Income Protection for Doctors 2024
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Income Protection for Doctors 2024
Doctors are incredible and many of us owe a great debt to doctors at some point in our lives. I certainly do!
When it comes to insurance, the insurance world has decided that they think the same way too. Some years ago, a few insurers started thinking “Doctors are amazing, is there anything that we can do as a kind of thank you to them?” And I pleased to say that yes there is.
Income protection is a policy that protects your income in the event that you are ill and cannot work. It might be that you can’t work for a few months, or for the rest of your life. Being a doctor you will see more than most people, the amount of things that can happen to a person healthwise, that completely changes everything they can do.
Let’s take a look at income protection for doctors.
Why Do Doctors Need Income Protection?
Doctors need income protection. Pretty much anyone that is earning an income, needs income protection.
If you are an NHS doctor it is very likely that you are a part of the NHS sick pay scheme. This can give you your full pay up to 6 months and then half of your pay for up to 6 months. Income protection is designed to kick in when your salary drops to half pay and then pay some more when your salary stops altogether.
In your work you will have seen that there are a lot of health conditions that don’t cause time off work, some that cause people to take some time off and others that mean that a person can never work again. In the insurance world we see lots of statistics and generally speaking if someone is off work for even a couple of months, their ability to get back to work significantly reduces.
If you are a doctor working privately then your need for income protection could be even greater!
When you work in private practice you do not often access to the perks that come with NHS employment, like the NHS sick pay scheme (or the death in service cover you get, but that’s a different blog…). Without the security of the NHS sick pay scheme it’s quite likely that you would need an income protection policy that can support you far more quickly than 6 months.
With income protection you can protect your earnings and lifestyle when your sick pay ends. Set up the right way, an income protection policy will pay out your income if your ill and can no longer work ever again as a doctor. This is known as an own occupation income protection. There are other versions of income protection, but you really want to aim on getting an own occupation policy.
Specific Income Protection for NHS Doctors
For the moment let’s look at NHS doctors. You usually get 6 months full pay, followed by 6 months half pay. It’s essential that you access a specific perk that some insurers can offer you due to your employment. If not you will be paying far more for income protection than you need to.
Income protection is arranged with what is known as a deferred period. This is the timeframe that you must be ill and unable to work before the financial side of the income protection policy can kick in and support you. Deferred periods are usually 4, 8, 13, 26 or 52 weeks long.
Income protection does not usually pay out while you are still receiving money from your employer, up to a certain percentage of your gross income. I’m sorry, jargon, I’m trying hard to avoid it. As an NHS doctor you want an income protection policy that tops up your income at 6 months when you go to half pay with the NHS, and then tops you up even more when your NHS sick pay stops. There’s no point buying an income protection policy that kicks in after 4 weeks as the insurer will not pay you support until your salary drops at 6 months.
The key thing, really key thing as an NHS doctor is that you can get an income protection that does this kick in at 6 months, for the cost of one that kicks in at 12 months. This is the thank you that insurers have put in place for you.
You see the shorter the deferred period, the more income protection costs. It’s a much higher risk for an insurer to insure someone for being ill and unable to work after 4 weeks, compared to 12 months, as a lot of things resolve well within 12 months.
By charging you for a 12 month deferred policy instead of 6 months, the insurers are making this policy as cheap as possible for you, whilst still promising to pay some of your income when your salary drops at 6 months.
Unfortunately if you are doctor that is not working in the NHS that is eligible for this NHS sick pay scheme, then you cannot access this kind of preferential income protection policy.
Insurance Doctor versus Medical Doctor
This might sound like a strange section, please bear with me. Insurers work with Chief Medical Officers and groups of trained doctors, to analyse medical data and determine the risks that they see depending upon certain situations.
This can prove really interesting. You see insurance doctors, at times, will view health conditions differently to the way that medical doctors do. This can sometimes make applying for insurance trickier as you might have a health condition that to you and your own doctor, is not a big concern. But for an insurance doctor it might be a concern that does alter the income protection options that you can have.
Pre-diabetes is a good example here. It might be that you have pre-diabetes, something that is a concern and does need to be monitored and hopefully reversed. Not everyone, but some people with pre-diabetes focus upon the fact that they are not yet diabetic, and don’t necessarily see it as anything serious. However, insurance doctors often treat pre-diabetes as actual diabetes when they are helping to set rules about the way that insurances like income protection are offered.
This can mean that a person might have a premium increase or a diabetes exclusion on their income protection policy, depending upon the insurer that has been chosen. This is not going to sound great if you are pre-diabetic, but it’s important that you go into looking at income protection with a clear idea of how things can be viewed differently.
Having a medical condition does not automatically mean that there will be a premium increase or an exclusion on an income protection policy. I don’t want to finish this blog on a negative but I always think that it’s best to be open about these kinds of things from the start, so that there are no shocks when people do apply for income protection insurance. Most people can arrange income protection at standard terms without any issues at all, so please do not worry.
Listen for more
I have a podcast and recently did an episode with Dr Debbie Smith, Chief Medical Officer at Swiss Re. We talked about emerging health trends and what this means for income protection claims and the underwriting of these products. You can take a listen here or on all major podcast platforms.
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