How to take the worry out of being ill or long-term sick

As doctors and medical professionals, you see accidents and illnesses daily. You also experience how this can affect your patients’ work and home life. But have you considered what would happen if you were off sick due to an illness or accident?

You are probably aware that when working for the NHS you are entitled to sick pay, but did you know this varies with your occupation?

Protect your income incase you become long-term sick

How NHS sick pay can vary

If you are in hospital service or have started as a salaried GP, the amount of sick pay you will receive depends on how many years of service you have completed.

  • During your first year of service, you will have 1 month of full pay followed by 2 months of half-pay.
  • During your second year of service, you will have 2 months of full pay followed by 2 months of half-pay.
  • During your third year of service, you will have 4 months of full pay followed by 4 months of half-pay.
  • During your fourth and fifth year of service, you will have 5 months of full pay followed by 5 months of half pay.
  • After 5 years of continuous service, you will have 6 months of full pay followed by 6 months of half pay, which is the maximum sick pay you can receive from the NHS. 

Now, remember if you had a break in service for 365 days or more and then returned to work for the NHS, your sick pay would go back to the beginning in these roles (1 month’s full pay followed by 2 months half pay). This is something to bear in mind if you want to have a break in service, for example, working abroad for a period. Also, remember, that maternity leave does not count as a break in service.

If you are a GP partner, your partnership agreement will set out your sick pay. This is normally guaranteed income for 12 months with a locum liability at that time. 

What happens if you are a dentist

For dentists, you are eligible for sick pay of 100% of your NHS pensionable income between 5-26 weeks (25% of pensionable income in Scotland and Northern Ireland). However, not all dentists are treated the same, so always check this out with your practice manager. 

For instance, If you are a private dentist or work through a limited company, you will have little or no sick pay. Don’t assume anything – always ask the question!

NHS sick pay is a great start, but what if you are off sick for a longer period, or unable to return to your occupation fully following illness or injury – What would you do? Can you maintain your outgoings and your family’s standard of living? You may manage with some assistance from family or a friend for a short period, but you can only rely on that help for a while!

There is something you can do to ensure that you can keep paying your monthly bills for the foreseeable future – take out income protection. 

What is income protection?

Income protection pays a monthly benefit into your bank account if you are unable to work due to sickness or an accident. The benefit you receive is tax-free, under current regulations. This means that you will not pay income tax, national insurance, pension contributions or student loan repayments in this income. The sum of money which goes into your bank account each month is yours to spend as you wish.

Income protection will continue to be paid to you until one of these three things occur:

  1. You return to work
  2. You pass away
  3. You reach the end of the policy term. 

Some policies limit the period to claim, for instance, to 2 years, but often it’s better to know you will have this sum to fall back on until your retirement age. You will need to discuss this with your adviser.

You can also claim on your income protection policy as many times as you need during the lifetime of your policy.

Are all income protection policies the same?

The blunt answer is a most definite “no”. The quality of cover and policy options are many, and a detailed understanding is vital before you commit to a policy.

Here are just a few options to include:

  • Guaranteed or reviewable premiums.
  • Deferment periods are normally expressed in the week after the onset of illness or injury when payment starts to be received.
  • Own occupation vs any occupation.
  • Waiver of premium.
  • Short-term or long-term.

There are many more options to consider, which can be confusing. Your occupation is very specialist, and your income protection needs to reflect this, so instead of spending hours researching this complex and vitally important topic that literally saves your income – call in an expert who can guide you through the options and make recommendations.

A financial adviser would never try to diagnose a complex illness – that’s your job. So, why should you try to decode the best income protection for you – this is our job!

What if I have a medical condition?

It’s always a good idea to try and have your cover in place before you have any medical conditions. This way, your income protection policy will have the greatest chance of having zero exclusions. 

However, if you do have medical conditions, this doesn’t necessarily mean you can’t get income protection. Always mention any conditional to your advisor. We can speak to the provider’s underwriters before making our recommendation. Different providers take different stances on many conditions, so we can prioritise those who are likely to look at your pre-existing medical condition more favourably. 

After application and underwriting, providers have different outcomes they can offer. We call these ‘terms’. There are four possible outcomes:

  1. The policy is accepted on standard terms. The premium and level of cover will match the personal illustration you will have been given before applying. 
  2. The premiums are increased to reflect the risk of that medical condition.
  3. The policy has exclusions for that medical condition, and the premium may stay the same or increase. 
  4. The policy is declined.

Our advisers have many years of experience in this area, so if you are worried you may not be able to get income protection or have previously been declined, speak to us.

What can I do if I do not work for the NHS?

As mentioned above, if you do not work for the NHS, you should talk to your employer or check your contract to see what sick pay arrangements you have in place. Additional income protection can dovetail with your current sick-pay entitlement. Without this crucial information, this exercise may well be unproductive. I encourage you to find out your sick pay entitlement ASAP.

How often should I review my existing Income protection?

As a rule of thumb, every year is ideal. However, if you have missed a few reviews, make sure you do it at least every time anything big happens in your life, such as your pay increases, you get married, you have a baby or change jobs.

This article has by no means been an exhaustive list of the benefits and options of income protection. It is meant, as a taster and something to provoke thought on the subject. If you have pondered on income protection in the past but never acted on it, or have some in place but haven’t reviewed it for some time – do get in touch and hopefully, we can help to bring you peace of mind. 

Protection products are varied in their purpose. Please seek financial advice to ensure cover is appropriate to your needs.

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