Why Dentists Income Protection?
Provides you with a tax free monthly income you can rely on should you be too ill or injured to work.
Designed to cover your core monthly financial commitments such as your mortgage/rent, bills and food.
Income Protection is the one protection policy every working adult should consider. Which? Money 2013
Speak to our expert independent advisers or get an instant online quote to compare the UK’s leading insurers.
What does Income Insurance cover?
Accident & Sickness
When the ‘Own Occupation’ definition of incapacity is used the policy can payout for any medical condition that prevents you from working in your own specific job role.
As income protection policies do not use a set list of conditions they cover and many insurers do not have any standard exclusions, income protection is the most comprehensive form of accident and sickness protection available.
Being in a highly skilled occupation such as a Dentist it is very important to make sure your policy covers you in your own occupation, you do not want to fall foul to a lesser incapacity definition.
How does Income Protection work?
You cease working due to any accident or sickness which prevents you from doing your job role.
You make a claim with the your insurer, which may require completing a claims form and providing documents such as your GP note.
The insurer will start to pay a monthly tax free benefit after you have been unable to work for the length of your deferred period.
The policy pays out until either you return to work or reach the maximum payout length, which could range from one year to retirement.
Do I need to protect my earnings?
When deciding if income protection is worthwhile it makes sense to weigh up the risk of something happening and the potential consequences:
The Incapacity Risk:
1 in 10 people have been unable to work due to illness or injury for +6 months (The Guardian/Unum Survey, 2011).
With government incapacity benefit of only £99.15 per week, someone with a salary of £30,000 would suffer a 77% fall in income.
If you lost your income how would you continue to meet your essential monthly outgoings if you didn’t have income protection?
Your Key Options
Choose your level of cover
Depending on the insurer, it is possible to cover anywhere from 50% to 70% of your gross (pre-tax) income.
Choose your deferred period
This is the length of time you would need to be off work before the policy kicks-in and starts paying out.
Choose your payout length
Short-term plans can payout for a maximum of 12 or 24 months and long-term plans can continue paying out either until you are well enough to return to work or you reach the end of the policy life, which is usually set in-line with your expected retirement age.
Sam was knowledgeable and attentive and spent a long time explaining and working out what Income Protection insurance would be best for me.Elizabeth Owen
What is Dentists' income protection insurance?
Income protection insurance for Dentists is a form of insurance designed to help protect you against the financial consequences of being unable to continue working due to sickness or injury.
Conceptually, it is extremely simple. In the event that a qualifying condition meant that you were unable to continue working, your policy would provide you with a monthly income up to a specified percentage limit of your previous gross earnings.
No matter whether you are a private dentist or employed by the NHS, it may be worth investigating what your position would be should you suffer from ill health or in injury that prevents you from working.
Do I need it?
There are really two aspects to this question:
- Could you survive financially if you suffered a total loss of income, and if yes, for how long?
- Are you likely to experience such circumstances?
Only you can really answer the first question. However, it may be worth taking into account that state aid might be extremely limited in circumstances where you suddenly found yourself unable to work through ill health and without regular income.
If you are employed by the NHS, (and at the time of writing) the maximum amount of sick pay you could expect to receive (after completing five years’ service) would be for up to 12 months. Full pay would be provided for the first 6 months and half pay would be provided for the latter 6 months.
If you have a private scheme, you may find that private sick pay entitlement will payout for a shorter length of time.
Should you be unable to meet your monthly financial commitments, your creditors may be sympathetic. That might not, however, prevent them from moving relatively quickly to legal repossession activities in order to seize things such as cars and houses should you be unable to maintain your loan repayments on them.
There are also lifestyle issues such as just how you and family members would cope with meeting your regular monthly outgoings for things including utilities and food etc.
Finally, make sure you are aware of what you may receive should you suffer from ill health prior to taking out your own plan, such as checking that your employer does not provide you with cover under a group scheme as an employee benefit.
How does it work?
Taking out cover typically couldn’t be simpler. You will select a level and duration of cover that meets your assessment of the financial risks you would face in circumstances where you were without an income.
