April 27, 2025 • 21 mins
Need to review your Income Protection?
Connect with Warren here: https://www.dentistswhoinvest.com/income-protection
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Get your free verifiable CPD for this episode here >>> https://www.dentistswhoinvest.com/videos/what-cover-do-i-need-to-protect-me-and-when-with-warren-robins
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Your dental career is a major investment—are you fully protecting it? In this episode, insurance specialist Warren Robins explains the essential income protection, life insurance, and business cover dentists need at every stage of their journey.
Learn why securing income protection insurance early can lock in lower premiums, why standard mortgage cover often isn’t enough for high earners, and how Family Income Benefit can offer smarter protection for your loved ones. For practice owners, Warren shares crucial insights into executive income protection, key person cover, and why private medical insurance is vital in today’s overstretched NHS system.
We also dive into inheritance tax planning strategies for dentists nearing retirement, ensuring your legacy is as secure as your practice.
Listen now and claim your free CPD certificate by completing the quick questionnaire.
———————————————————————
Disclaimer: All content on this channel is for education purposes only and does not constitute an investment recommendation or individual financial advice. For that, you should speak to a regulated, independent professional. The value of investments and the income from them can go down as well as up, so you may get back less than you invest. The views expressed on this channel may no longer be current. The information provided is not a personal recommendation for any particular investment. Tax treatment depends on individual circumstances and all tax rules may change in the future. If you are unsure about the suitability of an investment, you should speak to a regulated, independent professional. Investment figures quoted refer to simulated past performance and that p
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
What insurances do I need and when is it suggestible
to look into them correspondingto my career stage, because this
is something that we don't havemuch clarity on as dentists.
When, specifically, is it agood idea to think about a
specific type of cover?
And that's why we have MrWarren Robbins with us today on
(00:20):
the Dentistry Invest podcast.
We're going to be walkingthrough the typical career path
of a dentist and what insurancesit is highly suggestible to
look into at each respectivestage of one's career.
Speaker 2 (00:32):
I'm also super excited today to announce a
brand new feature for theDentistry Invest platform, and
that is free verifiable CPD toall UK dentists who have enjoyed
this podcast episode.
Whenever you finish the episode, all you have to do is click
the link in the podcastdescription.
It'll take you right throughthe dentist invest website.
You'll be able to complete ashort questionnaire and, once
(00:53):
passed, you fill in yourreflections and we'll go ahead
and email over to you yourverifiable cpd certificate,
which is entirely free.
What that means is this podcastepisode will be able to
contribute towards yourverifiable CPD hours during this
learning cycle.
Speaker 1 (01:13):
What insurances do I need and when?
Well, we're going to structurethis podcast like a little bit
of a journey today, becausethose needs change as we move
through life.
So, on that note, the way we'restructuring this podcast today
is what are our needs as anassociate?
What are our needs when we getour first mortgage?
What are our needs whenever weget kids, whenever we have a
(01:36):
family?
Then, for those out there whobuy a dental practice, that's
the next stage for some in theaudience, and then after that
we're having a conversationabout what our needs are
whenever we get close toretirement age.
Therefore, on that basis, onedoes it sound like a good idea
to start off with the associates, the new, so the brand new
associates yeah, absolutely,absolutely.
Speaker 3 (01:58):
So I guess the associate is you start in the
the work journey, um, the pointyou are at is where you've
invested a massive amount oftime, effort and probably money
to get through school, dentalcollege, get your qualifications
, and you're then at the pointwhere you're starting to get the
(02:19):
return on your investment.
So you're going to get themoney coming in, um, and if
something happens to you and itstops you working as a dentist,
then potentially you don't getyour return on on the investment
of time and money.
So the thing we talk about agreat deal and we've had
conversations about before is,at that point, income protection
(02:40):
is almost certainly the firstthing you want to be considering
, because if you get it whenyou're young, fit and healthy,
you're effectively locking in aminimum return on your
investment.
