Given the position of dentists as they tend to patients, it should come as little surprise to learn that back and neck problems are the single most common causes of incapacity. Analysis of more than 5,500 income protection claims made to Wesleyan Assurance Society between 2002 and 2012 showed more than a quarter of claims were due to musculoskeletal disorders, such as back or neck pains. This is more than twice as many as the next most common ailments.
Overall, the vast majority of dentists (86 per cent) 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
More than 90 per cent of the income protection claims to Wesleyan were made by dentists over the age of 40. This is a time in your career when you are most likely to be at the peak of your earning potential. Losing income at this stage could have serious implications on your finances.
However, illness or injury can strike whatever your age and income protection should be a cornerstone of any financial plan throughout your career. The longer you leave it before taking out a policy, the more difficult it could be to find cover later on.
If you work in the NHS, the maximum amount of sick pay that can usually be claimed is six months full pay, followed by six months half pay after five years continuous service. Remember, this only takes into account your NHS work, not any private work. If you work wholly in the private sector, any sick pay you are entitled to will be determined by your employer.
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 per cent of your pre-incapacity level. They also provide peace of mind, as most policies pay out until you are well enough to return to work, are no longer suffering from a loss of earnings (such as if you start receiving your pension), you reach the maximum age for your policy, or you die.
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 any other protection, such as sick pay, has expired or is 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.
Conclusion
More than eight out of 10 of the income protection claims analysed by Wesleyan ended when the dentist made a recovery from their illness or injury and returned to work. Nevertheless, 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.
This article does not constitute financial advice. For further information please speak to your financial adviser.