Income protection with a 5 year wait period?

MPEARSON

Hi all,

Does anyone know of any income protection with a 5 year wait period before being able to claim? I'm looking for something like a 5 year wait, then a 20 year (or retirement) pay-out.

The longest I can find using the comparison sites is 2 years.

Thanks

tacpot12

Very few people have the financial resources to wait for five years, so you won't find it as a commonly offered product. Take out a policy with a two year wait and go in a cruise with the spare money you have, or invest it.

MPEARSON

Hi...
It's not that we have lots of spare money... I wish we did
My employment benefits include a 5 year income protection policy, so I was looking for something to cover us after those first 5 years. I know that the premium is lower if the deferment period is longer, so was hoping to find something with 5 years for a low premium

dunstonh

Proper income protection (PHI) has deferment periods between 13 weeks and 52 weeks.

budget income protection (PPI) typically has 30 days or 60 days.

To be honest, I have never come across one with a 5 year deferment. That would be a non-standard product for the UK.

MPEARSON

Thanks. I will look at other options.

tacpot12

I would recommend you take out a PHI policy with a deferred period that you could afford yourself. You never know when you might leave your employer and find your self working for one that doesn't provide PHI. 26 weeks is usually a good compromise.

Weighty1

In the past the providers who did offer a 104wk deferred period were generally more costly than a 52wk deferrment period.

There's a good chance that a 5yr deferment period, if one did exist, would be more costly still. This is because the insurer would likely assume that you'd never be returning to work if you'd already been off for 5years at the point of claiming.

I'd suggest looking at a 12-month deferred period and simply know that you can't claim whilst the employer based scheme is paying out.

MPEARSON

There's a good chance that a 5yr deferment period, if one did exist, would be more costly still. This is because the insurer would likely assume that you'd never be returning to work if you'd already been off for 5years at the point of claiming.

That does make sense, thanks.
The plan was to go for an "own occupation" policy that still pays out if unable to work in my current job, but still work in a different job i.e. just to cover the expected shortfall.

I'd suggest looking at a 12-month deferred period and simply know that you can't claim whilst the employer based scheme is paying out.

That looks like the way forward.

kingstreet

We had a similar case and ended up doing as weighty suggested.

We wrote the plan with a 52 week defer and explained to the applicant that while they worked for their current employer, no benefit would be paid until their employer payments ended.

Weighty1

MPEARSON wrote: »

That does make sense, thanks.
The plan was to go for an "own occupation" policy that still pays out if unable to work in my current job, but still work in a different job i.e. just to cover the expected shortfall.

You should definitely go for an own occupation definition of incapacity (to be fair, this is fairly standard with most providers these days), however, this does not mean you would be able to claim on the plan if you were undertaking other work. It simply means it would pay out if you can't do your own job and are NOT earning via any other employment.

A lot of policies will pay out a proportionate amount if you decide to change occupation in move to a lower paid job, but no provider will pay out if you are earning the same income from undertaking a different role.