Being self-employed doesn't mean you have to suffer financially if you're off sick.
You will have seen the interesting article by Kevin Walker of Blackett Walker in which Kevin considered the pros and cons of Permanent Health Insurance and Critical Illness Insurance. He took you through the use of these forms of insurance when you are seeking to protect your locum earnings over the longer term.
PHI (otherwise known as Income Protection) is a distressingly underused form of insurance. Discussions have been going on for years, within the financial services sector, about why this should be and various initiatives have sought to address it culminating recently in 7 Families.
What’s ‘wrong’ with Permanent Health Insurance?
Challenged to throw in a view as to why this is ‘under bought’ I’d suggest it’s perceived as being time-consuming to set up and ‘too expensive’. So is there a way around these perceived obstacles?
Alternatives for sessional GPs
Let’s take a look at Locum Insurance and see what it can do for a sessional GP.
- It pays a pre-determined sum – up to £3,000 a week or 75% of your earnings, if less – if you’re ill or injured and can’t work.
- It pays for a maximum of a year and so your financial adviser might suggest you take out a Permanent Health Insurance with a deferment period of a year, to dovetail with your locum insurance.
- With any luck, the PHI policy’s year-long deferment period means a couple of things: it means your premium will be a lot lower than it would have been if the deferment period were shorter and it means that if your health is not quite tip top, the underwriters will be far less concerned than if you’d selected a 2 or 4-week deferment period.
So that’s a couple of objections overcome!
"...you can add in cover for jury service and compassionate leave, none of which are offered by PHI."
How does locum insurance work?
It’s almost invariably what’s known as ‘general insurance’ which means it’s not a permanent contract unlike PHI. However, companies such as Practice Cover have taken the good bits of PHI and have melded them into a general insurance policy for you. So:
- premiums are not age rated. If you’re 30 or 60, the premium rate is the same;
- you can buy a policy with an underwriters’ guarantee that they will not re-underwrite you if you claim or your health worsens; or
- you can add in cover for jury service and compassionate leave, none of which are offered by PHI.
And, maybe most important of all, you can cover a greater proportion of your earnings.
The opinions presented in this article are solely those of the author on behalf of Practice Cover Limited and they do not constitute individual advice. Practice Cover is a trading name of Practice Cover Limited and is authorised and regulated by the Financial Conduct Authority.