Doctors Income Protection

Doctors Income Protection insures a proportion of your wages against the risk of accidents or sickness preventing you from working and earning an income.

• It pays out a monthly tax-free income if anything medically prevents you from working as a doctor.
• It can be used to cover your core outgoings – everything from your mortgage / rent, bills and utilities to groceries and car running costs.
• Insure between 50% and 70% of your pre-tax (gross) earnings depending on your insurer.
• Certain providers offer specialist Income Protection for Doctors with features medical professionals find valuable such as no HIV exclusions, NHS sick pay mirroring and cover if you decide to take a sabbatical.
• Doctors Income Protection can cover you if you work as an employee for the NHS, as a locum or as a partner in your own practice.
• In 2018, leading insurers Liverpool Victoria and Legal & General both paid 95% of valid Income Protection claims.

What Does Income Protection for Doctors Cover?

Doctors Sickness Insurance is designed to protect against any medical eventuality (subject to your pre-existing medical history) that prevents you from working.

This might include:

• Accidents and bodily injuries
• Sickness and periods of ill health.

You can add on optional Unemployment Insurance for cover against the risk of forced redundancy.

Unemployment Cover

Redundancy Insurance is a short-term protection against the risk of forced unemployment. It will pay out a monthly income for a maximum of 1 or 2 years if you lose your job through no fault of your own. It’s an optional extra some doctors choose to add to their Income Protection.

Own Occupation Cover

It’s important to ensure that, as a doctor, you take out protection that covers you in your own occupation so the policy pays out for anything that medically prevents you doing your specific job.

There are cheaper policies which cover you under lesser definitions, such as suited occupation cover. To claim on a suited occupation policy, you have to be so unwell you can’t work in your current job or any job that your skills and experience make you suited for.

For instance, a doctor may no longer be able to practise medicine due to illness or injury but may be well enough to teach medicine and so could potentially not receive a payout under a suited occupation policy.

What Doesn’t Doctors Sick Pay Insurance Cover?

With any insurance you purchase, there are restrictions and exclusions in place as standard. It’s the same with Income Protection – not everything will be covered.

The major exclusion is anything related to pre-existing conditions – if you’ve suffered from a medical condition in the last 5 years, it’s likely that there’ll be an exclusion on the policy for that medical condition.

However, there may be an opportunity after you’ve served a period on your policy without any advice, medication or treatment for the condition where there’s a chance the insurer will consider covering that condition. This will be reviewed on a case-by-case basis.

Aside from pre-existing conditions, most policies exclude self-inflicted injuries and any illnesses / injuries caused by misuse of drugs or alcohol or those which occur in the pursuit of illegal activities.

However, other than these most policies don’t have any standard exclusions. What you are and aren’t covered for will simply be dependent on your medical history at the time you take the policy out.

Crucially, many Income Protection policies for doctors and surgeons will waive HIV exclusions if the disease is contracted by a needle stick injury or similar workplace incident.

Michael Barrow
Independent Protection Expert at Drewberry

Do I Need Doctors Income Protection?

When deciding if Income Protection for Doctors is worthwhile it makes sense to weigh up the risk of something happening and the potential consequences.

The Incapacity Risk

In our 2018 Protection Survey, 14.7% of individuals over 55 admitted that during their career there had been at least one instance where they had been out of work due to illness or injury for 6 months or more.

Meanwhile, there were more than 2 million people who are what statisticians call ‘economically inactive’ due to long-term sickness in the 3 months to January 2019.

Clearly, the risk of illness and injury – especially long-term illness and injury – is higher than many people may assume.

Although the NHS does offer generous sick pay (see below) for most workers, what would happen if that ran out and you still couldn’t work?

While many people think they’d rely on savings, Drewberry’s 2017 Wealth & Protection Survey revealed that 2 in 5 people in the UK have no more than £1,000 in cash savings to fall back on.

As such, it’s worth considering some form of sickness insurance for doctors. And with the NHS having such generous sick pay, you can actually reduce the cost of cover significantly by stretching out your policy’s deferred period.

How Does Income Protection for Doctors Work?

