Income Protection for doctors
Whether you are single, married, working full time or part-time, your income allows you to enjoy a certain quality of life and you don’t deserve to lose the lifestyle you have worked hard for because of something unexpected. Depending on your situation, doctors income protection cover generally provides up to 65% of your income in the case of an accident or illness. This cover can continue up until the age of 60 or 65, whenever you can access your superannuation. The length of time you receive payments depends on the contract term; for example two years, five years, or up to age 60 or 65; it varies depending upon the amount of cover you are willing to pay for.
How much income protection do I need?
The amount of income protection insurance you need will be determined by the salary you want to insure. Generally doctors income protection provides cover for about 75% of your salary in the event of illness or injury preventing you from working. You need to consider what the costs are of meeting a mortgage and other debts; providing for a spouse, children or other dependents; and maintaining your assets and investments. Remember; the point of income protection insurance is to provide an income stream if you can no longer work.
Getting the right blend
Income protection can be tailored to suit your existing benefits to ensure cover starts at the right level at the right time. For example, as a hospital doctor with 6 or more years service you will have NHS Sick pay of 6 months full pay and 6 months half pay. Therefore an income protection policy should be set up to pay out initially after 6 months to supplement the reduction in pay, with a further much higher benefit set to pay out after 12 months when the NHS sick pay ceases. Check your own sick pay benefits in order to get the level of income protection correct for your own circumstances. If you are a General Practitioner your practice agreement should give you details of your entitlement to sick pay.
Doctors income protection
Junior Doctors (Foundation Programme)
The NHS provides you with maximum sick pay entitlement after five years’ service but, until you reach five years, entitlement is very limited and may not cover basic living expenses. The NHS Doctors’ Sick Pay Initiative, a unique feature of the Friends Life Income Protection Plan, could provide you with a replacement income, starting as soon as your NHS full sick pay ends, whatever your length of service. Premiums are guaranteed so your cost will not increase unless you choose to increase your cover.
This table shows you how your NHS sick pay benefits are phased in.
|During the first year of service||One month’s full pay and (after completing four months’ service) two month’s half pay|
|During the second year of service||Two months’ full pay and two months’ half pay|
|During the third year of service||Four months’ full pay and four months’ half pay.|
|During the fourth and fifth years of service||Five months’ full pay and five months’ half pay.|
|After completing five years service||Six months’ full pay and six months’ half pay.|
Doctor Sabbatical Leave
During your career as a doctor you may decide to take sabbatical leave, but how would you cope without an income if you became ill or suffered accidental injury during this time? A Friends Provident Income Protection plan could give you the financial peace of mind you need during the first two years of your sabbatical. If you decide to take sabbatical leave, you will be treated as remaining in full-time employment for up to two years, meaning in the event of illness or accidental injury you will be assessed against your ability to perform your own occupation as a doctor.
Protect your private earnings
Although not included under the doctors’ sick pay initiative the Friends Life Income Protection Plan could also cover private earnings.
You care for others, we believe you should have the best possible care…
Medical & Professional Money Management
We understand that in a medical profession there is a slight risk of accidentally contracting HIV/AIDS. As Friends Provident don’t have a HIV/AIDS exclusion, we can provide you a plan with full cover against this infection.
Increasing your income protection cover
To help accommodate for any pay rises and inflation, we would recommend you opt for your income replacement level to rise by 5% every year, regardless of any changes in your state of health. As we will apply for your policy using the on-line eSelect system you also have the option of your benefit rising in line with the Retail Prices Index. Providing there is more than 10 years left on your policy, you also have the option to increase your cover by up to 30% every 3 years to reflect the progression of your career, without having to provide further medical evidence.
Examples of claims doctors have made to Friends Provident
|Sex||Age when Plan|
|Current age||Disability date||Current weekly|
What will I pay for income protection?
Premiums are set depending on:
- Age (premiums may increase or cover decrease as you get older);
- Health and pre-existing conditions;
- Whether or not you smoke;
- Occupation (for example, a manual labourer pays different premiums to an office worker); and
- The time you choose to wait before receiving payment.
Prices vary depending on age and other factors, but income protection can cost around one week’s salary per year. The premiums you pay on this type of policy are tax deductible. However, payments you receive under the policy are classed as assessable income for tax purposes.
What to look for when buying income protection cover
This isn’t an exhaustive list, so contact us for professional financial advice.
- When taking out a policy, ask these key questions: what’s covered; what’s not covered; how much will I be paid after a claim; and what will the insurance premiums cost now and later?
- Consider getting a policy with index-linked premiums and cover so you know the cover will keep up with inflation.
- Consider a non-cancellable policy; otherwise companies may reassess your health or other factors on each renewal, possibly raising your premiums or refusing to continue cover.
- Offset clauses allow most insurers to reduce payouts if you have other income (for example, sick pay from your employer or state benefits). Check the relevant section of the policy for details.
- Check the waiting period (how long before you receive payment, often 26 or 52 weeks) and the benefit period (for how long payments will be made – typically until your normally expected retirement age).
- Some policies pay out if you’re unable to perform your normal occupation; others only pay if you can’t perform any occupation for which you’re suited by education, training or experience.