Income protection insurance for those who are doctors or surgeons is a popular insurance product that is used to protect them against any financial risk they may face due to accident, injury, or sickness.
This type of income protection will pay out a monthly benefit for the policy holder to help replace any lost earnings they experience while they are unable to work.
Whether the medical professional is employed by a private company or the NHS, it is worth it for them to consider protecting their earnings.
For those who work for the NHS, they are provided sick pay but only for a maximum amount of time of 12 months, which is only available after they had been working for a period of five years. In this case, full pay is provided to them for the first six months of the benefit and half pay is provided to them for the last six months of the benefit.
For those who work in the private sector, their sick pay benefits are often significantly less, which makes it more important for them to consider protecting their finances.
With an income protection insurance policy, the doctor or surgeon’s earnings can be covered for the entire period they are unable to work all the way up until the time they plan to retire.
So, those who suffer a serious injury or illness that prevents them from working for a number of years can receive a monthly benefit in order to cover their financial obligations and not fall behind on their responsibilities, keeping them surviving financially and continuing on with life as normally as possible.
Why is Income Protection Insurance Needed?
For most of those who are working in the doctor or surgeon profession, it is very worthwhile to consider some type of sickness insurance protection of which income protection is generally the most appropriate plan.
This type of insurance coverage will benefit the policy holder based on their income and the nature of the comprehensive coverage they have chosen. If someone has to stop working for a long period of time, it would undoubtedly have an impact on their financial situation, which is why having a policy to protect their income and way of life is so important.
Most people only have enough savings to last them a few months without income should they be unable to work, and the state issued benefits for loss of work generally do not pay enough for someone to financially survive, especially if they have a family to support. At this time, it is required for employers to pay £88.45 a week in sick pay benefits to employees for a period of 28 weeks.
After this period has ended, state benefits will kick in but will only provide £99.15 a week for someone to survive on.
It is important to have a good understanding of the sick pay benefits an employer provides in order to make the best decision about income protection insurance – while the statutory sick pay is one benefit employees will receive, the employer may offer additional income loss support through another policy.
How Does Income Protection for Doctors Work?
The best way to explain how this type of income protection works is by showing a real life example:
Charles, a doctor in Liverpool, took out an income protection insurance policy that would cover 50 percent of his gross monthly income, totalling about £3,000 a month. When taking out the policy, Charles chose a 12-month deferred period since he had sufficient sick pay from his employer and savings to survive approximately one year without an income.
Five years after purchasing the plan, Charles was diagnosed with a form of cancer that would take him a period of three years to fully recover.
After 13 months of being out of work, the income protection plan paid £3,000 directly to Charles, free of income tax, to help him cover his financial responsibilities – the 12-month deferred period he chose plus one month of accumulated benefit.
Charles’ plan continued to pay this benefit every month for the full 36 months he was unable to return to work, equaling a total benefit of £108,000. If he would have relied on state benefits to cover his expenses, he would have only received £15,600 over three years.
While the income protection plan covered Charles until he was able to return to work after three years, it had the potential to continue paying him benefits for a longer period of time if needed or would have covered him until the time he planned to retire, at age 60, and would have received those benefits.
Information on Specialist Income Protection
Some income protection insurance providers will offer doctors additional features to their policies, such as limited cover during a period of sabbatical leave and sick pay mirroring deferred periods.
- For those who are newly qualified doctors or surgeons for the NHS, their sick pay entitlement will increase every year they remain in service, which includes a maximum of six months of full pay and six months of half pay after a service period of five years.
- Sick pay mirroring deferred period policies would automatically begin paying benefits when the sick pay benefit from the NHS has stopped.
- Additionally, some income protection plans will allow for coverage up to two years for those who are on sabbatical leave, helping to provide them with protection even though they are technically not working.
Income protection insurance policies for surgeons and doctors are most often taken out under the “own occupation” definition, even if the policy holder is on sabbatical leave – this means that a claim is generally approved should it be proven the individual cannot work their specific occupation.
What You Should Know About Own Occupation Cover
For those doctors who are general practitioners (GPs) or hospital-based, it is generally possible to gain an income protection policy using the “own occupation” definition. This means the insurance policy will pay out for almost any medical reason that prevents the policy holder from working their specific duties as a doctor.
While it is also possible for surgeons to find income protection policies with the same own occupation definition, it is important to note that some policy providers will limit the benefits surgeons can receive to a maximum period of only five years rather than when they are able to work.
Securing an own occupation definition is very important for those in the profession of being a doctor or surgeon. For example, if a surgeon was to have an injury to their hand it would be very difficult for them to continue performing their job as a surgeon which would in turn be covered by the “own occupation” definition. But, should they use a lesser definition, such as “suited occupation,” the insurance provided may require the policy holder to continue working since they have suitable skills for another job.
Through most income protection insurance providers, it is possible to cover between 50 and 65 percent of a monthly gross income before taxes. It is important for doctors to assess their monthly expenses to best determine how much coverage they actually need instead of just looking at the maximum coverage that is allowed – the more coverage that is chosen, the more expensive the monthly premium payments will be.
With personal income protection plans the monthly premium payments are debited from a personal bank account and any benefits that are paid out will go directly to the policy holder.
When taking out an income protection insurance policy, there will be an option to choose the length of the deferred period. This is the period of time between making a successful claim and when the benefits will begin paying out.
The longer the deferred period is, the less the monthly premiums for the policy will be – those who have sick benefits through their employer or significant savings to help them survive financially should consider extending their deferred period to help make the policy more affordable. Doctors and surgeons should check with their employer to see what sick benefits may be available to them.
For those who are employed by the NHS, the following sick pay entitlements will generally apply:
- Employed for 0 to 3 months – No sick pay
- Employed 3 to 12 months – 1 month full pay and 2 months half pay
- Employed 2 years – 2 months full pay and 2 months half pay
- Employed 3 years – 4 months full pay and 4 months half pay
- Employed 4 years – 5 months full pay and 5 months half pay
- Employed 5 years – 6 months full pay and 6 months half pay
There will also be some options regarding the length of term of the policy. Most plans will have a minimum term of 5 years and a maximum term that can be extended up until the policy holder turns 65 and starts collecting retirement benefits.
Usually, extending the period in which the coverage lasts will increase the monthly premiums the policy holder will pay, but it is important to keep in mind that more people suffer serious accidents or illnesses between the ages of 55 and 65 years old.
Finally, there will be the opportunity to take out an income protection policy that features index linking. This means that the value of the insurance policy will increase along with the rate of inflation to help keep the amount and value of the benefit to be paid the same.
In turn, it is possible for the premium payments for this policy to increase with the rate of inflation as well, even if the policy holder has opted for fixed monthly payments.
Regardless if someone is looking for income protection insurance as a doctor or a surgeon, there are insurance agents available to guide them through the process. It is possible for our knowledgeable team to help these individuals find the right type of coverage for their lifestyle and their budget.