Income Protection for Dentists
Are you a dentist looking for income protection? Let’s talk about protecting your income.
Best Income Protection for Dentists
The top three reasons medical professionals claim income protection insurance is:
- Mental health – like depression, stress or anxiety
- Musculoskeletal – like broken bones and back pain
- Serious illnesses – like cancer, heart disease or strokes
You’re covered for any medical reason, so long as you’ve been signed off work by a medical professional. The only exception is if there’s an exclusion on your policy. I’ll explain exclusions below.
As a dentist or medical professional, you understand better than most that illness or an accident can strike anyone at any time, and the financial consequences can be devastating.
What is Income Protection for Dentists?
It’s an insurance policy that pays out if you’re unable to work for any medical reason – physical or mental, illness or injury.
People typically claim their income protection for things like
- long-term back pain,
- serious injuries caused by accident, and
- stress or depression, but also for
- other illnesses like cancer, heart attacks and strokes.
The idea is to protect you financially if you couldn’t work for a long time in a longer-term way than sick pay. It prevents you from using up savings, taking on debts, relying on someone else, or significantly changing your lifestyle if you find yourself unable to work because of your health.
Types of income protection
There are two main types of income protection cover: income protection vs mortgage protection. The key difference between the two is how they are taxed. Beyond that, both types come with a waiting period and can either be level or increasing policies, meaning the amount paid out stays the same or goes up over time, in line with inflation.
Determining Your Insurability
There are three factors insurance providers consider when they determine whether or not you qualify for income protection cover:
- Your health:
- Do you have pre-existing conditions?
- Are you overweight?
- Do you smoke?
- Your age:
- The younger you are, the more likely you will be covered because the younger you are, the fewer health issues you will typically have.
- Your income:
- The amount of disability insurance coverage you can purchase is based on your income.
Therefore, as your income increases, you may be able to buy additional cover.
- The amount of disability insurance coverage you can purchase is based on your income.
Given these three factors, typically, an excellent time to buy disability income insurance is when you are young. When you first start practising, your age works in your favour. However, even if you are not just starting, the sooner your purchase disability income insurance, the better.
Do I need income protection insurance?
An excellent way to work out whether or not you need income protection is to ask yourself:
- Do you (or others) rely on your income to pay for everyday expenses like rent or mortgage, bills and food?
- If a medical problem stopped you from working and earning money, would you be able to keep up with the cost of living?
- Do you have any sick days pay that could keep you going if you were too ill or injured to work – and, if so, for how long?
- Do you have any cash savings or other assets you could cash in? And would you want to use your assets?
- Could you temporarily reduce your household’s expenses while you’re unable to work?
The answers to these questions will help you work out whether or not you’d benefit from income protection.
Insurance is meant as a cushion to protect our assets from a financial shortfall. For example, income protection might not be the right kind of insurance for you if your sick pay, savings, or other assets would be enough to live on. Or if you have a spouse or other family members who could support you financially – even if you were unable to work for a long time.
We take the guesswork out of it because we use cash flow modelling to get a visual understanding of your current financial situation. It is worth considering how a catastrophic event might affect your cash flow.
Will you have too little, too much, or just enough money?
What isn't covered?
When buying any insurance, it’s essential to understand that there can be limitations and restrictions.
Pre-existing Conditions
If you’ve had a health condition, it will need to be declared when applying for cover and could be excluded.
Depending on the severity of the medical condition, it will either be:
- Covered with no change in premium
- Covered with an increase in premium
- Excluded from cover.
As expert income protection advisers, we have direct access to the underwriters at all the leading New Zealand insurers.
This gives us the greatest chance of getting you the best terms should you have existing medical conditions to declare.
Can you get income protection if you're a self-employed dentist?
So long as you’re employed in any capacity – full-time, part-time or self-employed – you can apply for income protection.
But getting covered can be particularly important to self-employed dentists because you might not have sick pay (it’s generally only provided by employers).
This means time off work for medical reasons can have a quicker financial impact on self-employed people than it would on those who have sick pay. Therefore, income protection can provide a safety net they’d otherwise be without.
Understanding ACC CoverPlus Extra
ACC, the Accident Compensation Corporation, offers two disability insurance products to the self-employed dentists:
- ACC CoverPlus
- ACC CoverPlus Extra
You pay mandatory levies and can claim if you are injured due to an accident.
ACC CoverPlus is the default accident-only disability cover by ACC. It can pay up to 80% of your last tax year’s income.
ACC CoverPlus Extra is the superior disability cover and lets you nominate a certain amount of coverage and pay you that sum while you cannot work. As a result, CoverPlus Extra pays you faster and with less hassle.
Income protection insurance covers any medical condition, not just an accident or injury.
If you reduce the amount of cover you have, you will also be able to reduce the levies you pay each year. One option is to reinvest these savings in an Income Protection Package which would pay out if you cannot work due to illness and injury, including mental health. This would give you added financial security. In addition, your private insurance plan would cover your income should you be diagnosed with a disease and be unable to work.
Example 1: Income Protection for Dentists
A 35-year-old male non-smoker receives a maximum monthly benefit of $10,000. The annual premium is just over $2,300. The policy includes any occupation with total permanent disablement. The policy looks like this:
- Monthly benefit $10,000
- Waiting Period: 8 weeks
- Payment Period: to age 65
- Benefit Term: to age 65
- Total Permanent Disablement: $300,000 – Any Occupation.
How to get the Best Income Protection for Dentists?
Choosing income protection isn’t always easy.
There are many things to consider when getting covered and lots of different policies to choose from. In addition, doing this by yourself can be daunting; no one wants to make a mistake when protecting themselves financially.
This is why getting help from an adviser can be so valuable.
At LifeCovered, we have carefully selected the best income protection insurance providers in New Zealand.
We looked at
- financial stability ratings,
- claims paid and
- fixed life insurance premiums so you can get the best life insurance policy for your needs.
Further, we use recognised third party Rating Agencies for quality product research and comparison.
Using LifeCovered online (or speaking to an adviser over the phone), you get:
- Free, unbiased, regulated advice
- Your most suitable quotes from the whole market of insurers
- Peace of mind that you’re choosing the right cover for you