So you can choose your amountof cover based on maybe up to
about 65% of your earnings andyou know that, regardless of
(03:00):
what happens to you in thefuture you have an accident, you
hurt your hand, you get an eyeinjury, back injury, whatever,
anything that stops you youworking you've got a guaranteed
amount of money that's going tocome in and guarantee you some
return on on all that effort andthe money and time that you've
invested in to become a dentist,um, and I know from chatting to
dentists it's a pretty highpressure thing that you know
(03:22):
it's.
So it's not to beunderestimated how much work
goes into to getting qualifiedas a dentist, um, and you should
be on the career path to earnin a nice six figure salary.
But if you can't work andsomething happens and you
haven't got any protection, thenyou know who knows what you're
going to do.
You might end up in a warehouseearning 25 grand a year and all
(03:43):
that effort you've put in isnot going to be rewarded.
Um, so yeah, so early stages on,get your income protection in
place, guarantee that you'regoing to get some sort of
lifestyle guaranteed and returnon money time that you've
invested to become a dentist.
So that's stage one.
So that's a fairly simple one,um.
Next stage um, you've moved on.
(04:04):
You've, uh, met missile mrright, um, and you got married.
Most likely at that pointyou're gonna get the mortgage,
as most people do.
So your needs change.
Now the income protection needis still there.
That really never goes away.
Um, so probably what's happenedis your outgoings are going to
(04:25):
have increased.
So at that point you may needto review your income protection
arrangements, because as yourexpenditure or your income goes
up, your expenditure goes up.
Children, mortgage partnerstend to be quite expensive, so,
but that's hopefully going to bereviewed automatically as you
go on.
The next thing you're lookingat, then is life insurance, but
that's hopefully going to bereviewed automatically as you go
(04:45):
on.
The next thing you're looking at, then, is life insurance.
So you have a mortgage.
Clearly, what you need to do isto make sure that if something
happens God forbid that you havethe mortgage paid off.
So most people see that asfairly obvious.
So, if anybody's got a mortgage, you're going to speak to an
insurance broker or a mortgagebroker.
Mortgage.
You're going to speak to aninsurance broker or a mortgage
(05:06):
broker and they're certainlygoing to recommend pretty much
99.9% or 100% of the time, havelife insurance to pay off the
mortgage.
Point of that is it's adebt-free family home.
Now, that's fantastic becauseyou've got a debt-free home for
the family if, if the personthat's covered it is no longer
here.
But what you need to consideris what that's actually doing is
(05:27):
that's removing the monthlymortgage payment.
Now, if it's a good-sizedmortgage £2,000, £3,000, £4,000
a month.
You've lost those outgoings,you've lost that expenditure,
and that's really thefundamental point of taking
mortgage life insurance.
However, if you're bringinghome £7, nine thousand pounds a
month, there is a big drop, sothere's a big deficit.
(05:48):
Now if your partner cannotcover those remaining bills and
you know you might have childrenin private school, whatever it
may be good car loan, then youneed to think about do you need
to cover that deficit?
Now there is a life insurancepolicy which is not that well
known and it should be and itpays out on a monthly basis.
(06:09):
It's called family incomebenefit and it's designed
particularly to replace lostincome if somebody dies.
You can do it through a biglump sum.
The big lump sum insurancestend to be very expensive,
reason being if you've got threequarters of a million pounds
worth of cover, somethinghappens and then that liability
(06:31):
is carried to the very end ofthe policy by the insurance
company.
So if you die on the last dayof the policy, the insurance
company pays out three quartersof a million pounds, whereas
with the income based ones, aliability of the insurance
company reduces year on year.
So therefore it tends to be alot better value and it's also
probably easier to work outexactly what you'd need in terms
of monthly benefit compared toa lump sum maybe spent over
(06:52):
20-25 years.
So so that's the sort of thingthere.
You can also look at otherillness covers.
Critical illness cover is alsoan option.