Should you need to claim, you will simply submit details of your circumstances together with any supporting information such as medical reports etc.
You may decide, for example, that should misfortune strike you may be able to survive on your own financial resources for a specified period of time. As a result, you may consider that you would not need to commence income generation from your policy immediately following your cessation of work.
The period of delay you select between your claim being accepted and the start of income payments is called the deferred payment period. Typically, the longer that deferred period is, the more cost-effective the premium on the policy may be.
You will continue to receive your income up until such time as one of three events occurs:
- You reach the normal retirement age for your occupation;
- You are fit enough to return to work;
- The maximum period of cover you selected on a short-term policy has been exceeded.
Specialist income protection for dentists
Depending upon the nature of your occupation status, your employer or the NHS may have some form of sick pay plan.
It is possible to link your own dentists income protection policy with the circumstances of any other form of sick pay you may receive. For example, it might be possible to arrange for a deferred payment period that will commence immediately upon the cessation of any sick pay you may be receiving from an employer.
For instance, a newly qualified dentist will be entitled to less NHS sick pay than a colleague who has completed several years’ service. However, the longer the dentist is in service with the NHS the more his or her entitlement will be. There are some income protection policies that “mirror” the length of service so that the cost reflects a longer deferred period as time passes.
Getting own occupation cover
It is particularly important as a Dentist given the level of skill required in your job role that your product covers you in your own occupation.
Not all policies provide own occupation cover so it is really important to read the terms, own occupation cover ensures that if you are unable to do your normal job as a dentist due to any illness or injury, you would qualify to receive your monthly income benefits after the initial deferred period.
As an example, under the ‘Own Occupation’ incapacity definition, a serious hand injury might be interpreted as preventing you from carrying out your normal occupation as a dentist. Payments would commence if so.
The lesser occupation definitions available include ‘Suited Occupation’ and ‘Any Occupation’, using the ‘Suited Occupation’ definition an insurer could well consider that the injury you suffered would not stop you working and earning income in a related field even though you may be unable to perform dental surgery itself.
What are my options?
When selecting a policy, you may need to consider options including:
- How long you wish your policy to cover you for in the event of a claim, typically this can range from as short as 24 months to right up until your selected retirement age;
- The amount of income protection cover you require in order to meet your minimum living expenses (typically you can insure 50-65% of your gross earnings);
- The length of your deferred period, this can usually range from as short as 4 weeks right out to 12 months;
- Whether or not you wish your policy to be indexed linked (where your benefit increases in line with inflation (as measured by the Retail Price Index). This might be advisable, particularly in the case of longer-term policies however, it may mean an increase in your premium each year, even if you have selected the guaranteed (fixed) premium option.
Need some advice
We understand that you may well have a number of questions relating to aspects of this type of insurance policy.
As independent advisers (which means we are not tied to any one insurer), we are well positioned to offer you unbiased advice and guidance relating to the options you may have available to you in the marketplace.
Please do not hesitate to give us a call on 0208 432 7333 for further help and advice.
Actual Income Protection Claims
The table below details real life stories of how an income protection policy has saved someone financially following an illness which left them unable to work.
The information is from Liverpool Victoria's 2011 claims, it demonstrates how anyone can lose their income, regardless of age, gender or occupation, LV's youngest claimant in 2011 was just 22 years old.
To provide expert financial advice and deliver a passionate 5-star service to help educate our clients so they can make informed decisions.
To help individuals and businesses throughout the UK to plan their financial future whilst protecting them against the financial risks they may face.
To provide quality financial advice in a transparent, friendly and professional manner.
Occupation Definition Calculator
Make sure your Income Protection covers you in your 'Own Occupation'!
Too often individuals take out income protection without being fully aware of the incapacity definition on which their plan would pay out.
Will the plan pay out if I am unable to do my current job role? Or will it only pay out if I am unable to do any occupation?
If you do not already have income protection this tool should provide you with guidance as to what to look out for and to ensure you do not fall foul of a lesser occupation definition.
Independent Protection Expert at Drewberry Insurance