The cornerstone of financial planning is income protection cover. This form of health insurance is designed to pay you an income in the event of you being unable to work due to sickness, injury or accident. The main benefit is that your standard of living can be maintained in the event of a claim. Any benefits are paid tax-free and continue until you return to work, retire or die, whichever is the earlier. The maximum you are allowed to insure is approximately 65% of your gross salary (net profit for self employed).
You may well have already set up income protection cover so if you want to know if you've got it set up correctly the following tips might help.
At any one time there are over 50 income protection plans available in the marketplace offered by many insurance companies and banks. The market is also very dynamic, with some plans competitive for dentists and vice versa. This seems to change constantly. Seemingly innocent changes to the small print can make a contract uncompetitive for dentists.
There are three specific areas that should be included in your cover:
Whilst it is vital to find an income protection company that has a consistent history of paying claims on time, it is perhaps more important to check when they will not pay. These are known as exclusions. Some of the worst plans on the market include as many as 15 exclusions. Common ones include excessive alcohol, pregnancy (normal-complicated pregnancies may be covered) and dangerous activities such as mountaineering or scuba diving.
You should also include the following with your cover:
Worldwide cover - so you don't have to return to the UK to claim
Inflation protected - to make sure your standard of living is protected from inflation
Plan to run to your retirement age - for obvious reasons!
HIV cover - this should typically be covered if infected at work