When planning to work or live abroad, whether temporarily or permanently, doctors face unique challenges when it comes to income protection (IP) insurance policies. These policies are designed to protect your income in the event of illness or injury, but moving abroad can significantly alter the terms and coverage. Below, we explore the key considerations for doctors to keep in mind when relocating internationally.
1. Residency requirement for new policies
Doctors must be aware that to apply for a UK income protection policy, they need to meet the residency requirements. Most insurers define a UK resident as someone living in the UK for at least 183 days within the last tax year. If you’re planning a permanent move abroad within three months of applying for a policy, it’s important to know that most providers will refuse coverage. Securing an income protection policy before making any long-term international move is crucial.
2. Temporary moves (e.g., sabbaticals)
For doctors planning a sabbatical or temporary move abroad, income protection policies may still be valid under specific conditions:
Premium payments: Premiums must continue to be paid from a UK bank account.
Employer approval: The sabbatical must be approved by your employer, and the job must be kept open for your return.
However, it’s essential to note that without prior agreement from your employer sick pay may no longer apply once you are abroad. This could have a significant impact on your IP coverage, particularly if your policy has a deferred period—a waiting period before benefits begin. If you are dependent on NHS sick pay to dovetail with your income protection plan, be mindful that the protection this scheme offers may not extend beyond UK borders.
3. Permanent moves
If you plan to move abroad permanently before purchasing an income protection policy, you may find it difficult, if not impossible, to obtain coverage. Existing policies will likely be invalidated if the move occurs shortly after taking out the policy, and refunds of premiums are generally not provided in these cases. Additionally, once abroad, doctors will be unable to adjust the terms of their existing policies, such as increasing benefit levels, unless they return to the UK.
4. Claims while abroad
Making a claim while living abroad can present various challenges. Providers may struggle to verify medical evidence from overseas doctors, which could delay payments or result in claims being denied. Furthermore, many income protection policies restrict claims to certain “safe” countries, with limits on how long you can claim while living abroad. For example, some policies cap payouts at 26 weeks if the claim originates outside of a predetermined list of regions.
5. Special cases for Crown employees
Doctors employed by the Crown, such as those in the armed forces or merchant navy, may have access to special coverage through their employment. This is not typically available in mainstream income protection policies but may offer broader protection when working overseas.
6. Extreme sports and high-risk countries
If you are an adventurous doctor who enjoys extreme sports or plan to move to high-risk countries, be prepared for potential exclusions or restrictions in your income protection coverage. Many insurers exclude extreme sports or activities and regularly update their lists of restricted regions due to political instability or health risks. This could affect benefits such as waiver of premium or other supplementary policy benefits.
7. Impact of losing NHS sick pay
Doctors moving abroad who no longer work for the NHS will lose any integration of NHS sick pay in their income protection policies. For instance, if your policy was designed with a deferred period to align with NHS sick pay, you will now face the full waiting period before benefits begin as NHS sick pay would no longer be applicable. This could leave you financially vulnerable for a significant period.
8. Flexibility of the contract
Income protection policies are generally more rigid once the policyholder moves abroad. You may not be able to increase your benefit level, change terms, or make other adjustments unless you return to the UK. This loss of flexibility can make it harder to adapt your coverage to your evolving needs while living and working overseas.
Seeking advice and support
It’s important to note that advice and support from advisers such as Chase de Vere on income protection policies, are typically limited to UK residents and crown dependencies. If you’re planning to move abroad, it is advisable to secure the right advice and ensure your policy is in place before relocating.
Key takeaways for doctors moving abroad
Doctors planning to work or live abroad need to carefully assess how a move will impact their income protection insurance. Temporary absences, such as sabbaticals, may be manageable within the terms of a UK policy, but permanent relocations pose significant challenges. To ensure adequate protection, maintain UK residency during the application process, continue paying premiums from a UK bank account, and stay aware of restrictions tied to geographical location and activities abroad. Consulting a specialist adviser before any planned move is essential to securing long-term financial protection.
The information contained within this article is for guidance only and does not constitute financial advice.
Content correct at time of writing.