There are several personal and policy factors that you must consider before setting up Income Protection. These will all have an impact on the cost of cover.

How Much of My Income Can I Insure?

With most insurers it is possible to insure between 50% and 70% of your gross (pre-tax) personal earnings as a maximum. However, you may not need to insure yourself for the full figure.

Doing so will naturally increase the cost of Income Protection and if you can cover only the essentials premiums will be cheaper.

It’s important to note that you don’t usually need to worry about your benefit being taxed. With a personal plan the monthly premiums are paid from post-tax income and so any payout is paid tax-free.

What is the Deferred Period?

When setting up Income Protection, you will need to select a deferred period, which is the length of time you will need to be unable to work in order to begin claiming your benefits.

Setting a longer deferred period can bring the cost of your policy’s premiums right down, so it makes senses to set to avoid a short deferred period if you don’t need one.

It is important that you check your employment contract to understand how much sick pay you are entitled to. For NHS doctors and surgeons, sick pay entitlement usually rises with length of service.

This means you can match your doctors sick pay entitlement to your Income Protection policy and only have the Income Protection kick in when necessary after the sick pay ends.

When Should I Set My Policy’s Cease Age?

This refers to the age at which your policy will end.

It is usually set to a point in the future where you won’t need the cover anymore, generally because you’ll have retired and have other vehicles to fall back on, such as pensions.

The higher you set the cease age of the policy – some insurers will allow you to set the cease age as high as 70 – the more expensive cover will be, so it pays to think carefully about how long you’ll truly need protection for.

How Long Should My Claims Period Be?

While a short term insurance policy will reduce your premiums, it may not provide the cover you need.

Aviva reported that the average Income Protection claim length they saw in 2017 was 4 years 33 weeks. In comparison, a typical Short Term Income Protection policy will pay out for a maximum of 1 or 2 years.

Meanwhile, Long Term Income Protection will continue paying benefits right up until you reach retirement age if you’re so unwell you can never work again.

This means that if you develop a debilitating medical condition that prevents you from working, you can claim for as long as you need to with no worry that you will be forced back into work before you have completely recovered.

Which Premiums Should I Choose?

There are three types of premium options to consider when choosing Income Protection Insurance:

• Reviewable premiums
  Can be ‘reviewed’ as the insurer sees fit, which means that they may rise in cases where the insurer has seen a spike in claims or based on economic factors.Such premiums will start out cheaper but are then reviewed upwards and often therefore work out more expensive over the life of the policy.
• Age-banded premiums
  Age-rated premiums also tend to work out cheaper to start off but then rise each year. Unlike reviewable premiums, age-banded premiums can only rise by a preset amount laid out in your policy.These increases are solely linked to your age and the growing risk of you claiming as you get older.
• Guaranteed premiums
  There are usually a little more expensive initially, but the insurer cannot adjust them over the life of the plan unless you yourself make any changes to the policy.This generally means guaranteed premiums work out cheaper over the life of the policy, especially if you took out cover when you were young and healthy, as premiums are locked in from the start and can’t change with time.

Why Doctors Need Income Protection With ‘Own Occupation’ Cover

There are three main different definitions of incapacity that insurers use to decide whether or not you are unable to work:

• Own occupation
  Covers you in your specific job role. If you can’t do the day-to-day activities involved in your job due to accident or sickness, you can make a claim on your Income Protection policy.
• Suited occupation
  Covers you only if you can’t do your own occupation or any occupation that you’re suited to. So for example while a surgeon with a hand injury couldn’t be a surgeon, they may not be able to claim because they’d still be well enough to teach medicine.
• Any occupation / work tasks
  The most difficult definition of incapacity to claim on, you’ll only be able to claim if you’re so disabled you can’t work in any job or perform a set series of task crucial to most jobs, such as signing your name.

Own occupation cover is the best Income Protection and the type of insurance we would generally recommend for most doctors and surgeons.

This is because it allows you to make a claim if you can’t work in your specific job.

Victoria Slade
Independent Protection Expert at Drewberry

How Do I Make a Claim?

James, a doctor from Manchester, has taken out long-term Income Protection covering 50% of his gross earnings, equating to monthly benefits of £3,000.