Most people, if they're goingto take it, they tend to take it
to cover a mortgage so that ifthey have a heart attack, cancer
, something like that, themortgage is gone, so not just
death, but also in the event ofa critical illness.
(07:14):
Now if you have incomeprotection that covers all of
your outgoings, including yourmonthly mortgage payment, then
to a degree that is a bit of aluxury.
So a lot of people I speak tothey're happy that they can pay
off their mortgage over theoriginal term if they have any
sort of illness, critical orotherwise and they may consider
(07:35):
taking a smaller amount ofcritical illness cover just as
an emergency fund maybe 50k,100k.
So if something happens it'sreally unexpected, maybe they
need some changes to the housefor mobility or whatever.
They've got that as a fallbackposition, so that's probably the
sort of things you consider atthat point.
That is a fallback position, sothat's probably the sort of
things you consider at thatpoint.
So if you're moving on fromthere, you uh may be thinking
(07:57):
okay, life is going well, I'mgoing to buy my dental practice.
Not, obviously not.
Speaker 1 (08:01):
All dentists do oh wait, oh wait, wasn't there a
part in between kids, wasn't it?
Oh, kids, yeah.
Well, I think the kids, it cancome, come either way.
It can come either way, can'tit.
Speaker 3 (08:11):
Yeah, I mean, I think what children bring to the
equation, as I know fromexperience, is they're
incredibly expensive.
So, again, they're probablygoing to increase your payments
by not far off a decent mortgageand at that point you
definitely will be thinkingincome replacement is incredibly
(08:31):
important.
So if you've got two adults, nochildren, they're entitled, in
my opinion, to take the riskthat they can just cover some
fairly basic things, and if itall blows up in their face, then
they're entitled to take thatrisk.
As an insurance broker, Ididn't actually have any life
insurance until my wife becamepregnant, because up until that
(08:54):
point I thought I'm old enoughand ugly enough I'll take the
risk.
But as soon as I realized I hadresponsibility to children
perspective, that's when I sortof loaded up with life insurance
.
If I'm honest, I wish I'd havedone it earlier, because with
these insurances, the earlieryou put them in place, the
cheaper they are in the longterm.
So that was me probably notfollowing my own advice, but if
(09:18):
I'm honest, I didn't.
Children were never originallyin my plans, so it's a bit of a
shock.
I'm really glad I did become adad.
But yeah, so you never knowwhat the future holds.
So trying to future-proof yourinsurance advice is not a bad
thing, not a bad thing at all um, so yeah, so at that point.
Replacing your income on death,I think, becomes absolutely
(09:40):
essential.
Um, critical illness cover isan option um, and with that you
can get children's criticalillness cover included as well.
So that's not a bad reason toconsider that as well, because
it means if one of your childrensuffers a critical illness, you
get a payout potentially, whichmeans you might have options in
terms of private medical careif required, taking time off
(10:02):
work without any financial loss.
So it's not a bad thing toconsider.
And I guess, as you said, nextstage, after that, once you've
got the children covered off, um, if you're then going to go and
buy dental practice, if that'syour ambition, it doesn't change
your personal requirements agreat deal, but what it does do.
You'll find most of my clients,when they're buying dental
(10:24):
practices, they're going toborrow the money and commercial
lending.
Almost always, if not always,you're going to have to have
life insurance to cover thatborrowing, and the life
insurance policy is thenassigned to the lender so that
if anything happens to peoplethat are borrowing the money,
the lender automaticallyreceives that money.
(10:44):
So those policies and usuallysingle policies, are not in
trust.
They're assigned to the lenderand that's normally a condition
of the of the lending, and thathas to be in place before the
money's transfer.
So but at that point often youmay be sort of thinking you know
your outgoings have increasedsignificantly and again you're
(11:06):
then looking at potential incomeprotection options.
