If you're a young dentist, it could be easy to dismiss the prospect of being unable to work because of illness or injury, as something that only happens to older colleagues.
Almost two-thirds (59%) of income protection claims made to Wesleyan Medical Sickness by dentists occur between the ages of 40 and 54. This may seem a long way off at the start of your career, but it is important to get protection early on.
Musculoskeletal issues are the single most common cause of incapacity in the profession and made up a quarter of income protection claims made to Wesleyan between 2002 and 2012. This is more than twice as many as the next most common ailments.
Overall, the vast majority of dentists (86%) claim income protection for less than a year before returning to work. However, Wesleyan’s analysis shows those who are unable to work for more than 12 months, on average claim for almost eight-and-a-half years.
This is a stark reminder of how debilitating some conditions can be and how long you may be away from your surgery without an income.
Protecting yourself
When you consider how hard you’ve worked to get where you are today, it makes sense to take steps to protect your income. Taking out income protection should be an integral part of any financial plan as it will enable you to maintain the standard of living that you currently enjoy should anything happen to you. The longer you leave it before taking out a policy, the more difficult it could be to find cover later on.
Sick pay and additional protection
The amount of sick pay you are entitled to during your foundation year will depend on the deanery where you are studying. Once you take up a second year of foundation training (DF2) or take up a Performer position, you are likely to lose your entitlement to NHS sick pay for the next 12 months.
You need to complete two years on the General Dental Council register, before you are eligible again for sick pay from the NHS. This can include your foundation year and your first year as a Performer, or two foundation years. You’ll then receive full pay for six months, subject to the PCT’s discretion.
Without an income protection policy, once your sick pay stops you may have to draw upon your own savings or, if eligible, rely on state support. The Employment and Support Allowance pays out a maximum of £105.05 a week, which may be some way short of your regular income.
Income protection policies are generally based on your full earnings and will pay you a regular tax-free income, typically up to 50% of your pre-incapacity level. Most policies pay out until you are well enough to return to work, are no longer suffering from a loss of earnings (if you start receiving your pension for example), you reach the maximum age for your policy, or you die.
When buying income protection you should ensure the policy is specifically tailored to your needs and provides all the key benefits you require if you need to claim. For example:
- Ensure the policy includes an ‘own occupation’ definition, meaning it will pay out if you are unable to carry out your specific job. If the policy states ‘any suited occupation’, it won’t pay out if you are able to carry out other types of work based on your knowledge and experience.
- Check the scheme offers ‘permanent’ protection, meaning the terms on which it is offered will remain unchanged until the policy expires or you retire, whichever comes sooner.
- Think about the right deferred period for your needs. Premiums are normally cheaper if you wait longer before benefits are paid, so you might choose to defer payments until other sources of income, such as sick pay, have expired or reduced.
- Review your policy regularly as it may be impacted by any changes in employment conditions and salary increases that occur throughout your career.
Critical illness
You may want to supplement any income protection policy with critical illness cover. While income protection will pay a regular income until you are able to return to work, critical illness policies will provide a tax-free lump sum if you are diagnosed with a pre-defined medical condition, even if you are able to carry on working. This lump sum could be used to pay off your mortgage or to adapt your home to assist with changing requirements if you were to suffer a disability, for example.
Any time you are off work without receiving an income could leave you financially vulnerable. Speak to a financial adviser with an understanding of the dental profession to ensure you have adequate cover in place throughout your career.
The above information does not constitute financial advice. For further information please speak to your financial adviser.
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