An introduction to Dentists Provident and income protection

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1 An introduction to Dentists Provident and income protection

2 An introduction to Dentists Provident and income protection We are the market leading provider of income protection insurance to dentists, and have supported dentists in the UK and Ireland for over a hundred years. As we are specialists, you benefit from our in-depth experience of developing the most appropriate income protection solution at every stage of your personal and professional life. Members also benefit from our innovative and ethical approach to claims, and personal customer service. We are a mutual organisation so, with no shareholders, we exist solely for the benefit of our 13,500 members. On top of our protection insurance, members also have the opportunity to share in any of our financial surpluses, with a bonus account available to them when they retire. This guide gives you an introduction to us and to income protection. For full details of our plans, please do read our key features documents and our memorandum and rules. Why Dentists Provident? We specialise in supporting only dentists in the UK and Ireland, so we understand your individual needs You can take advantage of our flexible and customisable income protection plan You benefit from our quality, personal customer service with a UK based team, so you are treated as an individual not a policy number We have supported dentists for over a hundred years, so you know that we have the experience to be innovative for changing industry needs, and to develop appropriate solutions at every stage of a dentist s life You can be assured that our philosophy and approach have always been based around decency and fairness, with an ethical and innovative approach to claims 2 Dentists Provident

3 You have the flexibility to suspend your income protection cover, if you wish to take a break from work for maternity leave, travelling abroad or undertaking full-time postgraduate study, for example. You can suspend your cover for up to 24 months, over a maximum of three times during your membership. You won t receive dividend payments, but you still have your bonus account and can take up the cover again without having to go through the full application process* You have the opportunity to keep your investment, if you are over 50 and partially or fully retire. If you are over your defined retirement age and don t need your income protection anymore, then this option allows you to keep your shares, and any dividends and interest are still paid into your bonus account. At this point, you can leave your membership and take a cash lump sum or make partial withdrawals from this bonus account, to support you in your retirement NB: This option is only valid for insured members once they reach their defined retirement age. You can define your retirement age from as early as 50; we automatically define it as 60. As a mutual organisation, we don t have any shareholders, we are owned by our members. So every year any financial surpluses from our insurance business and investments are shared between members. Depending on how many shares they hold, the surpluses are paid as dividends into their bonus accounts. This builds up into a tax-free sum of money, that they can take advantage of when they retire NB: If you cancel your membership before you retire, your cash lump sum will be subject to a penalty. If you have been an insured member for less than two years, you will lose the balance of your bonus account.* What is income protection? Income protection insurance can give you a regular income, free of UK income tax, if you lose income because you can t work as you are ill or injured. The main types of contract tend to replace a proportion of your lost income. For more details please see your insurance company s key features document. How does income protection work? Not being able to work because of an illness or injury will have an effect on your income and monthly finances, but the extent of that effect on your lifestyle will depend on your personal circumstances. Income protection insurance companies pay you a regular income (within certain conditions) if you aren t able to work because of an illness or injury, in return for you paying a regular premium. There are many options you need to consider, from the type of insurer to the finer details of their contract, so that the plan suits your current role, income and what stage you are at in your life. So it is worth taking the time to make sure you have the right company and contract for you. There are no limits to how many claims you can make with income protection, and it could cover you for your entire practising life. Why may I need income protection? No one wants to think about falling ill or having an accident, but it is worth remembering that dentistry is a very physically and mentally demanding profession, so it is no surprise that many dentists suffer some form of illness during their careers. Every year Dentists Provident receives about 1,500 claims for benefits and in % of claims paid were to males and 37% to females aged years old. Some of these members will never be able to work again, and will receive benefits until they reach retirement age. We are currently paying long term benefits to