Now, if you're doing this to alimited company, you might be
thinking at that point someexecutive income protection
because you want to make sureyou can cover some more of the
expenses, because if you've gota three, four thousand pound a
month loan requirement you'vegot to pay off.
Um, that's an additionalexpense as well as your, your
(11:26):
personal expenses.
So that may be the time tothink about if you can get more
personal income protection anoption, or potentially some
income protection through thebusiness which funds that, or
key person income protectioncould be an option.
It is possible to take a policyas a business which is covering
(11:48):
profits, so it's designedbasically to keep the business
solvent.
Um, if the person is unable towork, so again, so that's an
option that's available.
Um, now, one thing I haven'tcovered um all of these stages,
that's the, the life and theillness insurances.
Um, probably one thing whichcomplements all the way through
(12:13):
these various stages is privatemedical insurance.
Now, private medical insuranceto some degree is a luxury and
you know there is a nationalhealth service but a lot of
people because the waiting listsin 2023, they were 7.7 million
(12:34):
people on the waiting list forthe NHS has dropped down to
about 7.4 million, and that'sthe reason that private medical
insurance has been more popularin the last 12 months than I
think it's ever been before thefact that you've got something.
There is an NHS system, butthere is a private option.
Yeah, there's obviously somevery obvious dental equivalents
(12:56):
there, so there's a parallel.
So the reason I think it goes,particularly if you're
self-employed, income protectionis brilliant, because if you're
off long-term, you've got thelevel of income replacement.
It's not going to be the fullamount of your income If you
have the private medicalinsurance.
The big benefit of that, ifyou're working for yourself
(13:17):
particularly, is that do youwant to go into a waiting list
of 7.4 million people or do youwant to try and jump to the
front of the queue, get yourselffixed and then get back to work
, earning your full income asquickly as possible and doing it
most likely in the hospital ofyour choice, um, probably in a
private room rather than a ward,um, and all the nice bells and
(13:39):
whistles that come with that.
Seeing a consultant of yourchoice, um, and potentially
having access to to better drugsthan you get through the NHS
one of the big benefits ofprivate medical cover you're not
going to be worrying about thepostcode lottery which you may
have heard of.
So essentially, a good privatemedical insurance policy will
guarantee that you get the bestdrugs for whatever condition
(14:01):
that you're suffering from andsee a consultant quickly and
surgery in a hospital of yourchoice.
So for me, when you considerthe cost of that versus the
income that you couldpotentially lose if you're off
work for three or four extramonths, it's a bit of a
no-brainer.
And and if you particularly ifyou work in predominantly
(14:23):
private work rather than NHS, asa dentist, I think it's pretty
obvious why people go down theprivate route, and I think it's
maybe crazy not to do the samesort of thing to protect
yourself when it comes tomedical cover as well.
So now getting towards thelatter stages so eventually
(14:43):
you're going to retire Hopefullyyou haven't had to use your
income protection and you'veaccumulated large amounts of
money and you then get to thepoint where the children are
sort of thinking what am I goingto do with mum and dad's money
when they're gone?
And you might be thinking abouthow to most efficiently get
that money to your, youroffspring and your beneficiaries
(15:06):
without the dreaded inheritancetax.
And the aussie inheritance taxis a massive thing at the moment
and I think the um the mostrecent figures that rachel
reeves has pulled in is somehuge amount by some like 8.4
billion, I think I was readingrecently.
Um, so the chancellor and thegovernment is going after
inheritance tax more and moreand more, and insurance can be
(15:28):
used as a tool to mitigate someof that liability.
Now, the most simple one ifyou've got something that you
want to gift to your childrenwhen you're alive, it can be
done as a potentially exempttransfer.
And I will stress that I'm notan expert and I'm not giving
advice on inheritance taxbecause it's not my field, but I
do arrange insurance where thisis done.
(15:50):
So if you're going to giftsomething, there is a potential
IHT liability for seven yearsand that liability drops after
three years and goes down byroughly 20% to the end of the
seven year term.
