Read your contract before you decide
Your staff handbook or contract explains your sick pay. A typical scheme might pay full salary for a few months, then half pay for a few more, then statutory sick pay only. Some pay a few weeks at most. Length of service often affects how much you get.
Write down the exact dates your pay would fall and when it would stop. That timeline decides the deferred period your policy needs.
What happens when sick pay ends
Statutory sick pay is a modest weekly sum for a limited time. After that, you would move onto state benefits that are means tested or based on your capacity for work. For most households, that is a long way below normal pay.
The mortgage, the car finance and the food shop keep going. Income protection steps in from the end of your deferred period and keeps paying until you return to work, the policy ends or you reach the end of the payment term.
Sick pay schemes are also not always guaranteed. Some are discretionary, which means your employer can decide how much to pay. Read the wording carefully and ask HR if anything is unclear.
Lining up the deferred period
If your full pay lasts six months, a six-month deferred period means the policy starts as your salary stops. Choosing a shorter period would mean paying for cover you would not need, because insurers usually reduce benefit to account for sick pay you still receive.
Half pay complicates things. Some people choose a deferred period that ends when full pay stops and accept that the policy will pay a reduced amount during half pay. Others wait until all employer pay ends.
Some insurers offer a split deferred period, with a reduced benefit starting earlier and the full benefit later. That can suit someone whose employer pay drops in stages.
- Full pay for a few weeks only: consider a short deferred period
- Full pay for several months: match the deferred period to it
- Half pay after full pay: decide whether to cover that dip
- Group income protection at work: start after it ends or top it up
Check for group cover first
Some employers provide group income protection as a staff benefit. It usually starts after a long deferred period and pays a share of your salary, often for a limited time. If you have it, a personal policy can fill the gaps or extend cover beyond it.
Group cover ends when you leave the job. A personal policy stays with you.
Ask your HR team what the group policy pays, how long it lasts and what happens if you leave. Some group schemes let you continue cover personally when you change job, but not all do.
How Hi Tomorrow helps employees with sick pay
Send us your sick pay terms and any group benefits. We will build a timeline of your income if you fell ill and recommend a deferred period that avoids paying for overlap.
We then compare policies on our panel, focusing on the definition of incapacity and how long benefit would be paid.