around 150 members; some of them are only in their 30s. Could you still maintain your lifestyle without your current income? You may have specific insurances to cover your practice or the mortgage on your home, as well as personal loans, but not necessarily to maintain your current standard of living including your holidays, hobbies and entertainments. So the question may be, not why may I need income protection, but can I do without it? Are you a self-employed dentist? If you work in a practice, you are usually self-employed and this can mean that you may wish to cover your lost income from the very first day you are off sick. However, if you are a self-employed associate, it is worth speaking to your principal, to see if they have any sickness provision in place for you. As a practice owner, your practice may continue to generate some income for you if you are not there. However, would it be enough in the long term, if you aren t seeing your patients? Current standard NHS contracts have a variety of qualification criteria and start paying benefits after four weeks of illness or injury, for a maximum of 22 weeks in a 52 week period. Are you an employed dentist? If you work in a dental school, hospital, the armed forces or a company you are often covered by the provision of the NHS, your Trust or the organisation. As an employee, it is important to be aware of your sick pay entitlement as it can vary considerably. As an NHS employee, you could receive your full salary for up to six months, half your salary for the next six months and then you could be reliant on State benefits. State benefits Statutory Sick Pay is currently per week for the first 28 weeks and after that you could claim Employment and Support Allowance (ESA). If you need to claim from the State under the ESA rules, the current situation is that you can claim 71 per week ( if you are under 25) for the first 13 weeks of a claim, while they make a decision on your ability to work through the Work Capability Assessment. This focuses on what people can do, rather than what they can t do, so it assesses how much your injury or illness limits your ability to work. The result of this assessment determines what you are entitled to receive. Dentists Provident 3

4 Those claiming ESA may still be eligible for other means-tested benefits. If you don t qualify for ESA you may be able to apply for Jobseeker s allowance. What other sources of income might I have? When you are deciding what income protection cover you may need, it could be worth reviewing any other sources of income that you may have available to you, if you were off work. These can include: Spouse/partner s income: Although you may need to consider their provisions for sickness cover as well, if they were to get ill Alternative employment: You may be able to undertake an alternative, more appropriate role Savings and investments: Although you may be charged for the early release of any funds A reduction in monthly outgoings: This could be achieved by changing your standard of living and releasing capital by downsizing Pensions: You may be able to take early retirement, but you may receive a reduced settlement as a consequence If you feel you can cover your outgoing expenses with any of these, or perhaps your employer covers you not only for the short term, but the long term as well, or you feel you can live on State benefits, then you may decide that you don t need income protection insurance. If I decide I want income protection, what choices do I need to make? Take the time to consider what options you need, remember they are likely to affect the amount of premium you have to pay, so read the insurer s key features documents carefully. 1. How long do I want to wait before my benefits are paid? This is called the deferred period and you can choose to be paid for the first full day you are off sick,* right up to a year or two. Some companies have a minimum deferred period of 13 or 26 weeks which you may think is too long, if you are self-employed. It is important you think about being covered not just for the short term, but also for your long term security. You may want your cover to start from the first day you are off sick, or not until after any employment cover stops. Choosing a shorter deferred period would tend to make your premium cost more. 2. Do I want guaranteed, renewable or reviewable premium payments? You can choose from insurers that offer guaranteed, renewable or reviewable rates. If you choose guaranteed premiums, the amount you pay is fixed in advance. These tend to be more expensive than reviewable rates and cannot be changed by the insurer. Renewable premiums are only set for a fixed period, whereas reviewable rates allow the insurer to change everyone s premiums at the same rate, based on the organisation s claims experience. 3. What definition of incapacity is best for me? Incapacity is how insurers define your illness or injury and they tend to define them in relation to: Any occupation: You can only claim benefits if you cannot work doing any job at all. Any suited occupation: You only get paid if you can t do your own occupation or any occupation you are suited to, as defined in your policy. Activities of daily living: You can only claim benefits if you cannot carry out everyday tasks, such as washing or dressing yourself. Activities of daily working: You can only claim benefits if you cannot carry out a selection of everyday work tasks, such as talking. Own occupation: You can claim benefits for any illness or injury if you cannot do your current job as a dentist, but could still do another role such as teaching. Don t forget to check that the insurer doesn t limit the time your incapacity is defined as own occupation during the length of a claim. 