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Why do doctors need income protection?
People with little knowledge of the medical profession in general and the NHS in particular tend to think doctors are extravagantly paid. Those in the know are aware that at the low end of the pay scale, doctors don’t earn very much above the national average and this is despite the years of training, the long hours and the immense pressures of the job. Most doctors in the NHS are probably not in a position to build up sufficient savings to prepare for the eventuality of extended sick leave and, without doctors income protection, would have to rely on occupational sick pay.
NHS sick pay
NHS doctors sick pay is worked out according to length of service.
- First year: one month’s full pay and (after four months of service) two months’ half pay.
- Second year: Two months’ full pay and two months’ half pay
- Third year: Four months’ full pay and four months’ half pay
- Fourth and fifth years: Five months’ full pay and five months’ half pay
- Sixth year and above: Six months’ full pay and six months’ half pay
Doctors in the private sector
Most doctors who work in private health are NHS doctors supplementing their income with private work. As for General Practice, there are only about 2,000-3,000 private GPs in the whole of the UK. Outside the NHS, sick pay is a matter for individual employment contracts and if you’re a private GP with self-employed status you’ll have to make your own arrangements. Again, this may mean your only recourse is Statutory Sick Pay or Employment and Support Allowance.
Income protection for doctors can make a huge difference to your financial stability and peace of mind.
Unique challenges of the job
All occupations have their challenges, but doctors face greater ones than most of the UK workforce.
Pressure: responsibility for people’s health and often their lives means every day brings extreme levels of stress.
Burnout: the cumulative effect of this daily pressure can lead to burnout, which makes it virtually impossible to carry out the duties of a doctor.
Risk of infection: the constant exposure to illness means there is an equally constant risk of infection.
Injury: the work of a doctor is often more physical than many people realise, which brings with it the potential for musculoskeletal injuries.
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Income protection for doctors FAQs
If you claim on your policy while receiving NHS sick pay your insurer will usually only pay the difference between your sick pay and your full amount of cover. When your sick pay ends you should start to receive the full amount of your insurance. Your insurance is not usually reduced by Statutory Sick Pay.
It’s usually a condition of any income protection policy that you keep your insurer informed of any changes in your income, occupation and circumstances. It may not affect your policy but they need to be kept up to date. If any change brings with it greater risks or higher income then your policy and premiums may need to be adjusted.
Many policies include an option called a ‘career break’ which allows you to put both your cover and your premiums on hold for a fixed period, often up to 2 years. You won’t be able to make a claim during this period, but it does enable you to restart the policy rather than having to take out a new one and go through the underwriting process again.
Pay-outs are tax-free. Beyond this, the tax treatment of income protection insurance premiums isn’t entirely clear. If you’re employed and part of a group scheme in which your employer pays the premiums, you may be taxed on these as a benefit in kind. If you’re self-employed they won’t be taxable but neither will you be able to deduct them from your tax liability because they are not considered a necessary business expense.
Income protection covers you for temporary inability to work as a result of injury or illness. You can claim as many times as you need to for different conditions and in certain circumstances for the same ones. It gives you regular monthly payments to replace your income.
Critical illness insurance covers you if you’re diagnosed with one of the serious illnesses specified in the policy which is likely to stop you working permanently or may even be terminal. It pays a single lump sum and once it has paid out the policy ends.
Related resources
Life insurance vs income protection insurance: what’s best for you?
A look at two essential kinds of financial protection, how they differ and how they can work together