Dental Tribune United Kingdom Edition

13Money MattersJanuary 23-28, 2012United Kingdom Edition 13 L ife insurance is by far the most popular form of protection taken out by dentists to cover their den- tal loans, mortgages and to protect their families. Critical Illness Cover (CIC) is some- times mentioned briefly or not at all by some advisers, due to their increased premiums. Critical Illness Cover is normally a ‘bolt on’ to life in- surance and provides a one off lump sum if you are diagnosed with one of the critical illness- es covered by the policy. Most critical illness policies will cover between 25 and 40 criti- cal illnesses. The lump sum payment can provide financial assis- tance to a family when they need it most; a dentist that has a critical illness may be the main breadwinner, if they do not work then income will not come into the household, financial worries will also not help them to get better. On top of all of this, they may need to see specialist doc- tors or get private treatment. Income protection policies may go some way in provid- ing income to the household; however this will be a limited amount on a monthly basis or after a deferred period and may not be sufficient to cov- er all the expenses in the event of a critical illness. There is no limit on the amount of critical illness cov- er you can take out. You can also have a com- bination of cover between life insurance and critical illness cover; for example you could have £500,000 of life insur- ance and £250,000 in critical illness cover on the same pol- icy, so you can get the cover you require to fit into your budget for protection. Not all critical illness poli- cies are the same; an article in the London Metro edition dated the 27 July 2011, illus- trates a prime example of this. A bus driver took out a criti- cal illness policy 12 years ago for £500,000, unfortunately he had to have a leg removed recently, he thought he would be covered and contacted his insurer, to find to his hor- ror, for the policy to pay out he would have needed to have BOTH legs removed/ amputated. As a dentist, put yourself in his situation. If you lost an arm/limb would your critical illness insurer pay out? There is only one provider of critical illness cover which would provide the correct cov- er for dentists: are you with them or not? Most critical illness poli- cies also provide other benefits like children’s cov- er and Total and Permanent Disability. These policies can be arranged with guaran- teed premiums, which mean that the premium won’t change over the term of the policy; or reviewable, the premiums would be reviewed in line with the current mar- ket, generally every five years. Dental loan cover Life and critical illness cover can be used to cover a dental loan, in the event of a critical illness the bank loan would be cleared and the dentist would earn income from the associates. If the dentist died, then the loan would also be paid off so this in ef- fect provides a two-fold pro- tection for the dentists and their estate. Family and mortgage cover Life and critical illness cover can be used to cover a house mortgage. The mortgage would be paid off if the life and critical illness policy is taken out for the outstanding mortgage amount. The policy is normally arranged whereby it can pay out on first death or first diagnosis of a critical illness. Family protection can pro- vide a lump sum to the family in the event of a critical illness or death. A family Life and Critical illness policy can be taken out in addition to mort- gage cover. Evolution of Critical Illness Policies? There is one provider of life and critical illness cover which has a unique propo- sition. They call it Serious Illness Cover, which would cover up to 161 serious ill- nesses. This is based on the severity of the illness/condi- tion and would pay out be- tween 10 per cent and 100 per cent of the insured amount. This is unique in the market, so in the event of a serious ill- ness that meets their criteria you would still get a pay out, it’s not an all or nothing pol- icy. This may be the way for- ward for future critical illness policies. If you have an existing critical illness policy it is best to get advice before replacing it, as some of the older poli- cies may cover more criti- cal illness definitions than newer ones. Critical Illness Cover should not be taken as an al- ternative to income protec- tion and vice versa, they are separate policies and cover different situations. Critical illness cover pays out a lump sum payment whereas income protection would pay out a monthly income. DT Dino Charalambous discusses Critical Illness Cover for dentists Have you got Critical Illness Cover? ‘Critical Illness Cover should not be taken as an alternative to income protection and vice versa, they are separate policies and cover different situations’ About the author Dino Charalambous has been a mortgage and protection broker for over seven years and provides a per- sonalised service for his clients in mortgages, life insurance, critical illness cover, income protection and general insurance. Where possible, he likes to provide face to face inter- views so he gains a full understanding of his clients’ requirements. Dino will take charge of any application and fol- low it through to the end so that there are less potential hassles for clients. This also ensures his clients have the appropriate cover for their needs. The dental sector is his main focus and he has worked with many dentists over the past seven years and many of his friends are dentists! For an informal chat, please call Dino Charalambous on 07939 457589/08456 123 424 or get in contact by email dino.charalam- bous@ft-associates.com FTA Finance Ltd is an appointed representative of IN Partnership the trading name of The On-Line Partnership Limited which is authorised and regulated by the Financial Services Authority. DO engage the services of an independent firm to liaise with the Banks on your behalf – will ensure proposal is packaged for best chance of a positive response and also to negotiate best terms. DO ensure you provide an accurate summary of your current position including all savings and existing borrowing. DO ensure your CV is up to date with particular focus on any past Managerial experience. DO expect the Bank to want you to put down a contribution towards the purchase. DO undertake your own research of the local area and find out why the current owner is selling. Raising Finance? Tel: 08456 123 434 01707 653 260 www.ft-associates.com peakingrankly S Search for Frank Taylor and Associates Follow us @franktaylorassc 1559COR FTA 140x100mm AD1.indd 1 22/02/2011 22:35