Income Protection Waiting Period

The waiting period on your Income Protection policy is the amount of time that needs to pass after your claim before the insurance company will start to pay your monthly benefit.

Note: it is not the time between the commencement of your Income Protection policy and when you can make your first claim as is often though.

As with any component of an insurance policy, the higher the risk to the insurance company the more expensive your  policy will be so in relation to your Income Protection waiting period, the longer the waiting period the cheaper your policy will be. This is the case as with a longer waiting period, you will need to be off work (to some extent at least) for a longer period of time in order to be paid.

Extending your Income Protection waiting period makes a large difference to your policy premium. For example, the difference between a waiting period of 90 days and 30 days is about 30%. If you are weighing up the difference between a 30 day waiting period and a 14 day waiting period the cost is approximately a further 40%.

It is important to understand why this feature of Income protection should be moulded around your situation. No one wants to pay more for their policy than they need to so if you have the ability (through savings or other means) to provide for yourself for the first few months on not earning, then you may like to look at a waiting period of 90 days in order to reduce your insurance cost. On the other hand, if you are highly cash flow sensitive and due to loans repayments and other lifestyle costs you will not be able to manage even for a short period of time without income, you will require as short a waiting period as possible and will therefore have to spend more money on your Income Protection.

Once you have a policy in place, you are able to increase your waiting period over time without the need to undergo further medical or financial underwriting and therefore you can review this over time. If you find yourself in a position where you have increased your savings and reduced your debt commitments then perhaps you can afford to extend your waiting period and therefore reduce the cost of your Income Protection policy.