Chapter 9

Investment and Protections

However successful you are in the business of dentistry, it is always important to keep your financial circumstances and requirements under review at all times. There is no doubt that too few practitioners review their financial position often enough.

There are many various forms of insurance, which are available to protect you and your family in terms of replacing income and paying off debts in the event of misfortune. Protection plans such as permanent health insurance, critical illness cover and life assurance should all be used to protect you, your assets and your family. A detailed analysis of protection plans and investment strategy is beyond the scope of the present text, but there are many specialist advisers who will be able to assist you with your requirements.

Permanent Health Insurance

Permanent health insurance provides for a replacement income in the event of injury or disability. Insurance companies will allow you to insure a percentage of your income, normally up to a maximum of around 70% (this varies from company to company). The benefits of the plan can also be deferred so that they begin either on day one, or after four, 13, 26 or 52 weeks.

Practice Overheads Plan

This type of arrangement is renewable each year, and provides an income to ensure that the practice can continue to run in the event of you being absent from the practice due to sickness or accident.

Critical Illness Cover

The development of critical illness insurance has been a major breakthrough in terms of providing enhanced protection to individuals and their dependants. In financial terms, the onset of a critical illness can be even more traumatic than death and therefore your individual cover and protection must be reviewed routinely. Critical illness cover provides a lump sum payment on the diagnosis of any one of a range of illnesses specified in the policy when taken out. A general list of illnesses covered is given here, although this may vary from policy to policy:

• heart attack

• kidney failure

• cancer

• stroke

• permanent total disability.

Most insurers will also pay out if treatment is required under the following circumstances:

• coronary artery bypass

• major organ transplant.

Critical illness cover is normally written in conjunction with life cover protection (see below) and it is now accepted that most practitioners require cover for critical illness as well as significant life assurance cover to protect their practice investment and financial liabilities, as well as their dependants.

Life Assurance

The cheapest form of life assurance is term cover and this is a simple and relatively cheap way to make sure that any liabilities you may have are covered in the event of your death. A life assurance plan will provide a lump sum payment on your death in return for a regular payment to an insurance company. This type of plan is used to cover your mortgage, practice purchase and any other liabilities such as loans for practice equipment purchase or even a car loan.

Apart from basic life and critical illness cover there are alternative forms of life assurance, which allow for an element of investment. Such policies are either with-profit endowments or unit-linked assurance to provide a minimum level of death benefit, together with a growing investment fund that is normally payable upon maturity. The returns on such investments are not guaranteed and it is therefore important to understand that such policies work best over relatively long periods of time.

There is also “whole of life” cover that guarantees a certain amount of benefit payable upon death and can b/>

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