Introduction
When you’re busy tending to your patients and writing up scripts, protecting your finances is probably the last thing on your mind. But when you’ve worked so hard to achieve a certain lifestyle, it’s important to have the right protection in place. In this guide, we’ll talk you through all the options available to you, from life insurance to mortgage protection.
Protecting your income if you can’t work
Have you ever thought about what would happen to your finances if an illness or injury stops you from practicing? You may have some savings to tide you over, but you can’t always predict how long your recovery will be, and when that money might run out.
That’s where income protection can help. It will provide you with a regular income to keep things ticking over while you’re off work. It should also give you the peace of mind to focus on your recovery.
How much you’ll receive will depend on your chosen level of cover. As a doctor you may be able to get enhanced cover, meaning your payout limit could be higher than other occupations. This is something you can check when you’re searching for a policy. When you take out income protection with Wesleyan, you can get up to £4,000 a week.
If you’re entitled to NHS sick pay, you may be able to time your benefits for when your sick pay ends. It’s worth checking how much sick pay you’re entitled to as this can vary. It often depends on your specific contract, your NHS earnings and where in the UK you live.
If you’re self-employed or work in private healthcare, you may not have NHS sick pay, making it even more important to look at a personal income protection policy.
Own-occupation for doctors
Your work as a doctor may be more nuanced than other occupations. That’s why it can be wise to look for a policy that offers ‘own occupation’ cover. This means that any claim you make will be assessed on your ability to work as a doctor, not just work in general. If you don’t have this cover, the insurer may not pay out if they believe you can continue working in a different role.
It’s also worth noting that most income protection plans are adaptable, meaning you can change the level of cover you receive if your financial situation changes. For example, you may want to increase your cover level if you receive a promotion or take on private work that boosts your income.
Cover for serious health conditions
While income protection pays you a regular income while you’re off work, critical illness cover pays you a single lump sum if you’re diagnosed with a pre-defined serious health condition. These conditions vary by provider, but can include cancer, heart attacks, strokes and dementia.
Receiving a large amount of money upfront can be handy if you need to pay for any medical treatments or care. As a one-off payment could run out quite quickly, you may want to pair it with an income protection plan – especially if you think you could be off work for a while.
Checking the fine print
As with any protection policy, it’s always important that you check the terms, conditions and exclusions. Pre-existing health conditions aren’t always covered, although some providers may offer partial coverage under specific circumstances.
It’s also worth noting that you won’t always be paid at the time of diagnosis. Sometimes you’ll have to reach a certain severity of illness before you receive any payout or be ill for a specified length of time.
Protecting your pension
Did you know that if you're off work for 12 months, your NHS sick pay benefits will stop? You'll also stop contributing to your NHS Pension while you're absent. Setting up income protection can help you with your day-to-day expenses, but it may not be enough to put towards a pension, let alone match the value your NHS Pension could provide.
At Wesleyan Financial Services, we take a holistic view to protection planning. We can help you get comprehensive cover that not only supports your living expenses, but can bridge the gap in any pension benefits you've not yet accrued.
Looking after the family home
Mortgage protection is a more niche type of protection product. As the name suggests, it covers your mortgage specifically, rather than paying out a lump sum that you can use however you choose.
It kicks in if you pass away while you’re insured, helping your loved ones pay off any outstanding mortgage on the family home. You can even take out a joint policy with your partner, meaning you’re covered if either of you pass away. You can combine your policy with critical illness cover to give you a wider breadth of protection, ensuring your mortgage is paid off post-diagnosis.
The payout you receive will be exactly what’s needed to pay off your mortgage. It's designed to run alongside a repayment mortgage with the cover reducing in line with your outstanding mortgage.
How much you can expect to pay for your cover will depend on the value of your home and your likelihood of death within your mortgage term. This will be worked out using your age, health, occupation and smoker status.
As a doctor, if you work with hazardous chemicals or are exposed to infectious diseases you may be deemed a higher risk by the insurer, so your premiums could be higher as a result.
Leave behind more than a legacy
Another type of protection product you’re probably familiar with is life insurance (or life assurance). Life insurance pays out a tax-free lump sum to your family when you pass away. It can help them continue the lifestyle they know and love, without having to worry about covering any costs you left behind.
For example, it can be used for your children’s school fees or to repay any loans on your medical business – it could even be enough to give your children an inheritance.
While you may be entitled to a death in service benefit from your NHS work, it may not be enough on its own. Life insurance can give your loved ones an extra financial boost.
If you’re part of a private practice or you opted out of the NHS Pension Scheme, then you may not have any provisions at all. You’ll need to think about how your family will manage financially without you, especially if you earn a healthy salary from your medical work.
As with any protection product, how much and how long you’re covered for will depend on your specific needs. Before you tailor your policy, you’ll need to choose from three main types:
- Term life insurance
- Whole life insurance
- Universal life insurance
As the name suggests, term life insurance lasts for a set term, usually 10, 20 or 30 years. You’ll only be covered for the length of your term, and you won’t accumulate any cash value. The main benefits of this type of policy are the flexible terms and lower premiums. On the downside, you’ll be unprotected when your term ends.
You’ll likely pay more for whole life insurance, but in return you’ll get lifelong cover and a guaranteed death benefit. It also features a cash value component that grows over time and can be borrowed against. It’s a more secure type of life insurance, as terms and payouts are typically guaranteed.
The main selling point of universal life insurance is its flexibility. You’ll be able to adjust your premium amount and your death benefits, and tap into your cash value. However, it’s more complex than standard whole life insurance, so it’s usually best to get financial advice if you’re considering it.
If you need further help deciding which type of protection policy is best for you, speak to a Specialist Financial Adviser from Wesleyan Financial Services. Charges may apply.
Protecting your business
When you’ve ticked personal protection off your to-do list, you may want to consider protecting your medical business too.
If you’re a partner in a practice, it’s likely that your livelihood is largely dependent on the success of your business. When you’re busy managing the day-to-day running, you may not be stopping to think about the risks you face.
For example, what would you do if your medical equipment failed, or a patient sued you for negligence? What would happen to your practice if your business partner became seriously ill or passed away?
Business protection is more than just cover for your buildings or equipment. It works to protect the general running of your medical business, including your reputation and partnerships. It’s a full strategy, one that a financial adviser can help you put together.
There are many plans that fall under business protection, all of which we’ve detailed in our business protection guide for GPs.
Here’s a brief summary of the main protection products for doctors:
- GP surgery insurance is an all-round policy covering damage, equipment breakdown and liability.
- Locum insurance can help you pay for replacement doctors, specialist nurses and pharmacists when you need them the most.
- Partnership protection insurance pays out a lump sum benefit that will allow you to buy your partners’ share of the business if they’re no longer around.
- Key person insurance provides a financial bridge between the loss and replacement of key employees.
- Medical malpractice insurance offers cover for clinical negligence, misuse of information and more.
- Management liability insurance offers liability cover for directors, managers and officers.
- Cyber insurance helps you recover financially from any cyber attacks and breaches, especially important when you’re holding confidential patient information.