DFT and new associate dentists
Focus on income protection
Starting self-employment? - It’s time to review your income protection
Most dentists pick up an income protection policy either in their final year at Uni or during DF1/DF2. This is often ‘sold’ to them by Dentists’ Provident or Wesleyan. These policies usually limit a claim to £1,300 per month of cover from week 1 of being off work due to ill-health, reducing to £650 after 6 months and £390 after 12 months. Sound familiar?
Here are some things you should consider if you have a Dentists’ Provident or Wesleyan policy.
1. Do these polices take account of my NHS sick pay entitlement once I start my new associate job?
Probably not. Here are a few words on what NHS sick pay entitlement you may have. For those dentists with NHS fee income the GDS Statement of Financial Entitlements covers eligibility for payments in the event of long-term sick leave. To summarise, you could expect to receive income after four weeks of absence and up to 22 weeks.
There are a few points of caution to mention:
- You have been a performer for two years or one year if you have just completed DF1.
- You rely on your practice to claim the appropriate amounts and pay you accordingly. The size of the payments depends on your contracted NHS income.
- This doesn’t cover any private fee income.
- The financial entitlement stops after six months (four weeks plus 22 weeks of claiming).
The rules are different if you are a salaried employee of the NHS. For self-employed dentists, at best you are covered for your NHS income for a maximum six-month period. After this the NHS will not pay you sick pay.
So the main point to make here is that because of NHS sick pay you may not be able to claim on your Dentists Provident or Wesleyan policy for 6 months. You might be paying for something you cant claim.
Solution: We review your cover to make sure it is set up properly to tie in with any NHS sick pay.
2. Is my Dentist’s Provident or Wesleyan policy a fixed or reviewable premium?
The standard policy that most dentists get in their final year at Uni offers reviewable premiums. In the case of Dentists’ provident this means that your premiums will increase as you get older. Whilst this might be acceptable for a few years the policy could become very expensive in later years. Wesleyan policies may be reviewed in line with general claims, which doesn’t offer much in the way of premium security.
Solution: We review your cover and recommend an insurer who offers dental specific cover with a guaranteed premium. Whilst you are at the start of your career and in good health now is the time to apply for this cover.
3. Is my Dentists’ Provident or Wesleyan policy expensive?
When you signed up were you offered policies from a range of insurers with a cost-benefit comparison? The chances are that a representative of Dentists’ Provident or Wesleyan introduced you to the policy and signed you up, either at Uni or in your FD year. To be blunt these representatives are sales people, they are not independent and they don’t necessarily have your long-term financial planning interests at heart.
Solution: We can offer a ‘whole of market’ income protection review and recommend the policy that is right for you, considering and comparing the costs on an independent basis.
In summary don’t assume the policy you have is suitable for your circumstances, especially if you are moving to a new associate job or a salaried post. We offer an independent review to check you are insured for the right amount and that your cover is good value.
Jon Drysdale is an independent financial adviser and director of Chartered Financial Planners PFM Dental.