A deferred period is the length of time between being unable to work and when the insurer will start paying the monthly benefit. Deferred periods can range from as soon as 1 day up to 12 months.
For example a policy with a 4 week deferred period will commence payments once you have been off work for a period of 4 weeks. During this deferred period you will have to use your savings or another means of paying your bills.
How long the deferred period should be will be determined by a number of factors, for example, does your current employer offer any additional sick pay benefits, do you have any other sick pay arrangements, how long you can survive with reduced income, do you wish to use any savings. Typically the longer the deferred period is on the plan the cheaper the monthly premiums are.