4. Do I want the benefits I receive to stay the same, reduce or increase over time? You can chose to have level benefits over the period of your claim, so they stay the same over the long term; have reducing benefits over the time of a claim; or those that increase in line with inflation, so are more representative of their true value over the long term. What type of income protection insurer is right for me? Many high-street insurers provide income protection cover alongside other products you may buy from them. Some may have standard contracts with little flexibility for your profession, and others do not offer any cash when you leave them, whether you have claimed or not. So it is always important to check the details of any policy. Each organisation s key features document will allow you to compare them. Commercial companies obviously have shareholders they pay their profits to. Mutual organisations are different from other public companies as they do not have external stakeholders, and use any of their financial surpluses of funds for the benefit of their members. They do this by giving members a bonus, or reducing the cost of the insurance. Friendly Societies are mutual organisations owned by their members. A few Friendly Societies (including Dentists Provident) have a unique contract called the Holloway Contract (there are only about a dozen in existence), that combine the income protection with an investment fund for retirement. This fund is currently exempt from UK income tax and capital gains tax. *Depending on personal circumstances and subject to conditions Dentists Provident 4

5 Our income protection plans Our plans are flexible and can be tailored to your personal circumstances in your practice or hospital and for whatever stage you are at in your life and career. For more details please read our key features documents. Some of the standard features of our income protection plans: Own occupation definition of incapacity: Our definition of incapacity, that is the illness or injury you wish to claim for, is based on your inability to perform your occupation as a dentist Tax-free benefits: All benefits you receive from Dentists Provident are currently free from income tax and capital gains tax in the UK. This includes not just your benefit payments, but also the funds in your bonus account available to you at retirement Currency choice: You can decide to pay your premiums and receive your benefits in Pounds Sterling or Euros Claim security: You are entitled to receive benefit payments for as long as you are ill or injured and suffer a loss of income*, or until you retire. We will never refuse a claim or cancel your membership simply based on the number of claims you have made, which also don t affect the premiums you pay The options you can customise to your needs: Level of weekly cover: You need to choose the level of weekly cover that suits you. Our income protection plan can pay you up to 60% of your pre-incapacity gross earnings and the maximum initial level of cover you can apply for is 1,200 per week* Deferred period: You need to decide how soon after the start of your illness or injury you would like your benefit payments to start; from the first full day you are off work, or after any number of weeks between one and 52, or 104.* The longer the deferred period, the cheaper your premiums are likely to be. If you are entitled to receive sick pay from your employer; have other income protection insurance policies; or wish to rely on alternative sources of income during short term illnesses, you can choose deferred periods that provide a seamless fit Benefit payment options: You need to decide what you would like to happen to your benefit payments if you are off with a long term claim: a. Indexation of benefit payments: Your benefit payments would increase in line with inflation each year, helping to preserve their real value in the long term (subject to limits). This is the most expensive of the three benefit payment options b. Level benefits: Your benefit payments would remain at a constant level throughout your claim c. Reducing benefits: Your benefit payments would reduce over time; with this option you will receive the full weekly rate for the first 26 weeks of any claim, 50% for the next 26 weeks and 30% for the rest of the claim. This option is only available when you choose a deferred period of zero, that is, you are paid benefits from the first full day you are off sick Shares: The maximum number of shares you can hold in the first two years of your membership is one share. After this, your maximum shareholding will depend on the level of your cover and your age, to a maximum of 2,000 shares. You can increase or reduce them throughout your insured membership before you retire. Additional options you could add to your plan: Escalation of cover: Your premium payments would increase with inflation on 1 January each year, following the first 12 months of your benefit payments (subject to limits), regardless of any claims. If your income does not increase in certain years and does in others, you can choose not to have this option in some years and have it in others Enhanced death benefit: This would pay your estate a one-off lump sum, equal to 26 weeks of your initial benefit payments, if you die within 12 months of the start of a claim due to the illness or injury you claimed for.