“Pay out from day 1” income protection is a UK policy feature where payments begin from the first day you’re medically unable to work due to illness or injury, provided the policy allows backdated claims. It bypasses typical waiting periods - often 4, 8, or 52 weeks - for faster support. In 2023, 97.6% of individual income protection claims were paid, including options with quicker payouts like this ABI, 2023. Spirit Cover offers this for immediate income replacement.
How It Works
- No Deferral: Unlike standard policies with delays (e.g., 4 weeks), “day 1” backdates payments - e.g., claim after 4 weeks, get paid from day 1 if terms allow Legal & General, 2025.
- Eligibility: Requires UK medical evidence from day one (e.g., doctor’s note) and a policy supporting backdated claims.
- Purpose: Replaces income - typically 50-70% - from the outset, contrasting with statutory sick pay (£109.40/week after day 3 Gov.uk, 2024).
Spirit’s Version
Spirit Cover offers “pay out from day 1” as an option, with:
- Trust Option: Policies can be trust-placed at no extra charge, potentially reducing inheritance tax liability (40% over £325,000 HMRC, 2024), depending on tax rules.
- Additional Benefits: Features like GP 24/7 or Fracture Cover are included as standard, subject to policy terms.
Key Details
- Backdating needs proof of incapacity from day one - e.g., claims filed later cover prior days if terms are met.
- Standard policies often defer payments (e.g., 8 weeks), but “day 1” suits those needing instant support, like the self-employed.
- In 2023, income protection claims totaled £579 million, with early payout options aiding rapid relief ABI, 2023.
Check Your Fit
Need support from the start? Ask your Spirit adviser if “day 1” fits - we’ll outline the terms plainly.