The policy will cover a maximum of between 50-70% of your gross annual income and will provide this income monthly and tax-free. This will be paid until you are either able to go back to work, the cover period ends, or you reach your retirement age.
This monthly amount can either be level (staying the same) or index-linked (increasing each year at the rate of inflation. This ensures your money retains its buying power).
The amount of time you’re off sick before your policy pays out is called the ‘deferral period’ (also known as the excess or waiting period).
Insurance providers will offer many different options for your policy’s deferred period ranging from as short as 1 day up to 12 months or even 24 months.
The longer your waiting period the cheaper the premiums will be, which is why we recommend aligning the deferral period with either your sick pay provisions, or however long you feel you can survive on your savings comfortably.
How long will it cover me for?
As long as you want it too. Full cover is until you reach your chosen retirement age or, alternatively, insurers can offer a 12, 24 or 60-month cover period.
Due to the complex nature of this protection, and the various options available to certain occupations, it is always best to speak to an adviser to ensure you have the correct cover for your circumstances, at the most competitive premium. We at Wellesley can help you with this.