We always recommend that you financially prepare for the possibility that you can no longer work due to illness or injury. Your ‘financial toolbox’ will help you through tough times. But exactly what should you include in your toolbox to ensure you’re fully covered?
This does not constitute advice and advice should be sought in all instances before acting on it.
Stock your toolbox
Wealth protection gives you and you family some peace of mind in case you lose your income – whether that is short or long term.
As well as the three main tenets of protection – Income Protection, Critical Illness Cover, and Life Insurance – there are many other alternatives and navigating through all the options for the right coverage can be confusing. This is especially the case for doctors and dentists whose jobs are very specific, so protection plans will need to be custom made to your situation.
Why do you need protection now?
Sick pay for healthcare workers can vary so you should not rely on that alone. Everybody should be able to refer to their ‘toolbox’ if the time comes so income protection is for everyone. Make sure you have ways to supplement where sick pay falls short.
Generally, the more protected you are, the better, but we understand that if you do not already have protection, you might be wondering why now, of all times, is the right time to do so.
Some doctors, medics, and dentists have already experienced a loss of income during the pandemic – such as due to illness. Going through a period of reduced income highlights just how important it is to be fully prepared for the worst case scenario. A reduced income while you’re trying to recover is the last thing you want to do.
My toolbox recommendations
There are a variety of coverage options and a mix of two or more policies that cover the essentials should be your goal if you have limited funds. You can always increase your coverage once your income returns to normal or as it increases naturally over time.
You should meet with your financial adviser to discuss the policies that are right for you. However, these are some of your options.
Income Protection
- Meant to help you and your family financially survive an illness or injury.
- Directly related to your income and usually pays out 50%-65% of your gross income (tax-free) while you can’t work.
- You can submit multiple claims during your policy term and payments can continue until retirement or death.
- Some policies might have pay out terms dependent on whether or not you can perform any job while others will dictate that you’re unable to perform your job, specifically.
- A wider variety of illnesses are covered compared to Critical Illness Cover.
Critical Illness
- Similar to IP, the money received can be used to pay the mortgage, rent, bills, or even groceries.
- The illnesses covered are more selective.
- Only one claim allowed during your term.
- Pay out is in the form of a lump sum.
Life Cover
- Ensures your family has the money they need to survive in the event of your death.
- Ideal for outstanding mortgages since it is meant to replace the income that you earned while alive that will no longer be available to your family.
- It provides a cushion to deal with any unexpected expenses if built into your figure.
- Pay out is in the form of a one-time lump sum.
Protection for peace of mind
Having a plan to protect your income might just be one of the best decisions you ever make. There is no need to worry about money when you are recovering and if you have life cover, you can rest easy knowing your family will be provided for after you pass.
Get in touch with Dental & Medical Financial Services to review or secure new cover today.
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Dental & Medical Financial Services have been helping doctors and dentists to build and protect their wealth, whilst saving tax for over 25 years.