What is Doctors Life Insurance? Do I Need It? How Much Does It Cost?

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22-04-2020

Specific Life Insurance for doctors and surgeons is there to pay out a lump sum if you pass away during the term of the policy.

It’s protects your loved ones, giving them the means to survive financially at a very difficult time.

What Does Life Insurance Cover?

Life Insurance pays out on death or diagnosis of terminal illness (where you’ve been told by a doctor that you have fewer than 12 months to live).

The payout can be used however your beneficiaries see fit, although the most common uses for a policy include:

  • Repaying a mortgage
  • Providing your family with the ability to maintain their standard of living
  • Covering a child’s or children’s school / university fees.

There are three main types of Life Insurance to consider:

  • Decreasing Life Insurance
    Where the sum assured (how much your beneficiaries will receive should you pass away) declines over the life of the policy, usually alongside a repayment mortgage, reaching zero by the end of the policy term
  • Level Life Insurance
    The sum assured remains fixed throughout the life of the policy, so your family receives the same amount of money if you die during the final year of the policy as they would if you died during the first year, making it well-matched to covering an interest-only mortgage, where the capital outstanding doesn’t fall over time
  • Family Income Benefit
    Rather than paying out a single, large lump sum, which may be difficult to apportion out over a lifetime, Family Income Benefit pays a regular income for the remainder of the policy term, typically run until your children are no longer financially dependent
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Can I Include Critical Illness Cover?

Yes, it’s possible to add Critical Illness Insurance to your Doctors Life Insurance, this will protect you against the risk of suffering a serious illness from a pre-defined list which tends to include cancers, heart attacks and strokes. According to major UK insurer Aviva, the most common reasons for a Critical Illness Insurance claim in 2018 were:

  • Cancer (61.4%)
  • Heart attack (10.6%)
  • Stroke (7%)
  • Multiple sclerosis (4.3%)
  • Benign brain tumour (1.7%)
  • Parkinson’s (1.5%).

It pays out a lump sum similar to the payout should you pass away, but can instead be used during your lifetime to help adapt a home due to a disability, meet medical bills or otherwise make any adjustments to your life necessary as a result of your illness.

Being a doctor you are probably even more acutely aware of the risk of suffering a serious illness. According to Cancer Research UK the chances of someone born after 1960 developing cancer during their lifetime now stands at 1 in 2.

Meanwhile, the British Heart Foundation reveals that there are more than 100,000 hospital admissions each year due to myocardial infarction (heart attack), equivalent to 1 every 5 minutes, while for strokes there are more than 100,000 strokes in the UK each year, with stroke is the single biggest cause of severe disability nationwide.

Critical Illness Insurance vs Doctors Income Protection

An alternative to Critical Illness Insurance that you may wish to consider is Income Protection for doctors.

Rather than adding Critical Illness Cover to your Life Insurance policy, Income Protection would run alongside your life cover as a separate policy.

It’s designed to pay out a proportion of your pre-tax income if you can’t do your job as a doctor for any medical reason — it doesn’t have to be a critical condition such as cancer, heart attack or stroke. Some of the most common claims on Income Protection policies include bad backs and mental health problems, for example.

There is specialist Income Protection for doctors, surgeons and physicians designed to work around your job and the risks you face on a daily basis. This includes:

  • No exclusions for HIV
  • A deferral period (the length of time you have to wait before the policy kicks in) to match any NHS sick pay you’re entitled to.

Income Protection is generally seen as more comprehensive than Critical Illness Cover because it protects against a wider range of conditions, including those not classed as ‘critical’.

Having an Income Protection policy paying out a percentage of your pre-illness income regularly each month may also be an easier way to manage your finances if you’re ill than one large critical illness payout.

Do Doctors Need Life Insurance?

It’s true that not everyone needs Life Insurance.

Single individuals without mortgages or financial dependents can probably do without it — even if it does tend to only cost a few pounds per month, if there’s no one to benefit from it then there’s little point having it.

However, this isn’t true for most of us who have a mortgage, kids and other responsibilities and worry about what would happen were we no longer around.

If you’ve just moved home and taken on a new / larger mortgage or started / expanded your family, consider the following questions:

  • What would happen to your loved ones if you suddenly weren’t around anymore?
  • Could they keep up with the mortgage / rent without your income?
  • How would they meet everyday expenses, such as bills, groceries or even school fees?

If the answer is that you don’t know or that your family would likely struggle, Life Insurance is a way to offer both you and your loved ones valuable peace of mind.

Do I Need Life Insurance if I Have Death in Service Cover at Work?

Many of our clients who are doctors get at least some form if Life Insurance through working for the NHS.

Known as Death in Service Insurance, this offers cover for a multiple of your salary, e.g. three times your gross earnings, if you pass away during your tenure with the organisation you work for.

While this may seem like it’s sufficient, the reality is that it might not go far enough if you pass away, especially if you have a mortgage to consider. According to The Money Charity, the estimated average outstanding mortgage for the 11 million households with mortgage debt was £132,242 in January 2020.

