

The deferred period is sometimes called

  • the waiting period
  • the excess period

So if you choose an 8-week deferred period, your income protection policy will start to payout once you have been unable to do your job for 8 weeks due to any illness or injury.

If you choose a 26-week waiting period, your policy will payout if you can’t work for 26 weeks.

What is the shortest Deferred Period for Income Protection?

Aviva, Zurich and Royal London offer 4, 8, 13, 26 and 52-week deferred periods.

New Ireland starts at 8 weeks.

Irish Life at 13 weeks.

What is the longest Deferred Period for Income Protection?

The longest waiting period for income protection is 52 weeks.

This is common to all of our insurers:

With a 52-week period, you must be unable to work for 1 year before your policy kicks in.

This may seem like a long time to wait but not if you are unable to work for 15-20 years:

By exhausting all other avenues of income (sick pay, savings, family support) you could struggle through financially for 12 months…but imagine being out of work and not earning an income for 15 years.

What Income Protection Deferred Period should you choose?

Look at your own situation and try to figure out how long you could survive without an income.

  • How long would your employer pay you?
  • How long would your savings last?
  • Could you move home for a bit?
  • Could you turn to your family for a dig out?

State illness benefit is just €203 per week (and isn’t available to the self-employed) so while it will help, you can’t really rely on it it pay the mortgage/rent, all the other bills and maintain your lifestyle.

Your income protection payment should kick in just when the smelly stuff is about to hit the fan.

What Deferred Periods are available for Income Protection?

You can choose a 4, 8, 13, 26 or 52 week waiting period if you are paying your premiums personally.

If your company or employer is paying the premiums, you can choose a monthly deferred period ranging from  1, 2, 3, 6 or 12-months.

How does the Deferred Period affect the cost of Income Protection?

The shorter the deferred period is, the higher the premium you will pay.

Logically, this makes sense as the risk to the insurer is greater for income protection policies with a short deferred period.

e.g. a broken arm keeps you out of work for 8 weeks. If you have a 4-week deferred period, the insurer will pay you a replacement income for 4 weeks.

However, if you have  8 week deferred period, you wouldn’t claim. There is less risk to the insurer on the 8-week deferred period compared to the 4-week deferred period. The insurer will offer lower premiums depending on the risk of a payout.

Here are some worked examples over 4, 8, 13, 26 and 52 weeks for a 35-year-old desk jockey – no manual work, earning €80,000 per year.

Quote Type: Income Protection
First Person: Non-Smoker, born on 01/01/1986
Cover Amount: €49,444 per year until age 65.
Occupation Class: Office Worker(Class 1)

Deferred Period: 4 weeks
Monthly premium: €264
after tax relief : €159 per month

Deferred Period: 8 weeks
Monthly premium: €187
after tax relief : €112 per month

Deferred Period: 13 weeks
Monthly premium: €128
after tax relief : €77 per month

Deferred Period: 26 weeks
Monthly premium: €89
after tax relief : €54 per month

Deferred Period: 52weeks
Monthly premium: €76
after tax relief : €46 per month

The sweet spot for most of our customers is 26 weeks as this is when they feel they will start to struggle financially without an income and this is the deferred period where the affordability meets their budget.

In the example above, if you earn €80,000, you have a monthly take-home of €4325 per month. The net premium on the 26-week deferred period policy is €54 per month which is just over 1% of your monthly take home.

Please let that sink in.

You pay just  €54 to insure a monthly income of €4120 until you are 65.

Your income is the only money coming into your account each month. The direct debit to protect your pay cheque should be the first one leaving your account each month.

Insure your money machine to safeguard your future.

Over to you…

Looking for more information on income protection, our income protection FAQ is a good place to start.

Happy to get the ball rolling? Well, complete this income protection questionnaire and I’ll be right back with my advice.

I’m happy to chat through your options on 05793 20836 or you can schedule a call back below.


Talk soon!

Nick McGowan | making life insurance easier

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Income Protection for the Self Employed & Freelancers

You and I have a lot in common.

Like me, you’re self-employed, or your partner is.

Like me, you’ve taken a risk by forfeiting a cushy role as an employee where you had the comfort of a regular income.

You’ve left behind benefits like income protection and death in service.

And you waved goodbye to illness benefit from the state should you get sick.

Are you CRAZY?

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