There are many reasons why doctors [or anyone, really] don’t feel they need insurance, whether they believe they are healthy enough and don’t need cover, they are young and don’t have anything worth protecting, or they might be concerned that even if they have a policy in place, their insurer won’t pay their claim. 

This article aims to debunk insurance for doctors myths by analysing 6 of the most common misconceptions we sometimes encounter in our discussions.

6 things about insurance for doctors that you think you know to be true but aren’t

1. Insurers don’t pay claims

Insurers do pay legitimate claims – numbers don’t lie. The financial services council advises that in 2019 the life insurance industry paid out more than $12 billion to over 100,000 Australians, and their families*.

There is however a variation between the percentage of successful claims paid through policies that are taken out through an insurance (or risk) adviser and those that are taken out directly with an insurer. Generally speaking, advised policies have a higher rate of acceptance as policy holders have a better understanding of what they are insured for, have the assistance of a dedicated insurance adviser and their team of claims specialists to assist throughout, what can sometimes be, a complicated claims process.

DPM has a dedicated claims team that works closely with our clients and their insurer, to achieve the best outcome possible, in the most efficient way during what can be a highly stressful time.

2. I have cover in my super

While many super funds do offer a level of automatic life, total and permanent disability (TPD) and income protection insurance; the level of cover offered is not tailored to an individual’s circumstances and can be significantly lower than the cover that you may require as a doctor.

When it comes to TPD and income protection insurance in particular, the quality of cover available through your superannuation fund may not be appropriate for your personal situation, as the cover available in the broader insurance market is generally of higher quality. Funds, including any insurance policy proceeds, released from super are subject to tax in the event that the member passes away and does not have a dependant under tax law and when funds are released in the event of permanent incapacity (TPD) if the paid prior to attaining preservation age (generally age 60). Self owned Life and TPD is not generally subject to tax.

Income protection insurance is one of the most important, but also the most expensive personal insurances, that we encourage medical professionals to consider carefully. The ability to earn an income is arguably your most important asset. Income protection, if held outside of super, is individually tax deductible and if you choose to pay for it within your super, you are not only eating away at your superannuation balance, but you also cannot claim for this expense at tax time.

3. All insurance policies are created equal

The cost of insurance policies can differ greatly from policy to policy, there is often a very good reason for these cost discrepancies. Whether it be the benefits and features that the policy offers or perhaps doesn’t offer, the quality of the definitions and the other variables such as premium structure, the length of time a policy may pay you and of course the level of cover that you are insured for.

Some policies don’t require the applicant to be medically underwritten at the time of application but rather at the time of claim, and while these policies may be cheaper the policyholder won’t have certainty of whether they are covered for a special condition until they are underwritten at the time of claim.

It is also important to be aware whether the cover is own occupation specific, or if you would have to be unable to work in any job for which you are reasonably suited, in order to be eligible to claim upon the cover. Given how specialised each area of medicine is, insurance for doctors that is adapted to their needs is a very important consideration. For instance, if a surgeon loses their fine motor skills, they would be unable to work as a surgeon but they may still be able to work in another medical occupation.

4. I’m young and healthy enough, I don’t need insurance

We risk advisers, love this one! People may think this when it comes to personal insurance yet, they insure their car or their home and contents without thinking twice about it. You are your biggest asset when it comes to generating an income, protecting your earning potential, should come first.

As previously mentioned, with high quality insurance for doctors, policies require applicants to go through medical underwriting before policies are issued. Should you have a pre-existing medical condition that results in an insurer seeing you as being at a higher risk of claiming, they may place an exclusion on your policy or a loading on the premium. Taking out cover while you are young and healthy will result in a much lower chance of exclusions or loadings. Once you have cover in place, the cover is guaranteed renewable, with the same terms and conditions, regardless of any subsequent changes in health.

While young, you may also feel that you have no assets that require protection. In reality, as soon as you start working, your ability to earn an income is arguably your greatest asset. Should you not be able to work again, consider the income you are foregoing and the negative impact on your long term financial goals. Income protection assists you in meeting your financial commitments and maintaining financial independence in both the short and long term.    

5. My family will support me if something happens to me

In the short term, there may be a limited financial impact to your family providing care and support. For longer term illnesses and injuries, the financial impact of lost working hours for those providing care and support can be substantial. Insurance for doctors such as income protection and total and permanent disability insurance can reduce the financial impact for you and your family allowing you to focus on recovery and rehabilitation.

6. Insurance is set and forget

A set and forget approach to personal insurance can result in both under and over-insurance. As life changes, incomes change, assets and liabilities change, you might get married, have kids, become an empty nester, and therefore your need for insurance will change. It is essential to review your cover regularly to ensure you have adequate financial protection in place and are only paying for the cover you need.

DPM works closely with Australian doctors to ensure they have appropriate cover for their ever changing circumstances. Book an appointment today for a confidential discussion and a complimentary assessment of your insurance needs.

Disclaimer: This article contains general information only and does not consider your personal objectives, financial situation or needs. You should assess whether the information contained in this communication is appropriate in relation to your own objectives, financial situation or needs. If you are considering the acquisition of a particular financial product, you should obtain a copy of, and consider, the Product Disclosure Statement for that product before making any decision. We recommend that you seek insurance advice from a medical financial specialist prior to making any decisions in relation to your income protection needs.
ABN 48 060 159 917. Doquile Perrett Meade Financial Services Ltd (AFSL  239690).