When you think that you’d likely need more than to simply cover your mortgage, such as providing a sum for family financial security, the Life Insurance from a Death in Service policy could quickly be eaten up, leaving little left for your family to live on should the worst happen.

For this reason, we often recommend a supplementary amount of Life Insurance alongside a Death in Service policy to ensure you and your loved ones are sufficiently covered.

Moreover, if you choose to give up working for the NHS and become a locum working through your own company, or move to the private sector, you may not get Death in Service Insurance at all and need to consider personal cover anyway.

Expert Tip / Relevant Life Insurance for Locum Doctors

If you’re working as a locum doctor, especially if you’re offering your services through your own limited company, the benefits you receive from the organisation you’re providing your services to will likely be minimal.

It therefore makes sense to take your own precautions when it comes to cover such as Life Insurance and sort of your own cover.

For doctors working as locums contracting their services out through their own limited companies, you have the option to take advantage of a special tax-efficient Life Insurance aimed at company directors known as Relevant Life Insurance, which can offer savings of almost 50% over the above personal policies.

Known as Relevant Life Insurance, the significant tax savings to locum doctors come as a result of working as directors of their own limited companies and can be thanks to a number of HMRC-sanctioned reliefs when it comes to National Insurance, Income Tax and Corporation Tax payments.

Why Life Insurance?

According to the 2018 claims statistics of LV, one of the UK’s biggest life insurers:

  • The average age for a Life Insurance claim for both men and women was 63
  • The youngest claimant was just 24 years old
  • Average policy age at the point of claim was only 9 years and 2 months.

The Risk of Dying

We’ve taken the example of three healthy men of various ages and calculated the risk of them passing away during the next 15 years using the below Life Expectancy Calculator.

Their risk of death is as follows:

Age 30

Age 40

Age 50

1 in 47

1 in 23

1 in 10

How Much Life Insurance Costs

The cost of Life Insurance is based on factors such as:

  • Your age
    The older we are the more likely we are to pass away during the life of the policy and so the more expensive premiums will be
  • Your medical history
    Insurers will generally ‘load’ (increase) premiums based on certain pre-existing medical conditions you have
  • Your smoker status
    Smokers die prematurely and are therefore charged higher Life Insurance premiums
  • The amount of cover
    The more you look to cover yourself for, the higher premiums will be
  • Length of policy / policy term
    Similar to your age, the older you are when the policy ends, the greater the risk of you passing away during the policy’s term and so premiums will be higher.

Below we’ve put together the cost of Life Insurance for doctors of three different ages. We’ve assumed:

  • They’re looking for £250,000 of Decreasing Life Insurance over 25 years
  • They’re also looking for £250,000 of Critical Illness Cover where mentioned
  • They’re a healthy non-smoker

Age 30

Age 40

Age 50

Life Insurance Only

£6.53

£11.66

£26.53

Life Insurance and Critical Illness Cover

£40.54

£79.40

£164.49

Adding Critical Illness Cover to your Life Insurance significantly adds to the cost, especially as you get older. This is because the likelihood of developing a critical illness is much higher than you passing away.

To keep costs down, many of our clients opt for a reduced amount of Critical Illness Cover running alongside the Life Insurance. To see if that’s appropriate for you, check with your adviser today.

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Overview of Policy Details and Additional Benefits

Aegon logo

Maximum Cover Unlimited

Published Claims Statistics

  • 98% of Life Insurance claims paid
  • 93% of Critical Illness Insurance claims paid

Additional Benefits

  • Health Assured
    Access to qualified counsellors 24 / 7 / 365 who tailor the support they provide to your individual circumstances
  • Children’s Critical Illness Cover
    If you opt for Critical Illness Insurance, you’ll receive a lump sum of 50% of your sum assured (up to £25,000) if your child is diagnosed with a critical illness
  • RedArc Second Medical Opinion Service
    UK-based specialist service with face-to-face consultation to review diagnosis and suggest alternative treatments, providing a valuable second medical opinion if you’re diagnosed with a serious illness.
AIG logo

Maximum Cover Unlimited

Published Claims Statistics

  • 99% of Life Insurance claims paid
  • 94% of Critical Illness Insurance claims paid

Additional Benefits

  • Smart Health
    Includes access to an unlimited, 24 / 7 GP appointment service available via the Smart Health app or over the phone, as well as access to nutritionists and a tailored online fitness programme.
  • Children’s Critical Illness Cover
    If you opt for Critical Illness Insurance, you’ll receive a lump sum of 50% of your sum assured (up to £35,000) if your child is diagnosed with a critical illness meeting the adult definition
  • Best Doctors
    Access a network of the world’s leading specialists and consultants for a second medical opinion on all physical health problems
Aviva logo

