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Protect your income in case you are off sick long term

Even GPs can fall ill so that they are unable to work – and income protection is a necessity, not a luxury, says Dr John Couch

One of the drawbacks of earning a salary above the national average is that the financial fall to earth, in the event of long-term sickness, is much more dramatic. With the increases in GP incomes over the past three years it is likely that many GPs have neglected to check whether income protection arrangements have kept pace. Indeed, some GPs have no protection at all.

The NHS pension scheme only allows ill-health pensions to GPs becoming permanently incapacitated. Many illnesses resolve in time, allowing a return to work. Even for those able to claim an ill-health pension, payments will be considerably less than previous salary, especially for younger GPs. Income protection is therefore vital.

It is interesting that life insurance is more often considered before income protection although the average male GP has a 20 times greater chance of being off work for six months or more before age 65 than of dying before that age. It is certainly a good idea to check your own arrangements if you have not done so within the past 12 months.

How much cover you will need depends on many individual factors including current expenditure, size of family and school and university fees. Spouse or partner income may also be taken into account.

Premiums for income protection policies do not attract tax relief. However, monthly payments made to you are free of income tax and national insurance under current legislation. Therefore the amount of cover you require can be related to your current after-tax income. However, as most policies limit the total amount that you can insure for, some fall in income will be inevitable.

Income protection premiums become cheaper when you have a deferred payment period. A policy that pays out after four weeks of illness will be much more expensive than one that pays out after six or even 12 months. If you are a salaried GP and have worked in the NHS for six years or more, sick pay of six months full pay followed by six months half pay must be made by your employer. If you are a GP partner, the payment period will be defined in your partnership deed. Six months full pay is a common figure but the option of expulsion after this period is also likely. Partners should also check the practice deed for the terms of locum cover. For instance, you may have to pay for your own locum after three months' absence. So you should also consider locum insurance.

If you have no cover, or have a shortfall when you check your plans, get advice and quotes from at least three advisers. Check exclusion clauses carefully. Many policies have strict criteria for claiming and will reduce payment if you receive a pension or benefits. Cover may be reduced if you take a career break. Some will also assess whether you could perform other work.

Sadly this type of protection is a necessity, not a luxury, so make it a priority.

John Couch is a GP in Ashford, Middlesex

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