If you are a dentist, it's likely that you've taken out
income protection insurance (also referred to as permanent
health insurance). In fact, you may have even claimed on
your policy.
During the last few years many of the leading insurers have
been releasing their claim statistics for critical illness
cover and income protection. This information is very
useful to know as it gives you an insight to what
policyholders are claiming for, and also peace of mind in
knowing that the insurance actually pays out!
Let's look at the statistics from DPS.
Established in 1908, Dentists' Provident Society is the
leading provider of income protection insurance to dentists
in the UK and Ireland.
They serve over 13,000 members and as they specialise in
dealing with members of the dental profession they have
been able to compile detailed information to demonstrate
the value of income protection insurance.
Highlights:
- In 2006 DPS paid claims totalling £2.7m
- On average, they paid 121 claims each month
- The largest claim in 2006 amounted to £32,100
(average £1,893)
- On average, 11% (1,456) of their insured members claimed
benefits in 2006
- The average age of claimants was 43
- The average duration of short term claims in 2006 was
just under 4 weeks
Let's look at some examples of claims in 2006:
Male - age 49 - Stroke - 11 years claim duration -
£116,730 paid (to end 2006)
Female - 54 - Spondylosis - 1 year - £33,858
Male - 56 - Torn tendon - 1 month - £2,700
Male - 38 - Depression - 4 years - £162,400
Female - 28 - Back strain - 2 weeks - £1,500
Male - 25 - Renal disease - 1 year - £19,200
As you can see, the reasons for claims are varied, and many
of them would not have been eligible for a claim under a
critical illness policy.
The good news is that as DPS are a mutual organisation,
they do not have any shareholders and are run solely for
the benefit of their members. Their claims philosophy is
based on the principles of fairness, honesty and sympathy.
In fact, out of the 1,456 claims in 2006, only an
additional 4 resulted in claims-related complaints.
DPS New Contract
As you may be aware, Dentists' Provident Society revamped
their income protection plan at the start of 2008. This has
resulted in a myriad of new options to consider. One of the
main changes is that you are now able to set up your cover
with inflation protection.
It is more than likely that if you are an existing DPS
member your current plan will be set up on a level benefit
basis or reducing benefit.
What you can do now is contact DPS and ask them to provide
you with a quote for one of the inflation protected plans.
Do take care with this though, as there are different types
of the inflation protected version!
Just making this one simple change to your cover could make
a huge difference if you need to claim over the long term.
Key Considerations:
Income protection should really be seen as one of the most
important types of insurance that you can hold. After all,
if you are unable to work for a number of years it's more
than likely a lack of income will have a big impact on your
life.
Why take the chance?
ACTION POINT
Take the time to review your existing level of income
protection and ensure you have enough cover in place to at
least provide for your monthly essentials. Either do your
own research or speak to a specialist who can help you
choose the right package.
----------------------------------------------------
Ray Prince is an Independent Financial Planner with
Rutherford Wilkinson plc, and helps UK Resident Doctors and
Dentists get the best deals on mortgages, protection and
investments, as well as helping them achieve their
financial objectives. Just visit
http://www.medicaldentalfs.com to get your free retirement
planning guide. Rutherford Wilkinson plc is authorised and
regulated by the Financial Services Authority.
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