Get the Protection you Deserve
Featured Products Promotional FeaturesPosted by: Dental Design 6th January 2022
Income protection has always been a sensible idea for the self-employed worker and the last 18-months have shown the entire world how important it is to be protected financially when unable to work. At any one time, there are over fifty income protection plans available for people to choose from. These can all look great on paper but what should you ensure is included in your policy?
The Financial Impact
The pandemic would have seen some self-employed workers go without insurance pay-outs as their policies may not have covered the specific circumstances. However, there were Self Employment Income Support Scheme (SEISS) payments available: the government paid people grants dependent on their earnings. However, reports show that the self-employed were adversely affected despite the government’s attempt at support.[i] In fact, on average the self-employed were granted income of 5% below their expected level. It may not sound like a lot but for a newly qualified dentist with a family this loss of earnings could have significantly impacted their quality of life.
One can need to make a claim for more reasons than the pandemic and these include mental health, injury, permanent disability, and death. Reports show that in 2020 the insurance industry paid out the highest combined figure on record – up 8% compared to 2019.[ii] These figures show a rise in mental health claims whereas claims under critical illness saw a 6% fall. Overall, financial protection has always been critical for people but the pandemic has highlighted its importance more than ever.
What to Look for
Searching for a financial protection policy that suits you can be overwhelming and the pressure to choose can lead to ill-informed decisions being made. However, there are specific areas that should be covered in your policy.
Paying on a monthly basis is usually how you will pay for your cover. There are two methods in which a premium can be paid which are either reviewable rates or guaranteed rates. Guaranteed ensures that you pay a set amount across the duration of the plan (usually to age 60). As the rate is guaranteed it means that it can never change regardless of the amount of claims you make. Reviewable rates, however, mean that you will pay a set amount for the first five years and after that time the company can review your rate and adjust it. Their review will be based on the number of claims made and your predicted future claims. Typically, reviews take place every five years but they can be annual.
A lot of plans include a ‘suited’ by training, education or experience as an occupational definition. This means that benefits will only be paid out if you can’t perform any role similar to dentistry, such as pharmaceutical or research work. There are also ‘any’ occupation plans which should be avoided at all costs, as the word suggests you will have to be incredibly ill/injured not to be able to carry out any role in order to claim. What you should want in your policy is ‘own’ occupation definition of disability meaning that you will receive payment of a claim based on your inability to perform as a dentist.
It is vital to find a company that has a good track record and provides a policy that works for you. However, it’s just as important to ensure that you’re aware of what they will not pay out for. These are referred to as exclusions. There are some companies that have as many as fifteen exclusions in their policies and commonly pregnancy, dangerous activities, and excessive alcohol consumption are among those listed.
There are just a few more things you should look out for when choosing a policy. The plan should run to the age that you wish to retire. Worldwide cover is also ideal because you won’t have to return to the UK in order to make a claim with this feature. It is ideal to ensure that your standard of living is protected from inflation with inflation protection. HIV cover is another important criterion that your policy should meet and should be covered if infected at work. It is also ideal for your policy to include Day 1 Cover so that you are protected from the very first day of sickness or injury.
All professionals require extensive cover when it comes to income protection and, typically, no one policy will include every aforementioned aspect. However, money4dentists, the specialist independent financial advisers, have been exclusively advising dentists and their partners since the 1990’s. With a great track record for guiding dentists efficiently, effectively and profitably money4dentists can also help you with mortgage or practice loans, private medical insurance, pension forecasts, and more.
In summary, self-employed professionals have always needed income protection but the global pandemic has highlighted the importance of this to many. It can seem like an overwhelming process to go through but it doesn’t have to be. Staying informed and working with the right people can ensure that your journey to protected income is smooth and suitable for you.
Richard T Lishman
Managing Director of the 4dentists Group of companies
For more information please call 0845 345 5060 or 0754DENTIST.
Email info@money4dentists.com or visit www.money4dentists.com
[i] Delestre, Isaac, et al. Institute for Fiscal Studies Income Protection Policy during COVID-19: Evidence from Bank Account Data IFS BN303. Sept. 2020.
[ii] ABI. “Record Amount Paid out to Help Families Cope with Bereavement, Ill Health, and Injury ABI.” Www.abi.org.uk, 14 May 2021, www.abi.org.uk/news/news-articles/2021/05/record-amount-paid-out-to-help-families-cope-with-bereavement-ill-health-and-injury/. Accessed 21 Oct. 2021.