Now you can take a lifeinsurance policy that mirrors
that IHT liability and it willdrop down in line with the
liability.
So if something happens duringthat seven-year term and if
(16:14):
somebody dies, then thattriggers the IHT liability and
you've then got that covered fora relatively small amount of
money.
So that's the first thing.
So if you are going to look attransferring your wealth to your
children while you're stillalive, it makes sense to cover
the liability through aninsurance policy.
The second option is, if youknow you're going to be
triggering an IHT liability whenyou die, you can take a whole
(16:39):
of life insurance policy.
Now, again, you need advice onhow much cover you'd need, but
in terms of the basics of whatit does unlike a term insurance
policy where the insurancecompany is basically taking a
gamble.
So they're going to go.
We're not going to charge agreat deal of money because
we're betting that you're goingto outlive the policy.
So essentially, they're rollinga dice on whether you survive
(17:01):
or not.
With a whole of life policy,they're essentially going.
If you keep paying yourpremiums, we are going to pay
out x thousand or hundredthousand pounds of money to your
chosen beneficiaries when youdie.
Now the interesting thing withthese policies is, when you look
at the contributions, theydon't tend to be anywhere near
(17:23):
the amount of money that's goingto be paid out if somebody dies
at the expected age.
Now, the reason for that istwofold.
First of all, they'll see,invest the premiums and they do.
They're pretty good at that.
But the biggest thing is a lotof people take these policies
out and then they cancel them.
So if you're one of the peoplethat takes the whole of life
policy and you don't cancel it,you're benefiting from the money
(17:46):
that people have contributedand then cancel their policies
going into the pot.
So if you look at the returns,with a typical whole of life
policy, they're incredibly goodand they're tax-free.
It's pretty much the only timeyou can get a really big return
on an investment with absolutelyno zero, with zero liability,
um, for the profit you've madeon that investment.
(18:07):
The only downside you've got todie to trigger it.
So which, uh, which is notideal, but um, but yeah, in
terms of that, it's fantasticfrom that perspective.
The other thing is the premiums.
If you've got an estate wherethere is definitely going to be
liability, the premiums that youpay towards the, the um, the
whole of life policy are anallowable expense.
So therefore they actuallydeduct from the liability for
(18:30):
the IHT in the estate, whicheffectively means you're getting
a 40% discount on the premiumsthat you're paying in, which
makes the return even better.
So that is you know it's abrilliant investment because
you're actually getting 40%discount on the premiums and the
investment return is'reactually getting 40 discount on
the premiums and the investmentreturn is tax-free.
Speaker 1 (18:54):
As I said, the only downside is you've got to be
dead to to realize those returns.
Speaker 3 (18:56):
Apart from that slight disadvantage, it'll be a
minor, minor matter, minormatter, but no but.
Speaker 1 (19:00):
But I hear what you're saying.
You know it can make sense fora lot of people, particularly
forward thinking.
Have we done this subjectjustice, then?
Warren the journey, so to speak.
Speaker 3 (19:11):
We've skated over it, but essentially what it's
saying is you need change.
You need to constantly beregularly reviewing the
protection provision that youhave in place.
Reviewing the protectionprovision that you have in place
.
And my general philosophy is,if you think you're going to
(19:34):
need some insurance in thefuture and I've learned by my
own mistake in that in terms ofdelaying taking out insurance if
you think you might need aninsurance in the future, it's
generally better to take it whenyou're young, fit and healthy
as possible, because you neverknow what life's going to throw
at you.
So none of us ever think we'regoing to get ill.
None of us think anything bad'sgoing to happen to us, because
we have a massive optimism bias.
But the reality is things dohappen to people and I regularly
(19:56):
speak to dentists where they'vegot medical backgrounds and
sometimes it means they can'tget insurance that they want,
whereas if they'd have taken outfive years ago.
They could have done so.
