Income protection insurance for doctors or surgeons is a popular insurance product that protects them against any financial risk they may face due to accident, injury, or sickness.
This type of income protection pays a monthly benefit to the policyholder to help replace any lost earnings while the policyholder is unable to work.
Whether a private company or the NHS employs a medical professional, it is worth it for them to consider protecting their earnings.
Sick pay is provided for NHS workers but only for a maximum of 12 months, and it is only available after they have been working for five years.
In this case, they receive full pay for the first six months of the benefit and half pay for the last six months.
Those working in the private sector often have significantly lower sick pay benefits, making it more critical to consider protecting their finances.
With an income protection insurance policy, doctors’ or surgeons’ earnings can be covered from the time they cannot work until they plan to retire.
So, those who suffer a serious injury or illness that prevents them from working for several years can receive a monthly benefit to cover their financial obligations and avoid falling behind on their responsibilities.
This keeps them surviving financially and allows them to continue on with life as normally as possible.
Why is Income Protection Insurance Needed?
For most people working in the doctor or surgeon profession, it is 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 policyholder based on their income and the nature of their chosen comprehensive coverage.
Click To Compare QuotesSuppose someone has to stop working for a long period. This will undoubtedly impact their financial situation, so it is important to have a policy protecting their income and way of life.
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 survive financially, especially if they have a family to support.
At this time, employers are required to pay £88.45 a week in sick pay benefits to employees for a period of 28 weeks.
After this period ends, state benefits will kick in but will only provide £99.15 a week for someone to survive.
Understanding the sick pay benefits an employer provides is important in order to make the best decision about income protection insurance.
While 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 covering 50 per cent 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 three years to recover fully.
Click To Compare QuotesAfter 13 months of unemployment, 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 could not return to work, equaling a total benefit of £108,000.
If he had relied on state benefits to cover his expenses, he would have received only £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 more extended period if needed or would have covered him until he planned to retire at age 60, and he 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 sabbatical leave and sick pay mirroring deferred periods.
- Newly qualified doctors or surgeons in the NHS will have an increased sick pay entitlement every year they remain in service. This 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 provide coverage for up to two years for those on sabbatical leave, helping to protect them 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 policyholder is on sabbatical leave.
This means that a claim is generally approved should it be proven that the individual cannot work in their specific occupation.
What You Should Know About Own Occupation Cover
It is generally possible for general practitioners (GPs) or hospital-based doctors to obtain 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 policyholder from performing their specific duties as a doctor.
Click To Compare QuotesWhile it is also possible for surgeons to find income protection policies with the same own occupation definition, it is essential 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 can work.
Securing an occupation definition is very important for those in the profession of being a doctor or surgeon.
For example, if a surgeon were to have an injury to their hand, it would be tough for them to continue performing their job as a surgeon, which would, in turn, be covered by the “own occupation” definition.
However, should they use a lesser definition, such as “suited occupation,” the insurance provided may require the policyholder to continue working since they have suitable skills for another job.
Available Options
Through most income protection insurance providers, it is possible to cover between 50 and 65 per cent of a monthly gross income before taxes.
Doctors should assess their monthly expenses to determine how much coverage they need instead of just looking at the maximum coverage allowed. The more coverage 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 paid out go directly to the policyholder.
When taking out an income protection insurance policy, you can choose the length of the deferred period.
This is the period between making a successful claim and when the benefits begin paying out.
The longer the deferred period, the lower 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 employers to see what sick benefits may be available.
For those who the NHS employs, 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 two months half pay
- Employed two years – 2 months full pay and two months half pay
- Employed three years – 4 months full pay and four months half pay
- Employed four years – 5 months full pay and five months half pay
- Employed five years – 6 months full pay and 6 months half pay
Some options regarding the policy’s term will also be available. Most plans have a minimum term of 5 years and a maximum term that can be extended until the policyholder turns 65 and starts collecting retirement benefits.
Usually, extending the coverage period will increase the monthly premiums the policyholder pays.
Still, it is important to keep in mind that more people suffer serious accidents or illnesses between the ages of 55 and 65.
Finally, there will be the opportunity to take out an income protection policy with 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, the premium payments for this policy could increase with the rate of inflation as well, even if the policyholder has opted for fixed monthly payments.
Whether a doctor or a surgeon is looking for income protection insurance, insurance agents can guide them through the process.
Our knowledgeable team can help these individuals find the right coverage for their lifestyle and budget.