Maximum Cover Unlimited

Published Claims Statistics

  • 98.9% of Life Insurance claims paid
  • 92.6% of Critical Illness claims paid

Additional Benefits

  • Bupa Anytime Healthline
    Offering support and medical advice from a helpline staffed by Bupa nurses, as well as short-term counselling for you and your family to help with mental wellness issues
  • Best Doctors
    Access a network of the world’s leading specialists and consultants for a second medical opinion on all physical health problems
  • Children’s Critical Illness Insurance
    An optional add-on for an additional premium, this pays out 50% of your sum assured up to £25,000 for a child diagnosed with a critical illness meeting the adult definition.
Legal General logo

Maximum Cover Unlimited

Published Claims Statistics

  • 97% of Life Insurance claims paid
  • 93% of Critical Illness claims paid

Additional Benefits

  • RedArc Nurse Support Service
    Provides help and guidance on long-term physical conditions, serious illness, trauma, disability, bereavement or mental health conditions from a registered nurse
  • Children’s Critical Illness Insurance
    An optional add-on for an additional premium, this pays out 50% of your sum assured up to £25,000 on a ‘standard’ policy or 50% of your sum assured up to £30,000 on an ‘extra’ policy for a child diagnosed with a critical illness meeting the adult definition
  • RedArc Second Medical Opinion Service
    UK-based specialist service with face-to-face consultation to review diagnosis and suggest alternative treatments, providing a valuable second medical opinion if you’re diagnosed with a serious illness.
LV logo

Maximum Cover Unlimited

Published Claims Statistics

  • 95% of Life Insurance claims paid
  • 89% of Critical Illness claims paid

Additional Benefits

  • Doctors Services
    Including a virtual GP service offering up to five video / telephone consultations with a GP; remote psychological services offering up to five consultations per year with a qualified therapist; and remote physio services offering up to five consultations per year with a physiotherapist
  • Second Medical Opinion Service
    UK-based specialist service with video or telephone consultation to review diagnosis and suggest alternative treatments
Royal London logo

Maximum cover Unlimited

Published Claims Statistics

  • 95.2% of Life Insurance claims paid
  • 91.2% of Critical Illness claims paid

Additional Benefits

  • RedArc Helping Hand
    Nurse support for customers with long-term physical or mental illness or those dealing with bereavement providing advice and support on physical and mental health issues
  • Children’s Critical Illness Insurance
    An optional add-on for an additional premium, this pays out 50% of your sum assured up to £25,000 on a ‘standard’ policy or 50% of your sum assured up to £30,000 on an ‘enhanced’ policy for a child diagnosed with a critical illness meeting the adult definition
  • RedArc Second Medical Opinion Service
    UK-based specialist service with face-to-face consultation to review diagnosis and suggest alternative treatments, providing a valuable second medical opinion if you’re diagnosed with a serious illness.
scottish widows

Maximum Cover

  •  £25,000,000 (Level and Decreasing)
  • £15,000,000 (Increasing)

Published Claims Statistics

  • 99.3% of Life Insurance claims paid
  • 94.1% of Critical Illness claims paid

Additional Benefits

  • Scottish Widows Care
    Provided in partnership with RedArc, offering access to trained nurses who can help with issues such as serious illness, bereavement, trauma, disability or support on discharge from hospital
  • RedArc Second Medical Opinion Service
    UK-based specialist service with face-to-face consultation to review diagnosis and suggest alternative treatments, providing a valuable second medical opinion if you’re diagnosed with a serious illness.
  • Children’s Critical Illness Insurance
    If you opt for Critical Illness Insurance, you’ll receive a lump sum of 50% of your sum assured (up to £25,000) if your child is diagnosed with a critical illness meeting the adult definition
zurich logo

Maximum cover £40 million

Published Claims Statistics

  • 99.7% of Life Insurance claims paid
  • 91% of Critical Illness claims paid

Additional Benefits

  • Zurich Support Services
    Available to assist with a range of situations in your daily life, from searching for childcare to moving home. Also available is a telephone counselling session service, offering up to six sessions with a qualified counsellor
  • Children’s Critical Illness Insurance
    An optional add-on for an additional premium, this pays out 50% of your sum assured up to £25,000 on a ‘standard’ policy or 50% of your sum assured up to £30,000 on an ‘enhanced’ policy for a child diagnosed with a critical illness meeting the adult definition.

Get Life Insurance Quotes & Expert Advice

When you’re looking for Life Insurance for doctors, we recommend you get advice. This is especially true if you’re considering adding Critical Illness Cover to your policy, as you’ll want to ensure you’re covered for any potential medical issues arising from needle stick injuries, for example.

We’re here to offer fee-free advice on Life Insurance for surgeons and doctors — just drop us a call on 02084327333 or email help@drewberry.co.uk.

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 2872 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.

I had a great experience with Drewberry, they have a lot of knowledge and expertise with life insurance and income protection and were able to advise me and arrange suitable products. Highly recommend.

Lachlan Mellings
12/08/2020
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