There’s a good chance that you signed up for income protection coverage when you graduate. It could have been at a graduation Ball or following a talk.
Even if you did not know that there was better coverage, it is important that you purchased a very important plan. Imagine if you had been away from work for several years after starting your job.
What would you do if you didn’t have coverage?
It’s important to have enough coverage for your financial planning. As with many things in life, protection plans do not come in the same format. Each plan has its own details and nuances.
Let’s look at the most important types of protection available and what you should be looking out for.
Income Protection
This is without a doubt the best coverage that you can purchase and everyone should have it. This coverage will help you to have a steady income even if your income is cut due to injury, illness or other reasons.
You are eligible for 6 months of full pay and 6 months of half-pay if you have served 5 years in the NHS. You’re then on your own, although you might qualify for an NHS pension in the event of ill health.
It’s possible that you don’t have coverage if you are in practice. However, General Practitioners may be eligible for 12-month coverage under their Partnership Agreement.
It is important to do your research before you decide to buy an income protection policy.
- Your age
- Your health
- gender
- The market coverage rates
You won’t be able to change the plan in the future, so make sure you buy it right. You’ll be reassessed on all the criteria.
You need to be aware of these things:
- Do you require day 1 coverage if you are in practice?
- Can you be guaranteed premiums?
- or reviewable premiums? (which could mean that the premium might increase in the future, depending on the overall claims of the provider or the income market protection market)
- Can you inflation proof your insurance?
- Will the coverage continue until you reach retirement? Some providers limit it to 55 years.
- Are you purchasing protection or an investment component of the plan? The latter is offered by the Dentists’ Protect Society.
- Does it cover your inability to perform your occupation? Be wary of plans that pay claims based on your own occupation for only a short period of time, such as 24 month.
- What is the claims process? It is highly recommended that you learn about the claims process.
- What is the claim history of the provider (i.e. Do they have a good track record for paying claims?
Over 20 income protection providers offer several types of plans. To make sure you make the right choice, you need to do your research.
Let’s take a look at some other types of cover.
Life Assurance
This is the simplest type of coverage and easiest to claim on. ).
While you will need to consider many of the above criteria, there are also different types of coverage:
- Term assurance is a guarantee that you will be covered for a set period.
- Term assurance can be purchased as level, increasing or decreasing
- You can also purchase coverage that pays either a lump amount OR income on claim (the latter is called Family Income Benefit).
- Most plans offer a payout for the diagnosis of terminal illnesses.
Critical Illness
This cover is intended to pay an annual income or a lump sum upon diagnosis of a particular list of diseases. This cover is the most complex. You will need to read the fine print. These are the main conditions that can lead to a claim.
- heart attack
- Cancer
- Stroke
Don’t forget…
Practice Overheads / Locum Cover
Only a few providers offer this coverage, so be sure to find out about their history and the types of coverage they provide.
You may be eligible for more competitive coverage if you have already got coverage.
Financial Tips Bottom Line
It is important to do the right detective work in order to ensure that you have the best personal protection.
- Calculate how much coverage is needed
- Find out all types of coverage that are available
- Make sure to purchase the best cover possible, and not just the price
ACTION POINT
This is an important topic. Although investing your money can be more glamorous than buying the right protection, if you don’t have the right type and amount of coverage, you might not have enough money to invest.