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Building and protecting your wealth

Income Protection for Self-Employed is Essential Not Optional

Self-employment has many benefits and can be a preferred status for certain segments of the dental and medical sectors, such as GPs, associates and locums. However, it is less secure and ensuing you have a backup plan in the event you are unable to work is essential. Here is why.

This does not constitute advice and advice should be sought in all instances before acting on it.

The security of the NHS or employment

When working under the safety net of the NHS or another employer, you will be entitled to some sick pay should you need it.

The NHS will pay your full salary for six months following incapacitation, which can certainly give you the needed support if you break a bone, take time off work following injury, or suffer a short-term mental health issue.

Aviva reported in their 2019 report though that the average duration of an Income Protection claim is almost seven years!

This is why we strongly believe that everyone – employed or self-employed – should consider Income Protection cover to protect their valuable income stream in the event they cannot work.

The self-employed have a greater risk

There are approximately five million self-employed people in the UK, according to the Office for National Statistics (ONS). Insurer, LV, report that only 4% of self-employed people have Income Protection insurance. This is considerably lower than the already low national average of 11%.

Whilst this research covers all sectors of self-employment, in the medical world, GPs are commonly self-employed in a partnership. In the dental world, associates and practice owners may also choose their status as sole-trader or partnership for tax purposes.

It is very important to understand that if you are self-employed and unable to earn an income, you won’t have the benefit of employer’s sick pay, so you need a backup plan.

Income Protection insurance for the self-employed

One common misconception by those in self-employment is that they don’t think they are eligible for Income Protection cover, which is incorrect.

Income Protection insurance provides a fixed monthly sum in the event of you being unable to work.

Most policies are linked to your own occupation and role, so will payout as long as you are unable to carry out your specific job role. Other policies may have criteria to payout only if you are unable to perform any job.

Income Protection can be really affordable and it is generally best taken out when you are fit and healthy. This secures you a good premium, which is then fixed for the entire duration of the policy. Waiting ten years can generally double the premium as you age.

Related Reading: How Much Is Income Protection Insurance and Do I Need It?

There is also the option to set a short deferment period, which helps to keep premiums a little lower.

Self employed? What is your backup plan if you can’t work?

Research by LV found out that 33% of people in self-employment could not survive more than three months by using savings and other resources immediately available.

As a doctor or dentist, it is likely you will have some savings. Would you want to see them drain away though to cover longer-term periods of ill health or recovery from injury?

Worse still, would you be prepared to remortgage your property to release equity, seeing wealth that is being built for your retirement, get eaten away?

These are the common reasons why doctors and dentists opt for Income Protection cover. It is an affordable way to obtain peace of mind that you can retain your current lifestyle and protect income and your wealth in unforeseen circumstances.

Related Reading: Income Protection: What Are Your Alternatives? 

Get a quote

The benefits of Income Protection insurance are grossly undervalued, but those in self-employment should see this cover as essential, not optional.

Contact us for an initial quote so you can assess your options and weigh up the benefits.

Protection your income and wealth is vital
Investments | Financial Planning | Retirement | Save Tax | Protection |

Dental & Medical Financial Services have been helping doctors and dentists to build and protect their wealth, whilst saving tax for over 25 years.
Call Darren to discuss your options.

Tel: 01403 780 770


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