You know, delaying somethinglike insurance, you've got the
risk factor that you may not beinsurable or it'll be more
expensive in the future.
And if you leave it a few fiveyears, it's definitely be more
(20:19):
expensive because you, becauseyou're five years older.
So so, generally speaking,review your insurance regularly.
If you can afford to futureproof it, take the cover out as
soon as possible.
But I regularly review myclients on policy anniversaries.
I get in touch with my clientsjust to make sure that have
their circumstances changed?
Is the cover I arrangedoriginally still appropriate?
(20:41):
Does it need tweaking?
And it does.
These things do happen.
So yeah, yeah.
So that's a very, very pottedoverview of of how people's
needs change over time.
So and if anybody wants a freeaudit of their current insurance
setup, we're going to go aheadand put a link in the
description of this podcast thatyou can use to connect with
(21:02):
warren absolutely, yeah, morethan happy to take a look, and
my philosophy is always ifyou've got something that does
the job well, I'll tell you tokeep it, and if it can be
improved, I'll tell you that too.
What insurances do I need and when is it suggestible
to look into them correspondingto my career stage, because this
is something that we don't havemuch clarity on as dentists.
When, specifically, is it agood idea to think about a
specific type of cover?
And that's why we have MrWarren Robbins with us today on
(00:20):
the Dentistry Invest podcast.
We're going to be walkingthrough the typical career path
of a dentist and what insurancesit is highly suggestible to
look into at each respectivestage of one's career.
Speaker 2 (00:32):
I'm also super excited today to announce a
brand new feature for theDentistry Invest platform, and
that is free verifiable CPD toall UK dentists who have enjoyed
this podcast episode.
Whenever you finish the episode, all you have to do is click
the link in the podcastdescription.
It'll take you right throughthe dentist invest website.
You'll be able to complete ashort questionnaire and, once
(00:53):
passed, you fill in yourreflections and we'll go ahead
and email over to you yourverifiable cpd certificate,
which is entirely free.
What that means is this podcastepisode will be able to
contribute towards yourverifiable CPD hours during this
learning cycle.
Speaker 1 (01:13):
What insurances do I need and when?
Well, we're going to structurethis podcast like a little bit
of a journey today, becausethose needs change as we move
through life.
So, on that note, the way we'restructuring this podcast today
is what are our needs as anassociate?
What are our needs when we getour first mortgage?
What are our needs whenever weget kids, whenever we have a
(01:36):
family?
Then, for those out there whobuy a dental practice, that's
the next stage for some in theaudience, and then after that
we're having a conversationabout what our needs are
whenever we get close toretirement age.
Therefore, on that basis, onedoes it sound like a good idea
to start off with the associates, the new, so the brand new
associates yeah, absolutely,absolutely.
Speaker 3 (01:58):
So I guess the associate is you start in the
the work journey, um, the pointyou are at is where you've
invested a massive amount oftime, effort and probably money
to get through school, dentalcollege, get your qualifications
, and you're then at the pointwhere you're starting to get the
(02:19):
return on your investment.
So you're going to get themoney coming in, um, and if
something happens to you and itstops you working as a dentist,
then potentially you don't getyour return on on the investment
of time and money.
So the thing we talk about agreat deal and we've had
conversations about before is,at that point, income protection
(02:40):
is almost certainly the firstthing you want to be considering
, because if you get it whenyou're young, fit and healthy,
you're effectively locking in aminimum return on your
investment.
So you can choose your amountof cover based on maybe up to
about 65% of your earnings andyou know that, regardless of
(03:00):
what happens to you in thefuture you have an accident, you
hurt your hand, you get an eyeinjury, back injury, whatever,
anything that stops you youworking you've got a guaranteed
amount of money that's going tocome in and guarantee you some
return on on all that effort andthe money and time that you've
invested in to become a dentist,um, and I know from chatting to
dentists it's a pretty highpressure thing that you know
(03:22):
it's.
