What Is Dentists Income Protection?
Income Protection is an insurance policy where you pay a monthly premium, in return for the protection of a portion of your income. In the event you are unable to earn a living, due to becoming ill or suffering an injury, the policy will pay a regular, tax free benefit up to a maximum percentage of your earnings, usually around 50 – 70% of your gross income. A long term policy will continue to pay out until you are fit to return to practicing, or until retirement if you do not ever recover enough to work.
Choices to Make When Purchasing A Policy
Length of Term
Income Protection policies can vary from a short-term policy, which could cover your dentist income, with a benefit pay out for a specific term – for example six months or a year. Alternatively, you can purchase a completely comprehensive policy which would cover you for as long as you need until you are fit to return to work, or until when you retire, whichever comes first.
Waiting Time
Another thing to consider when purchasing a policy is the waiting time or deferral period from the point you become ill, until the time you can make a claim and start to receive the income benefit. The longer the deferral period, the cheaper your monthly premiums will be, but this needs to coincide with your own individual circumstances surrounding savings.
Own Occupation Definition
It is possible to insure your own specific income from dentistry work. Illness or injury may mean you are unable to work as a dentist, but you could still do other work. Choosing cover with an ‘own occupation’ definition however, ensures that if you can’t work as a dentist, your policy would pay out the benefit.
Sum Assured
You need to decide how much benefit you would need to receive if you needed to make a claim. A typical amount for dentist cover is around 60-70% of your gross earnings – don’t forget pay outs are tax free. The more you cover the greater your premiums will be, so make sure you calculate your essential outgoings and how much you would really need.
Do I Really Need Dentists Income Protection Cover?
Running your own surgery and working independently can be busy and it’s very easy to put off making decisions about protection insurance, as there is always the feeling that it’s not something that will happen to you. Or it just slides to the bottom of your very long to do list. Here are some statistics though that show why it’s important to consider protecting yourself now.
- ‘Each year one million workers suddenly find themselves unable to work due to serious illness or injury’ (Welfare Reform for the 21st Century)
- Yet according to the Department for Work and Pensions Family Resources Survey, around 54% of households have either no savings or less than £1,500 savings and 76% have less than £10,000
How Much Does Dentists Income Protection Insurance Cost?
It is difficult to give a definitive answer to this question, as there are a number of variables which affect premiums. It is always a good idea to get a tailored quote from one of our expert advisers, based on your individual requirements and circumstances.
Factors which affect the premiums are your own personal circumstances as well as the choices you make about the cover.
Your Circumstances which affect premiums:
- Your health
- Your age
- If you smoke
Your choices which can affect premiums:
- Amount of cover (the monthly pay out amount)
- The waiting period (from when you become ill, to when you can claim)
- The policy term (the maxmum length of time you would receive a pay out)
- Which insurer you choose
- If you choose guaranteed or reviewable premiums
- If you go for own occupation cover
Example quotes for a 40 year old dentist:
- £2000 per month income benefit cover
- with a three month wait period
- full policy (meaning it will pay out until you return to work/retire)
£63.81 per month premium
- £2000 per month income benefit cover
- with a three month wait period
- with a maximum claim time of two years
£24.47 per month premium
What Does Dentists Income Protection Not Cover?
Income Protection doesn’t have a set list of conditions covered as you would with a Critical Illness Insurance policy. If you are too ill or injured to do your job, then you should be eligible to make a claim. However, as with all insurance policies, there will be some exclusions which apply to anyone. These are likely to include injuries or illnesses caused:
- As a result of travel to areas where travel is advised against by the Foreign and Commonwealth Office because of conflict, high terrorism risk etc
- As a result of criminal activities
- As a result of substance or alcohol misuse
Previous Illnesses
If you have suffered from a medical condition previously, this could also be excluded from your self-employed income protection policy. Each insurer has their own individual stance on how they will handle your circumstances, but if you have an existing condition, it can be reflected in the policy. This could be that you have to pay an additional premium to cover the condition, alternatively the condition could be excluded completely, or some insurers may be happy to cover the condition completely, with no additional charge. It depends upon each insurer’s appetite for risk as well as your individual circumstances. It is especially important to seek professional advice in this instance to make sure you have the best value and the most complete cover.
