Options for illness cover for locum and salaried GPs

For most people, their largest asset is not their home, but their future income. If you were aged 30, with gross income of £60,000 per annum, you would earn £2,280,000 of income to the state retirement (SRA) age of 68…more of course if your income or SRA increases.

As all of your future plans are reliant on this income, it would seem sensible to make sure this is protected. However, it is surprising how many sessional GPs have no cover in place whatsoever.

If you were unfortunate to be unable to work due to illness or disability, as a locum you would have no sick pay arrangements in place. If you are a salaried GP, you would typically have a contract from the practice, often mirroring the NHS contractual sick pay but from the date you started at the practice. This initially would be one month’s full pay followed by two months’ half pay. Nothing would then be received, but after 12 months you may receive an ill health retirement pension from the NHS, but this is not guaranteed and, if paid, is unlikely to be significant in the early years of your career.

There are a number of different ways of protecting your income which could include all or some of the following:

Income Protection Cover (Permanent Health Insurance)

This is a long term solution designed to pay you a monthly income if you are unable to work due to illness or injury. It provides permanent cover which means it could, in extreme situations, continue to pay benefits right through to your retirement age if you were unable to return to work.

Some cheaper plans can also be obtained that only pay out for a limited period (typically 2 years).

Locum insurance

Designed to cover your short term locum costs if unable to work due to illness or injury. This is really something partners in a practice need to consider as their partnership agreement will normally state that they will be liable for the cost of a locum to take on their clinical duties while they are absent. A locum policy would cover this financial responsibility. If you chose to move into partnership this would be an additional cost to consider.

Critical Illness Cover

Designed to pay out a lump sum or regular income if diagnosed with a specified illness or medical condition.

One size does not fit all, and I cannot emphasise enough just how important it is to seek Independent Financial Advice to discuss your particular circumstances to find the best solution for your particular needs.

Many of you may already have cover in place, which is good news, but a lot of things have changed over the years which means existing policies should all be reviewed.

Has your income changed since you took income protection out?

Your income protection contract should be index linked. It is highly likely that either the benefits under the contract or your income has risen since you arranged your income protection, meaning the two could be out of kilter.

This could lead to you being under or over insured. It’s worth checking…otherwise what you actually get when you desperately need the income could well be quite different to what you were expecting.

Will you need to work past age 60?

The NHS has changed for many the point at which you can start to draw your NHS Pension. Historically, income protection contracts were written to age 60, in line with the normal retirement age (NRA) for the NHS or that being the point most people typically wanted to retire.

If your financial commitments mean you’ll need to work past 60, it would be wise to review your income protection cover now.

Have you reviewed your income protection cover since insurance industry-wide changes took place in January 2013?

The EU Gender Directive was introduced in December 2012 to stop companies using gender as a basis on which to differentiate on price. It has meant, for one, that the price for female income protection has dropped substantially.

If you haven’t reviewed your income protection cover since January 2013, it may now be possible to get the same cover at a lower cost. It’s worth checking at least.

Is there a new product with even better cover more suitable for you?

In recent years there have been beneficial improvements to income protection contracts. For example, a couple of years ago, one of the major players in the medical insurance field launched the best contract that we have seen. For some of our clients, it’s been worth them reapplying for the same cover in order to benefit from the enhanced contract.

The last word

You could view income protection as a waste of money and, indeed, we hope it is for you…we hope you’ll never need to draw on it. Should that not be the case and you do need to make a claim at any point in your career, it will be the best money you’ve ever spent!

This article first appeared in The Sessional GP magazine.

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