When taking out his policy, James agreed to a deferred period of 12 months because that is how long he will be able to claim sick pay.

Needing to claim…

Some time after taking out his policy, James suffers a type of cancer and he takes leave from his work to recover. During the first 6 months of being out of work, James receives the full amount of sick pay he is entitled to from his employer.

At this point, James submits all of the medical evidence necessary and a completed claims form to back up his claim.

After this initial 6 months of full sick pay (in line with the NHS’s sick pay scheme), his sick pay benefits are reduced to half pay.

Despite his policy’s deferred being 12 months and James being only 6 months out of work, his Income Protection provider is notified that James is claiming reduced sick pay and begins paying out his Income Protection benefit to top up his income.

Paying a claim…

6 months later, James’s sick pay officially stops and he reaches the end of his Income Protection policy’s deferred period.

A month later, James receives his first full Income Protection benefit of £3,000. James is able to continue claiming Income Protection benefits until he finishes his treatments and is given the all-clear from his doctors to return to work.

As James took out a long-term policy, it would have been possible for him to continue claiming Income Protection benefits right up until his retirement age if necessary.

Specialist Income Protection for Doctors

If you are a newly qualified or junior doctor with the NHS, your sick pay entitlement will increase with every year of service – usually up to 6 months full pay and 6 month half-pay after 5 years of service.

Some insurers offer special features on their Doctors Income Insurance plan, including sick pay mirroring deferred periods.

When you’re only receiving half sick pay, most people would see it as vital that their income is topped up in order to meet their basic expenses, but a standard Accident & Sickness Insurance policy won’t always be able to do that.

Income Protection for Doctors, on the other hand, usually keeps the NHS sick pay structure in mind when planning your policy’s deferred period.

LV’s Doctors & Surgeons Income Protection Cover, for example, will pay out reduced Income Protection benefits when you stop receiving your full sick pay from the NHS to top up your half sick pay.

This happens regardless of how long you have set your deferred period, which means that you can set your deferred period as long as 12 months and significantly reduce your premiums without sacrificing insurance coverage.

When your NHS sick pay stops entirely and your deferred period ends, LV will begin paying out your full Income Protection benefits.

Sabbatical Cover

Some insures that offer Doctors Income Protection also accommodate sabbaticals by allowing policyholders to take breaks of up to 2 years from their policy. This time can be used to study or work abroad, where policyholders will still be covered as long as they have a UK bank account.

If you move to anywhere in Europe, USA, Canada, Australia or New Zealand and certain other industrialised nations, you can keep your payout on a long-term basis.

If you move anywhere else in the world your benefit will be limited to a maximum of 26 weeks if you need to claim before you’ll have to return to one of the listed countries for medical assessment to continue with the claim.

How Much Does Income Protection for Doctors Cost?

The cost of Income Protection depends on a variety of personal and policy factors as outlined above. One of the main factors is the risk associated with your occupation, here the cost of cover differs for a GP and a Surgeon.

We’ve put together a rough idea of how much Income Protection costs for Doctors and Surgeons of three different ages.

To come to these monthly premiums, we’ve assumed:

• The individual is a healthy non-smoker
• They want a benefit of £2,000 a month
• They’re looking for an 13 week deferral period
• Their cease age will be age 65
• They’re looking for long-term cover
• They want to guarantee their premiums for the life of the policy.

Compare UK’s Best Doctors Income Protection Providers

Not many UK Income Protection providers offer protection specifically for NHS employees, although many providers have enough policy options to help you tailor your policy as best as possible to your circumstances.

Aviva

Aviva covers all policyholders with an own occupation definition of incapacity and, if you choose to return to work in a different occupation until you are well enough to return to your pre-incapacity occupation, Aviva will top up your reduced income with Back to Work Benefits.

• Covers up to Up to 55% of earnings or up to a maximum of £20,000 per month.
• Dual deferred period of 26 weeks and 52 weeks to align with NHS sick pay.
• Maximum entry age of 59 years.
• Aviva pay out pays a Trauma Benefit worth six times the monthly benefit (up to £40,000) if the policyholder suffers one of six listed traumatic events.

