Why are doctors at risk?

Many Doctors are failing to protect their biggest asset; themselves

 With years of education behind them and years of earning potential in front of them, doctors are a valuable commodity. But why are so few protecting themselves with insurance?

You’ve worked to give yourself a good income. And your income is going to play a big role in your lifestyle, and that of your family, for a long time to come.It sounds like something you’d want to protect, right? But underinsurance is an issue facing an alarming number of Australians, from all walks of life – including doctors.

The insurance we’re talking about is life insurance – the most common forms of which are death cover, total and permanent disability (TPD), trauma insurance and income protection.

When you’re working in a career where you’re exposed to career-threatening hazards like contracting a blood borne disease, Life Insurance is a recognition of the unique risks you face every day.

Insurance for business owners

Many doctors are self-employed, adding another layer of financial responsibility to the equation.But despite their significant insurance needs, many small business owners are also failing to protect themselves and their families with adequate insurance.

According to a 2006 survey by the Investment and Financial Services Council (FSC), less than half of small business owners feel they have adequate cover[1].

It could even reduce your tax bill!

Income protection insurance is one of the most relevant types of cover for professionals – including the self-employed. It can replace up to 75% of your income if you can’t work because of sickness or injury.

How much does it actually cost?

Let’s take the example of a 39-year old male doctor who earns $120,000 pa. He takes out:

  • an income protection policy to cover 75% of his income (or $7,500 per month), and
  • a business expenses policy to cover $10,000 per month of fixed business expenses.

His total premium before tax is $2,810. But because his income protection premiums are tax-deductible, his after-tax premium reduces to $1,644. At about $30 per week, that’s the equivalent of a take-away pizza each week.

Source: Asteron Life Limited, based on a non-smoker taking out an Agreed Value Income Advantage policy, and an Indemnity Contract Business Expenses policy, both with 30-day waiting periods and stepped premiums paid annually.

Get the cover you need

The best way to find out the types and amount of cover you need is to speak to a financial adviser. They can help you get the right cover, and make sure it’s structured in a way that makes it as cost-effective as possible.

This material is current as at 12 June 2012 and is not intended to constitute personal advice, and must not be relied on as such. This information has been prepared without taking into account your objectives, financial circumstances or needs. Before making a decision based on this material, you should consider the appropriateness of this material having regard to your own objectives financial circumstances and needs. You should consider obtaining independent advice before making any decision.

[1] ‘Investigating Income Protection insurance in Australia’ – FSC, July 2006.