This does not constitute advice. Professional advice should be taken prior to acting on any part of it.
Dental and Medical Financial Services Limited is an appointed representative of Best Practice IFA Group Limited, which is authorised and regulated by the Financial Conduct Authority.
Many people think that wealth protection isn’t for them. They’re too young, they don’t have a family yet, they’ve only just begun to build their wealth, etc. But the truth is, wealth protection can benefit everyone, no matter what stage of life you’re in or how much wealth you need to protect.
Even at the start of your career, it’s always a good idea to have a plan in place to protect your income.
If you have dependents or anyone counting on you to cover the majority of living costs, wealth protection will be beneficial to you. Anyone whose job is their livelihood – as is the case for many self-employed doctors – should consider securing at least one kind of wealth protection policy.
Sure, it’s not exactly a cheerful topic to think about, but if you were to suddenly become ill or injured, what would you do? Do you have a plan to pay your rent or mortgage and all your other living expenses? How would you stay afloat without any income coming in? Even if you have an emergency fund, your illness or injury could keep you from returning to work to replenish your savings before they run out – that’s where wealth protection comes in. Illnesses and injuries can happen to anyone and if you’re prepared to deal with the financial aspect ahead of time, you can focus fully on recovering.
It’s crucial you understand the supplemental coverage available to help provide your family and loved ones with a financial safety net through difficult times.
There are three primary avenues to explore for protection – Life Cover, Critical Illness Cover, and Income Protection.
Life Cover
Life cover pays out money to your dependents after your death via a lump sum. These funds will help them keep up with the mortgage and bills – anything that your income would normally pay for but will no longer be able to. Life cover differs from other wealth protection policies because it only pays out after your death.
Income Protection
Income protection insurance covers your income in the event of an illness or injury. It’s tied to your income and it pays out up to 65% of your gross income on a monthly basis if you are unable to work. Income protection is comprehensive in that payments are available until you retire and you can make multiple claims throughout the lifetime of the policy and it covers a variety of medical issues that could prevent you from working.
Critical Illness Cover
Similarly to Income Protection, Critical Illness Cover provides coverage if you were to become ill or injured and unable to work. Unlike Income protection, it will be a lump sum, and also unlike Income Protection, the number of illnesses covered are more limited, so be sure to review your policy so you’re aware what’s included.
Which one should you choose?
Out of these three, life cover is generally the most popular protection policy to have. It can be tied to a mortgage (many policies even offer a mortgage guarantee), and often policies tack on critical illness cover as part of their plan, while income protection is sometimes added on afterward.
While they all have their benefits, many people who are self-employed find themselves benefitting most from Income Protection as opposed to critical illness because of the more comprehensive coverage provided.
But for complete peace of mind, it’s best not to have to choose and to have everything. You can use critical illness cover’s lump sum to help pay one-off expenses and let income protection’s regular payments help you over an extended period of time. And of course, Life Cover can benefit everyone because of its unique coverage and payout situation.
Need help choosing the right protection?
Of course, the ideal situation would be to be covered from all angles but if you need to prioritise coverage, Dental & Medical Financial Services can help. They’re specialists in developing and protecting your wealth and their expertise will let you find the right mix of protection for yourself and your family.
Get in touch with DMFS today to get a wealth protection solution designed specifically for you.
