Practice Cover Locum Insurance
Practice Cover is a fairly new organisation based in Southampton that is ‘the UK’s only specialist provider of locum insurance for GPs, dentists and other medical professionals’. That latter group includes practice staff too. Director is Lynda Cox, who was previously head of product development at Skandia Life. Around half its business comes from IFAs. The logic behind offering specialist locum cover is simple – income protection (IP) insurance is essentially designed to provide an income if yours stops but, for some people, their income will actually continue but much of it may have to be spent paying a locum to continue their medical or dental practice.
Traditionally, IP insurers have developed complex rules to get round this Catch 22 situation but it’s fair to say that that has often looked like an uncomfortable add-on. Practice Cover offers three levels of cover:
• Level 1. This pays a weekly benefit if the customer is unable to work due to illness or accident. In addition (as with the other two levels) the plan pays a lump sum (usually £10,000 but higher amounts may be applied for) on death; loss of limb(s); loss of sight; loss of speech; loss of hearing, and on permanent total disablement.
• Level 2. This also pays if unable to work due to jury service or suspension. Additional sums are payable for medical expenses; coma; funeral expenses, and compassionate leave.
• Level 3. This further pays additional sums for phased return to work; maternity/paternity/adoption; hospital inpatient; home modification; domestic, chauffeur, childcare; partner training; return home expenses; dental expenses; hospital transport; HIV needlestick injury, and delayed return from holiday.
Policies can be taken out by individuals or by a practice. Customers (aged 18 to 75, although over 70s require special underwriting) can choose a weekly benefit of £200-£3,000 (more on request), and a deferred period of 2, 4, 8, 12 or 26 weeks. Cover can be permanent or annually renewable (when cover could reduce in future if a claim is made). Plans are underwritten by Alpha Underwriting for Lloyd’s (Syndicate 1200, managed by Argo Managing Agency Ltd).
Cover is worldwide (apart from certain territories such as Afghanistan, Somalia and other hot spots). Exclusions are fairly standard but also include off piste skiing, bungee jumping, being under the influence of alcohol, drugs or solvents and venereal disease.
Payment continues for a maximum of 12 months, although shorter periods can be chosen. Although the plan is designed to provide locum cover, employing a locum is not essential provided the other claims criteria have been met. Cover is for 12 month periods, so premiums are likely to increase over time. Premiums are payable annually or by six or ten monthly instalments, subject to a credit charge. Premiums also attract insurance premium tax (IPT).
Customers can choose locum insurance (as reviewed here), overheads insurance or locums can get cover on themselves.
Comment: There is a lot in this new product that is of interest – even the fact that it is targeting the often confusing locum cover market. Moreover, there is a choice of product covers, with the higher covers especially including a number of interesting and unusual benefits. For example, a GP might have to employ a locum if called up for jury service or while taking maternity leave and this plan can cover such costs. We also especially like the choice of permanent or short term cover, although both versions seem to attract IPT (which long term IP does not usually).
However, the maximum payout is just 12 months and, whilst this limits the risk to the underwriter and allows it to underwrite more generously than a long term IP insurer would, it also restricts the value of the policy overall. Of course, that could be remedied by additionally taking out conventional IP with a 12 month deferred period and there is also the argument that very long term claims inevitably mean making significant life changes for individuals and employers too and so the need for ongoing income is less (but nice to have if you’re the recipient – even though, in turn that can disincentivise your ever returning to work).
Our rating therefore reflects the 12 month limitation but, when combined with other IP cover, the value of the plan to a customer in that situation could effectively be higher, even if the overall cost of protection would be higher too.
Plus points: Newish specialist provider that targets the potentially complex area of IP cover for medics; Choice of cover options; Some attractive additional benefits designed to meet real work needs; Looks easy to set up.
Not so plus points: Benefit payout limited to 12 months; IPT is payable on premiums; Website includes only minimal information on cover provided.
Website: http://www.practicecover.co.uk.
Rating (max 10): Innovation: 9. Overall: 7.5. Silver
Tags: Practice Cover; IP