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How do insurers protect the income of health professionals?

News article

Publication date:

25 March 2020

Last updated:

30 March 2020

Author(s):

Adam Higgs

Protection Guru explore how providers match up against the other providers and which proposition offers the best perks of income protection for medical professionals.

 

 

Advising the medical profession on their income protection requirements can be difficult as often their needs due to their occupation are quite different, particularly in matching the deferred period to their sick pay scheme. Royal London have today joined the growing list of providers who are now offering doctors, surgeons and other medical professionals’ special benefits within their Income Protection Plans. This week, we explore how they match up against the other providers and which proposition offers the best perks.

Length of Service

Full Pay

Half Pay

During the 1st year of service

1 month

2 months

During the 2nd year of service

2 months

2 months

During the 3rd year of service

4 months

4 months

During the 4th & 5th year of service

5 months

5 months

After 5 years of service

6 months

6 months

One such perk that some insurers offer is matching the deferred periods within their income protection plan to the NHS sick pay scheme. NHS employee sick pay varies depending on length of service. The table below shows how long employees will be offered full and half pay depending on their length of service:

(Source: https://www.nhsemployers.org/tchandbook/part-3-terms-and-conditions-of-service/section-14-sickness-absence-england)

This sick pay structure complicates income protection advice as advisers do not know if or when a client may claim on their policy. If, for example, a claim was made in the client’s first year of service with the NHS their immediate requirement is a split deferred period of 1 and 3 months. If the client needs to claim in their 4th year of service however, the split deferred periods should be 5 and 10 months.

As such NHS staff, and those with sick pay schemes that mirror the NHS, require an income protection plan where the deferred period changes in line with their length of service. Fortunately, there are a number of insurers that offer this.

Over the last few years this has been limited to doctors and surgeons, however in recent times insurers such as LV=, Legal & General, Royal London and Vitality have extended their offering to other NHS staff and public sector occupations such as teachers. The table below shows the insurers that offer to match alternative sick pay schemes and the related occupations:

* Sick pay matching is only available to non-NHS doctors, surgeons and dentists where their employers sick pay matches the NHS.

** Vitality offer sick pay matching to any NHS employee where their sick pay is based on part 3, section 14 of the NHS Terms and Conditions of Service Handbook. This applies to all NHS staff other than very senior managers and staff within the remit of the Doctors’ and Dentists’ review body.

 

As can be seen, LV= and Royal London also extend their sick pay guarantee to private school teachers, doctors, surgeons and dentists that are employed privately whose sick pay scheme matches that of public schools or the NHS. Providing the doctors, surgeons and dentists are registered with General Medical Council or General Dental Council and are licenced to practice in the UK they will be eligible.

Legal & General, LV=, Royal London and Zurich take their offerings for doctors and surgeons further by increasing their minimum benefit guarantees. The table below shows how their benefit guarantees for doctors and surgeons’ contrast to their standard offerings:

Other insurers do offer a minimum benefit guarantee; however this is not increased for doctors and surgeons from their standard offerings.

Interestingly across insurers, the minimum number of hours a doctor or surgeon is required to work per week to qualify for the minimum benefit guarantee is the same as other occupations for all providers except LV= and Vitality. Both insurers have actually increased the minimum from what they offer for other “standard” occupations, meaning that in order to qualify for the increased benefit they are required to work longer.

Aviva, LV=, Royal London and Zurich go another step further, offering cover during a sabbatical break on certain occupations. This allows clients in qualifying occupations to take an employer agreed sabbatical of up to 1 year for AvivaRoyal London and Zurich, and 2 years for LV= while still being treated as if they were working full time.

In general, If the insured person becomes incapacitated while on sabbatical the benefit payable will be calculated based on earnings received 12 months before the sabbatical was taken. For the benefit to be paid the insured person will usually be required to prove their employer approved their sabbatical and held a position for them to return to in a similar role.

AvivaRoyal London and LV= will allow the client to take multiple sabbatical breaks throughout the term of the contract, however they require the client to be back in work for at least 12 months (6 months for Aviva) before another break is taken. Zurich only cover the client for one sabbatical break during the policy. The maximum time a client can take as a sabbatical is 12 months for both AvivaRoyal London and Zurich, and 24 months for LV=.

Overall, Aviva, Legal & General and Royal London have a strong proposition for NHS medical staff as they match sick pay arrangements and have an increased minimum benefit guarantee. Vitality and LV= appear to offer the best cover for select public occupations. Royal London and LV= are somewhat unique in being the only two insurers who offer their NHS sick pay guarantee to dentists and professionals not directly employed by the NHS. Zurich should also be commended for increasing their minimum benefit guarantee for doctors and surgeons while maintaining a low working hours requirement.

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This document is believed to be accurate but is not intended as a basis of knowledge upon which advice can be given. Neither the author (personal or corporate), the CII group, local institute or Society, or any of the officers or employees of those organisations accept any responsibility for any loss occasioned to any person acting or refraining from action as a result of the data or opinions included in this material. Opinions expressed are those of the author or authors and not necessarily those of the CII group, local institutes, or Societies.

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