LV

• Covers up to 60% of income and benefits. Provides reduced benefit payouts to mirror NHS sick pay as required.
• Choose deferred period of 1, 2, 3, 6, or 12 months.
• Maximum entry age of 59 years.
• LV offer Sabbatical Break Cover which allows you to take an extended break from your job to study and work abroad.

Vitality

• 60% of your earnings capped up to £2,500 per month and 50% of any earnings above. Receive reduced benefits while receiving reduced sick pay.
• Deferred period for doctors of 1, 3, 6, or 12 months.
• Maximum entry age of 59 years.
• Vitality Plus Programme allows policyholders to accumulate points by keeping active, which can be spent on certain rewards.

Aegon

Aegon was founded as Scottish Equitable in 1831 in Edinburgh and is still headquartered there. Dutch insurer Aegon N.V. bought a 40% stake in Scottish Equitable in 1994 and became a 100% stakeholder in 1998.

• Maximum coverage: 55% of your annual income before tax, up to a maximum of £150,000 per year.
• Deferred periods: 4 / 8 / 13 / 26 / 52 weeks
• Maximum entry age: 59

AIG

AIG is one of only a handful Income Protection providers to offer cover for individuals with type 2 diabetes. It is also willing to offer diabetics guaranteed premiums and will not exclude diabetes in its policy, unlike other providers.

• Maximum coverage:
  • 60% of the first £30,000 of your salary
  • 55% of salary between £30,000-£100,000
  • 45% of any salary £100,000+
• Deferred periods: 4 / 8 / 13 / 26 / 52 weeks
• Maximum entry age: 54

Legal & General

L&G Accident & Sickness Insurance comes with a free life cover element that pays out a maximum of 12 times your monthly benefit if you pass away while the policy is in force.

• Maximum coverage: 60% of your annual income before tax, up to a maximum of £200,000 per year.
• Deferred periods: 4 /13 / 26 / 52 weeks
• Maximum entry age: 60

Royal London

Royal London Accident & Sickness Insurance can include Fracture Cover, which pays out a lump sum of between £1,500 and £4,000 on top of any benefit you’d receive for being off work if you receive a fracture of a specified body part

• Maximum coverage: 65% of the first £15,000 income and 55% of the remainder, up to a maximum of £250,000 per year
• Deferred periods: 4 / 8 / 13 / 26 / 52 weeks
• Maximum entry age: 59

Get Expert Doctors Income Protection Advice

As a doctor, there are a number of specialist Income Protection policies available to you. This includes policies with a deferred period that matches any NHS sick pay you’re entitled to. To ensure you get it right, don’t hesitate to contact us today.

Why Speak to Us…

We started Drewberry because we were tired of being treated like a number and not getting the service we all deserve when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to let us help.

• There is no fee for our service
• We are independent and impartial
  Drewberry isn’t tied to any insurance company, so we can provide completely impartial advice to make sure you get the most appropriate policy based solely on your needs.
• We’ve got bargaining power on our side
  This allows us to negotiate better premiums for you than you going direct yourself.
• You’ll speak to a dedicated expert from start to finish
  You will speak to a named expert with a direct telephone and email. No more automated machines and no more being sent from pillar to post – you’ll have someone to speak to who knows you.
• Benefit from our 5-star service
  We pride ourselves on providing a 5-star service, as can be seen from our 2335 and growing independent client reviews rating us at 4.92 / 5.
• Gain the protection of regulated advice
  You are protected. Where we provide a regulated advice service we are responsible for the policy we set-up for you. Doing it yourself or going direct to an insurer won’t provide this protection, so you won’t benefit from these securities.
• Claims support when you need it the most
  You have support should you need to make a claim. The most important thing when it comes to insurance is that claims are paid and quickly. We are here to support you during the claims process and make sure it’s as smooth and stress free as possible.

Taking out specialist Income Protection For Doctors can be confusing and has a few pitfalls to avoid.

If you need any help please do not hesitate to pop us a call on 02084327333 or email help@drewberry.co.uk.

Robert Harvey
Head of Protection Advice at Drewberry