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How to ... Protect your income when off sick

Phil Mileham looks at how GPs can safeguard their earnings with insurance if they are too ill to work.

There are many different insurance policies in the market, so it is vital you choose the one that is right for you and your personal situation (Photograph: Istock)
There are many different insurance policies in the market, so it is vital you choose the one that is right for you and your personal situation (Photograph: Istock)

For the first time in 13 years, we have a new government and a wave of change that will affect many areas of our lives.

The world of finance is likely to be at the forefront of these changes but, despite this, some things remain constant for GPs. Protecting yourself and, if you are a GP principal, your practice are prime examples. They should remain a cornerstone of financial planning, no matter what happens - whether you are at the start of your career or heading towards retirement.

It may seem that paying out on income protection or locum insurance policies is an unnecessary expenditure in these cash-strapped times but it could be the best money you have ever spent.

This is a guide to the key areas you should consider when protecting yourself financially, if you or staff at the practice become too ill to work.

The key is to spend wisely on a policy that suits your particular needs and circumstances. You should talk with an adviser who understands the GP profession, to ensure you have the right level of protection and do not pay for unnecessary products.

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Income protection cover
Should you be unable to work due to illness or injury, having an income protection policy means you will still receive a regular income.

An income protection policy will pay you a monthly tax-free income at, typically, 50 per cent of your pre-incapacity earnings. Before taking out a policy, there are some key points you should consider:

  • Is the level of cover specific to your circumstances? Some people may have alternative ways of covering loss of income, such as through a partner's earnings or investments. Take this into account when you choose a policy.
  • Does the cover include 'own occupation' definition? Check that the benefits will be paid if you are unable to carry out your specific job due to sickness or injury. Some income protection products offer an 'any suitable occupation' definition, which means they will not pay out if you cannot do your own job but could do other types of work based on your knowledge and experience.
  • What is the 'deferred' period? The deferred period is a set amount of time - for example, four weeks, six months, a year - from the date you are incapacitated to the date when income payments start to pay out. Based on your circumstances, think about how long a deferred period would be appropriate for you.

Locum insurance
Of course, it is not just personal income protection you need to consider. What would happen if a partner, salaried GP or other key staff member in your practice is unable to work due to sickness or accident?

You should have a policy that provides locum cover for all staff who play an active role in the provision of services.

The cost of employing a GP locum varies from region to region but wherever you live, you will find it a huge expense. Depending on where the practice is located, you can pay up to £700 a day to employ a locum.

If you consider that 77 per cent of the sickness claims Wesleyan paid out to practices in 2009 were for illnesses of more than 60 days, it does not take a financial expert to realise that the cost of providing locum cover on a long-term basis can be a major expense.

Before selecting locum protection there are a number of things you should consider and we recommend that you take professional advice. However, these tips should give you an overview of what to look out for:

  • Look for a scheme that offers you a permanent contract. Once the policy is underwritten, the terms and conditions cannot be altered and will provide cover until the policy ends, no matter how many claims you make or how the state of the insured party's health changes.
  • Make sure the plan comes with guaranteed options so that you can increase the cover without having to provide further medical evidence.
  • Ensure the cover will still pay out if you decide to cover any absence by re-allocating resource in-house rather than employing a locum.

The crucial thing is to avoid waiting until someone falls ill before you consider locum protection. By then it is too late.

Get advice
Protecting yourself is vital as it can help you maintain your level of income, avoid significant locum bills, and put plans in place to deal with sickness and injury. There is a wide range of products available but not all will match your particular needs, so choose carefully.

It is sensible to take professional financial advice to ensure you find the right cover at the right level, leaving you neither overnor under-insured.

Plan ahead

Plan carefully
Consult with a professional who can guide you through the complex range of products available to ensure you find the right cover at the right level.

Plan early
The need to protect yourself starts at the beginning of your career in the case of income protection, and before someone falls ill, in the case of locum cover. Newly qualified GPs may not see the need for this, especially when they are often burdened by a large level of debt. But losing income through illness at this stage could make your financial position untenable.

Plan according to your needs
Make sure your income protection is appropriate for your role, and that all key staff at the practice are covered by locum protection.

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