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Protect Your Family's Future

'No one thinks of winter when the grass is green!'
Rudyard Kipling 1865-1936, 'A Saint Helena Lullaby'

The invention of a rifle with the ability to accurately identify a target and shoot round corners, once the stuff of Boy's Own fiction, is now a reality and looks likely to make a significant impact on urban warfare. Unfortunately, in civilian life, none of us knows what is round the next corner.

This uncertainty makes planning for the future something of a lottery – but there are always steps which can be taken to minimise the risk of losing, even if actually winning the millions on offer is not very likely!

Investing in an income protection plan is a basic, commonsense step to safeguard your own and your family's financial security and quality of life should you suffer an injury or disease which compromises your ability to work. It's also a fact of life for all healthcare professionals, and perhaps particularly dentists, that the nature of their work inevitably means they are more frequently exposed to a greater risk of infection than those employed in other walks of life.

However, choosing an income protection plan which offers the insurance which will meet your family's needs should the occasion ever arise, and which also complements your own lifestyle and terms of employment, is not always easy amongst the plethora of options available. While it may be tempting to follow the price comparison website route and simply select the lowest quotation offering the maximum benefits, what may appear superficially to be the best value is not necessarily the appropriate choice for a dental professional.

Income protection plans are usually offered in three categories:

  • Own occupation. Under this type of plan claims will be met if a plan holder's health is so compromised that they are unable to perform the duties required of them as a dentist.
  • Suited by training. Under this plan claims will only be met if the claimant dentist is unable to perform any other role within the area of dentistry.
  • Any occupation. This type of plan is not recommended for dental professionals, as in order for a claim to succeed the claimant must be so severely handicapped as to be unable to work in any capacity, even outside the dental industry. Most dentists' earnings are significantly higher than those working in non-professional occupations, and while for example back pain or injury, a common complaint for dentists, might rule out work in the surgery, much lower paid sedentary work, in a call centre for example, could still be possible. Without an adequate income protection plan, the dentist's family's quality of life would suffer accordingly.

An clear understanding of the three types of plan is vital to making the appropriate, personal decision. While own occupation plans are normally recommended for dentists, as offering the most comprehensive cover, young, single associates with no dependents might feel the more expensive premiums were not justified.

The benefits of all types of plan are paid tax-free and continue until the claimant returns to work, reaches retirement age or dies, whichever is the earliest. Benefits are usually paid monthly up to a maximum of 65% of the claimant's former gross salary, or net profit in the case of a self-employed dentist.

Each of the three main types of income protection plan contains a wide range of options, and not all of them even within the 'own occupation' category are suitable for dental practitioners. While the temptation is to focus chiefly on the level of potential benefits on offer, some plans will not be appropriate for health care professionals with their increased exposure to infection risk, or for some other exclusion or condition buried in the small print and easily overlooked. When making their choice, plan purchasers should objectively assess their own level of risk and determine the level of protection they need before examining the plan terms in detail to ensure it provides the required level of cover. After all, mistakes cannot be rectified later, if the worst should happen!, and all too often the press reports cases where an accident victim believed they had financial protection in place, only for a specific exclusion to apply.

While individual circumstances will always influence the final decision, there are three key factors to which every plan purchaser should pay special attention.

Perhaps the most important is the disability threshold, whether caused by illness or injury, which the insurer will require to be proven before meeting a claim. It's worth remembering that the claimant's definition of being 'unable to work' may not coincide with that of the plan provider, and there is also a substantive variation in this definition between companies and policies. Since this is invariably the critical factor in deciding the outcome of a claim, dentists need to be sure they fully understand the plan provider's definition before committing to the policy.

The second key consideration is naturally the cost, but as well as the level of benefits this will partly depend on the type of premium. Premiums are usually paid monthly, but depending on the structure of the plan they will either remain constant ('guaranteed rates') or become potentially variable after the first five years ('reviewable rates'). In some cases both premiums and payments may be linked to inflation to preserve the value of the plan over an extended period.

Because guaranteed rates do not change during the life of the plan, some dentists choose this option to assist their ongoing financial planning. However, although reviewable rates are fixed for the first five years, the provider may increase or decrease the premiums at that point depending on the plan holder's claims history. If the dentist is fit and confident of remaining in good health, this could be the preferred option.

The third key element of every income protection plan which dentists ignore or gloss over at their peril is the insurer's list of activities or occurrences which, if they are the cause of incapacity, negate the insurer's liability. These are called 'exclusions.' Although these vary between providers, the following are the most common -

  • HIV/AIDS
  • Normal pregnancy and childbirth
  • War
  • Self-inflicted injuries
  • Criminal acts
  • The misuse of alcohol or drugs
  • A failure to follow medical advice
  • Residing outside the UK.

Since income protection plans, by their very nature, tend to be relatively long term, careful attention should be paid to specific exclusions. Women of child bearing age, for example, may wish to start a family while the plan is in operation, or a dentist may decide to volunteer to work overseas, even perhaps in one of the world's trouble spots. On a more mundane level, high risk sports such as rock climbing or horse riding could feature on the list of exclusions and so make a particular plan unsuitable.

While the right plan will deliver security and peace of mind, it can be difficult to choose. If in doubt, the answer is to seek help from a specialist Independent Financial Adviser (IFA) such as money4dentists, who have wide experience in every area of dental finance.