* This is paid on top of the cash lump sum from your bonus account Increasable sickness benefit: This increases your cover, subject to certain limits, without the need for further medical evidence on the 6th, 12th and/or 15th anniversary of taking out your plan.* The increases under this option are in addition to those available with escalation of cover and you can use them to adapt your cover to any change in your life, such as a significant increase in your income Severe disability benefit: You can receive a regular top-up payment equal to 20% of the value of your weekly benefits at the start of a claim, if your illness or injury satisfies certain predefined criteria. We know that certain illnesses or injuries can change your life forever and your long term financial requirements may be greater than those covered by your regular income protection payments NB: Each additional option will have an effect on the cost of your premium payments. For further details on the specific elements, inclusions and exclusions of our plans, please read the key features documents and our memorandum and rules. Member benefits We also support our valued members by providing guidance from experienced, reputable and relevant third parties, to help you in your practising and personal life. Whether it is advice on posture and back care, offers for ergonomic instruments, complimentary preventive exercise classes and techniques, or reduced prices for lecture attendance, we like to support your health, wellbeing and lifestyle throughout your membership. Dentists Provident 5

6 How to apply Our application and underwriting process is comprehensive and thorough. The better we know you, your detailed medical history and your health and lifestyle, the more we can ensure that we offer you the best possible terms in your plan. You can apply online at our website or through your independent financial advisor. What other health protection products are there? The health insurance industry offers you protection, giving you the peace of mind that you and your family are supported, if you fall ill or are injured in an accident. The main categories of products are those that are long term, or general insurance products, which are reviewed every year: Long term insurance products: Critical illness pays you a lump sum only if you contract one of the specific illnesses listed in your policy. Private medical insurance is designed to cover the cost of private medical treatment for acute conditions. Long term care insurance is designed to finance long term care, when you are unable to care for yourself. General insurance products: Accident, sickness and unemployment cover usually provides benefits for a limited period such as mortgage payment protection, which may cover your mortgage for 12 or 24 months, if you are off sick or made redundant. Practice expenses/overhead insurances (including locum cover) provide reimbursement for the expenses of operating your practice, if you cannot work. They may include rent, utilities and other fixed costs. *Depending on personal circumstances and subject to conditions Where can I get help? Our member services team can help you with any general questions about Dentists Provident, so please contact them on the number below. If you would like advice, please contact an independent financial advisor. You may find it useful to talk to one who specialises in professions such as dentistry, to give you some guidance. Contact us Address: Dentists Provident, Saffron Hill, London, EC1N 8QP Telephone numbers: Main office: +44 (0) Member services team: +44 (0) Underwriting team: +44 (0) Claims: +44 (0) Office opening hours: 9am-5pm, Monday to Friday Fax: +44 (0) This booklet is intended for general information only. It is not designed to provide financial or other advice, nor is it intended to make recommendations regarding the suitability of our plans for a particular individual. Nothing in this guide constitutes an invitation, inducement or offer to subscribe for membership or additional benefits of Dentists Provident. You can find full details of our plans in our memorandum and rules and key features documents. Applications are required and non-standard terms may apply. NB: All references to taxation are within the context of UK tax regulations. HM Revenue & Customs tax treatment of premiums and benefits, in relation to Holloway contracts and income protection, may change in the future. Members outside of the UK should seek professional tax advice. Registered office: Saffron Hill, London, England, EC1N 8QP Telephone: +44 (0) We may monitor calls to improve our service. Fax: +44 (0) Dentists Provident is the trading name of Dentists Provident Society Limited which is incorporated in the United Kingdom under the Friendly Societies Act 1992 (Registration Number 407F). Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Firm Reference Number ). 04/14