After many years of study and hard work to get where you are, one of the most important assets as a Doctor that you have is your income – and it is worth taking the time and speaking to someone who understands the marketplace to ensure that you have the best possible cover and at the best price.
Income Protection provides you with an ongoing income stream in the event of not being able to work due to illness or injury. There are many possible variations within the policy and it is important to ensure your policy has features that are relevant to your occupation and lifestyle to ensure that you have maximum ability to make a claim in the event of something stopping you from working.
The personal insurance market for medical professionals is a very competitive and dynamic place. Products are regularly upgraded with improvements to core definitions as well as the addition of other bells and whistles. So choosing the right product for you is quiet a difficult job to do. For example, for surgeons the policy they chose to implement must acknowledge the specific type of surgery they conduct, and the skills or dexterity required to do it.
Why cover yourself?
How do you plan to protect yourself if you are diagnosed with blood borne diseases such as Hepatitis B, Hepatitis C or HIV?
If you were diagnosed with a blood borne disease, it could be emotionally and financially devastating for you and those who depend on you. The diagnosis may require a need to change jobs, reduce the number of patients you see or to stop work altogether. All of these situations are likely to significantly impact your income-earning ability.
You may need to make these changes because AHPRA (Australian Health Practitioner Regulation Agency) has stipulated that all registered medical practitioners and registered medical students must stop performing exposure-prone procedures.
Exposure-prone procedures include contact by the skin with sharp surgical instruments, needles, splinters of bone, or teeth in poorly visualized or confined body sites.
Income Protection pays a replacement income if you are unable to work as a result of injury or illness. When determining your capacity to perform a job, you need to make sure that you take the unique nature of working as a GP into account.
How much can you insure?
Usually you can insure up to 75% of your current income which can be increased as your income increases. There are however Income Protection policies in the Australian marketplace that allow you to insure up to 100% of your income, at least for a portion of the benefit period. The amount that you are able to insure is capped by some insurance companies at $20,000 per month, though there are insurance companies that will allow up to $60,000 per month benefit for Doctors.
Contract type – Agreed or Indemnity
Are you receiving at least a portion of your income due to working as a sole trader or as self employed? If so, your income will fluctuate from year to year. An agreed contract ensures your whole benefit will be payable in the event of a claim even if you have earned less over the preceding 12 months to claim. An indemnity option means that at the time of claim you will need to provide recent financials to support your benefit amount which may eventually result in a lower benefit payable.
Waiting Period / Benefit Period
Choosing the right waiting and benefit period on your policy is paramount. This can be the difference between receiving benefit or not and it makes a large difference to the cost of your policy.
For example, if you can afford (through savings or other liquid funds) to be able to manage for the first 3 months of not being able to work and therefore have a policy with a waiting period of 90 days, this will reduce the cost by approximately one-third. This will ensure that you will be protected for more serious illnesses and accidents that keep you away from work for longer periods of time or even for the rest of your life.
Stepped or Level Premiums
Stepped premiums are great in the short term, however will cost you much more in the longer term as your premium will increase each year due to your increasing age. If you are expecting to keep your policy in place up to retirement, reviewing the level premium option (which does not increase in cost up to age 65 or to age 70) could save you half of your premiums over your lifetime.
Blood Borne Diseases
In your occupation as a Doctor, if you were to become infected with HIV, Hep B or C you may be forced to cease working even though technically, you have the ability to continue. It is important to ensure that your Income Protection policy will pay a benefit in these events and it is clearly defined in the Product Disclosure Statement.
Needle Stick Cover
Some insurance companies, in addition to the above ‘Blood Borne Disease” clause, offer Needle Stick cover to Doctors that will provide a lump sum in the event of becoming infected with HIV, Hep B or C whilst performing your usual occupation. You are able to apply for cover amounts up to $1,000,000.
Cover against Mental Illness
We note that recent studies show that medical professionals such as doctors, surgeons and dentists are potentially 20% more likely to not be able to work due to mental illness. This has been attributed to the high stress nature of their occupation and also the caring, more emotional nature of their personalities that have drawn them to their occupation in the first place. We are concerned that some policies directed to Medical Professionals have these conditions excluded.
It is very important to considering the definitions for an Income Protection disability – We advise a three-tier definition that delivers you the best possible outcome for your claim.
The Australian income protection market commonly uses three distinct disability definition methodologies to assess disability. These are:
- Income based – where you suffer a loss of income as a result of an injury or illness;
- Hours based – where your working hours reduce as a result of an injury or illness; or
- Duties based – where you are unable to perform important duties of your occupation as a result of an injury or illness.
Qualifying for benefits
With certain policies, provided that the governing body has been notified of your medical condition – and you are unable to perform a duty (or duties) of your usual occupation —you can qualify for an Income Protection disability benefits if diagnosed with Hepatitis B, Hepatitis C, HIV or any other blood borne disease and:
- You ordinarily perform exposure-prone procedures as an important part of your practice, or
- It leads to a reduction in the number of patients you see, because patients may seek medical treatment elsewhere.
While the medical industry is a rewarding one to be a part of, it is also statistically quite a hazardous industry. As a result of this, you especially need to ensure your insurance is sufficient for your profession. Income Protection will ensure adequate protection for not only yourself, but more importantly, your family.
If you need help choosing a income protection cover, contact us today!
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