In today’s society most dentists we advise have several loans, either mortgages - residential or buy-to-let, practice loans and sometimes credit cards. Being debt-free prior to retirement is increasingly rare. It's therefore essential to ensure you have adequate cover. Many dentists appreciate the need for Life Assurance and Income Protection. We find that most dentists we meet also want to cover their mortgages and loans with Critical Insurance cover.
Critical Illnes cover provides a tax-free lump sum of cash on the diagnosis of serious illness or total permanent disability. This is particularly useful for those who haven't yet been able to build up significant levels of savings to use as a safety net.
The reality is that we are twice as likely to suffer a serious illness than die before the age of sixty. For many reasons, including the advances in medical sciences and technology, the survival rates for once fatal illnesses are much higher. A consequence of this is families contending with the unwelcome cost of treatment whilst having to meet daily financial commitments, often on a reduced income. For dentists this could also include the running costs of the practice.
There are two main types of policy available: Term (level) or Mortgage (decreasing). When considering Critical Illness, there are several factors involved. Firstly, there are your current mortgage commitments, for both the home and the practice. It is necessary to balance the current costs of living with the cost of providing financial cover when you are unable to work.
Secondly, although generally cheaper, a mortgage critical illness plan means the amount that can be paid out decreases over the term of the plan. In contrast, a level term critical illness cover payout remains constant throughout the life of the policy. The advantages for both types will require careful consideration.
Choosing the right provider of your cover is vital as there may be no option to change if your health deteriorated. One of the main areas for dentists to consider with critical illness policies is to make sure the wording on the small print covers you as a dentist. Very few insurance companies have the necessary “own occupation” that could be crucial in the event of a claim.
Bearing in mind that 1 in 4 women and 1 in 5 men will suffer a serious illness before retirement age. Taking adequate measures to ensure that the recovery process is not hindered by worries about finance seems a prudent step.