Doctors Income Protection

With most insurers it is possible to insure between 50 per cent and 70 per cent of your gross (pre-tax) personal earnings as a maximum. However, you might be earning enough that you do not need that much income to cover your day-to-day expenses.

It’s important to note that that you don’t need to worry about your benefits being taxed. With a personal plan the monthly premiums are collected from a personal bank account and any payout from the plan would be paid directly to you. As premiums are paid from post-tax income, the benefit is received tax-free.

When choosing how much of your income you would like your Doctors Income Protection policy to cover, keep in mind that the more cover you choose to receive, the more you will need to pay in premiums.

For that reason, it is wise to align your cover requirements with your monthly expenditure rather than opting for the maximum cover allowable.

When taking out an Income Protection plan, you will need to select a deferred period, which is the period of time during which 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 entitlements usually follow the following scale.

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.

In comparison, Long Term Income Protection policies can continue paying benefits right up until you reach retirement age. 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.

Plans usually have a minimum term length of 5 years and most insurers providing Income Protection for doctors offer plans that  run all the way up until age 65 or even age 70. Because Income Protection insurance is designed to protect your throughout your professional life, it makes sense to set your policy’s cease age to be equal to the age you expect to retire.

Naturally, extending the cease age of the policy can increase the monthly premiums significantly as the chances of suffering illness increases vastly between the ages of 55 and 65 years old, which form the highest risk years.

For long-term insurance policies, it makes sense to consider the option to link your Income Protection benefit to rises in inflation (as measured by the Retail Price Index). Including this option means that your benefit will increase each year in line with RPI inflation and therefore the purchasing power of your cover will not be eroded by inflation over time.

With the inflation linking option it is important to note that the monthly premiums will also rise each year with inflation, even if guaranteed premiums are selected. With most insurers the premiums would rise in line with inflation but a small number of insurers would actually increase the premiums by a greater amount than inflation.