Thomas Dickson explains why getting the right type of cover in dentistry is critical – especially in the current climate.
As the cost of living crisis bites, dentists may be tempted to ditch some of their insurance policies in order to reduce spending.
However, in a profession that relies on physical and mental wellbeing, reducing or cancelling protection for a short-term saving could cost you in the long run.
Three reasons dentists need cover:
- Dentistry is a demanding profession health wise, and even with the support of ergonomic chairs and surgeries, loupes and regular exercise it can still take its toll. Musculoskeletal pain is the biggest cause of both insurance payments and early retirement in dentistry
- Dentists who are self-employed can’t rely on their employer to look after them if they’re unable to work. For those in the NHS pension scheme, there are some death-in-service and sick pay benefits, but even for dentists who work exclusively in the NHS, this is unlikely to be sufficient cover
- In our experience many dentists have significant mortgages, loans, and high monthly outgoings such as school fees. If you have to stop work unexpectedly, it’s not long before the savings run dry.
So, unless you have significant assets, getting the right type of cover is critical. Principal dentist Asha Ram reflects on the importance of a safety net after becoming suddenly unwell – www.wealthwide.co.uk/blog/the-importance-of-a-safety-net.
Income protection
If you are incapacitated and can no longer work, personal income protection plans pay out a monthly tax-free benefit.
This is one of the most important types of insurance for self-employed associates or principal dentists as it ensures you can keep up with your outgoings until you’re well enough to return to work.
For comprehensive cover, the cost is typically between 1.5%-2% of your gross income, so if you’re earning £85,000 a year, you’d be paying £100 – £140 a month. Ask yourself which of the following scenarios you would prefer:
- An income of £85,000 per annum, but if you were suddenly unable to work due to ill health, your pay would stop completely, or;
- An income of £83,500 per annum, and if you can’t work through accident or illness, you’d continue to be paid over £4,000 a month tax free until you’re able to return to work or retire?
Life cover
In the event you were to die prematurely, life cover ensures your family can stay in their home and continue to pay the monthly bills.
It’s relatively inexpensive, so most people wouldn’t be able to make much of a saving by cancelling their plans.
If you’ve incorporated, you can also take out cover through your Limited Company so you get tax relief on the premiums. But any claim would be paid to your beneficiaries tax-free.
Critical illness cover
It is a well-known statistic that one in two of us will get cancer during our lives. Fortunately, many cancers are now survivable, but the impact on your life – your ability to work and look after your family, either financially or in terms of looking after a loved one – remains immense.
The financial pressures, at what would undoubtedly be a difficult time, cannot be underestimated.
To read more about how Wealthwide can help you arrange a personalised insurance package, click here – https://www.wealthwide.co.uk/insurance.
Other options to reduce your premiums
There are a few stages in life when it’s appropriate to reduce or cancel your cover. We have several clients who have recently sold their practices, and all took great pleasure in cancelling their insurance plans and reducing their monthly outgoings.
It’s also worth reviewing your insurances when your children leave home or are no longer financially dependent.
As part of our financial planning process, we help many clients work out the point at which their pensions and savings have accrued sufficiently so that they would be able to maintain their lifestyle even if they were suddenly unable to practice dentistry.
Create a financial plan
A comprehensive financial plan can take into account your income, savings and investments, the mortgage, household utility bills and other personal expenses such as holidays.
We can then forecast exactly how much cover is appropriate so that in the event something catastrophic does happen, you and your family have the right amount of money, in the right hands, at the right time.
Read more about our financial planning service and how we’ve helped other dentists here – www.wealthwide.co.uk/financial-planning-for-dentists.
If you’d like to learn more about personal protection and financial planning, please get in touch with us directly – www.wealthwide.co.uk/contact.
