The right level of cover
Dentists are well aware of the physical and mental demands of the job. As a profession there is an above average take-up of income protection and other health related polices. So it is a welcome relief that statistics from the Association of British Insurers (ABI) reveal the number of declined income protection claims fell by a third in 2012 compared with the previous year. This may in part be due to the Consumer Insurance (Disclosure and Representations) Act 2012 which formalised existing industry best practice on claims. Specifically, the act provides legal protection for customers that claims will not be declined for non-disclosure unless information is deliberately or carelessly withheld or misleading.
Improving statistics are a step in the right direction, although not all insurers are keen to reveal their claims history. Reassuringly, one major insurer of dentists did publish claims statistics showing an increase in paid claims from £3.4 million (2011) to £4.1 million (2012), with the average claim size increasing by 17%. With this insurer, musculoskeletal conditions remain the most common reason for claiming.
Significantly for the dental profession, a key reason for failed claims is often the insurer’s definition of occupation. No dentist should entertain a policy which covers them merely on the ‘any’ or ‘suited’ occupation definition. The availability of ‘own’ occupation polices for dentists is poor with many household name insurers avoiding the profession. With only a handful of providers willing to take the risk of insuring dentists it is important to seek specialist advice from an independent and dentally aware adviser. After all, these policies are not cheap, so good quality cover is essential.
In respect of the cost, your age at application remains the main factor, given that gender equality on insurance premiums has been enforced since December 2012. A delay on starting a policy or increasing existing cover can be expensive: for example, the typical premium for a 25-year-old is likely to be at least 40% lower than for a 40-year-old. As premiums can be secured on a guaranteed basis there are obvious advantages to applying as early as possible.
Other issues to watch out for are pre-existing medical conditions which you will need to disclose on your application form. Insurers adopt an individual approach to medical underwriting and their interpretation of your backache or neck pain might make the difference between standard terms or a career long exclusion.
The level of cover, the deferred period in the event of a claim, inflation proofing options and policy end dates are all things to consider. Dentists tend to sign up to income protection at university or during foundation training. However, the policy will not necessarily be suitable for a self-employed associate or practice owner and should be reviewed with any change of circumstance such as a new job, children, new mortgage or increases to fee income.
Jon Drysdale BA (Hons) Dip PFS is an independent financial adviser with PFM Dental and arranges income protection exclusively for dentists. Visit pfmdental.co.uk/ for contact details.