So it's not to beunderestimated how much work
goes into to getting qualifiedas a dentist, um, and you should
be on the career path to earnin a nice six figure salary.
But if you can't work andsomething happens and you
haven't got any protection, thenyou know who knows what you're
going to do.
You might end up in a warehouseearning 25 grand a year and all
(03:43):
that effort you've put in isnot going to be rewarded.
Um, so yeah, so early stages on,get your income protection in
place, guarantee that you'regoing to get some sort of
lifestyle guaranteed and returnon money time that you've
invested to become a dentist.
So that's stage one.
So that's a fairly simple one,um.
Next stage um, you've moved on.
(04:04):
You've, uh, met missile mrright, um, and you got married.
Most likely at that pointyou're gonna get the mortgage,
as most people do.
So your needs change.
Now the income protection needis still there.
That really never goes away.
Um, so probably what's happenedis your outgoings are going to
(04:25):
have increased.
So at that point you may needto review your income protection
arrangements, because as yourexpenditure or your income goes
up, your expenditure goes up.
Children, mortgage partnerstend to be quite expensive, so,
but that's hopefully going to bereviewed automatically as you
go on.
The next thing you're lookingat, then is life insurance, but
that's hopefully going to bereviewed automatically as you go
(04:45):
on.
The next thing you're looking at, then, is life insurance.
So you have a mortgage.
Clearly, what you need to do isto make sure that if something
happens God forbid that you havethe mortgage paid off.
So most people see that asfairly obvious.
So, if anybody's got a mortgage, you're going to speak to an
insurance broker or a mortgagebroker.
Mortgage.
You're going to speak to aninsurance broker or a mortgage
(05:06):
broker and they're certainlygoing to recommend pretty much
99.9% or 100% of the time, havelife insurance to pay off the
mortgage.
Point of that is it's adebt-free family home.
Now, that's fantastic becauseyou've got a debt-free home for
the family if, if the personthat's covered it is no longer
here.
But what you need to consideris what that's actually doing is
(05:27):
that's removing the monthlymortgage payment.
Now, if it's a good-sizedmortgage £2,000, £3,000, £4,000
a month.
You've lost those outgoings,you've lost that expenditure,
and that's really thefundamental point of taking
mortgage life insurance.
However, if you're bringinghome £7, nine thousand pounds a
month, there is a big drop, sothere's a big deficit.
(05:48):
Now if your partner cannotcover those remaining bills and
you know you might have childrenin private school, whatever it
may be good car loan, then youneed to think about do you need
to cover that deficit?
Now there is a life insurancepolicy which is not that well
known and it should be and itpays out on a monthly basis.
(06:09):
It's called family incomebenefit and it's designed
particularly to replace lostincome if somebody dies.
You can do it through a biglump sum.
The big lump sum insurancestend to be very expensive,
reason being if you've got threequarters of a million pounds
worth of cover, somethinghappens and then that liability
(06:31):
is carried to the very end ofthe policy by the insurance
company.
So if you die on the last dayof the policy, the insurance
company pays out three quartersof a million pounds, whereas
with the income based ones, aliability of the insurance
company reduces year on year.
So therefore it tends to be alot better value and it's also
probably easier to work outexactly what you'd need in terms
of monthly benefit compared toa lump sum maybe spent over
(06:52):
20-25 years.
So so that's the sort of thingthere.
You can also look at otherillness covers.
Critical illness cover is alsoan option.
Most people, if they're goingto take it, they tend to take it
to cover a mortgage so that ifthey have a heart attack, cancer
, something like that, themortgage is gone, so not just
death, but also in the event ofa critical illness.
(07:14):
Now if you have incomeprotection that covers all of
your outgoings, including yourmonthly mortgage payment, then
to a degree that is a bit of aluxury.
So a lot of people I speak tothey're happy that they can pay
off their mortgage over theoriginal term if they have any
sort of illness, critical orotherwise and they may consider
(07:35):
taking a smaller amount ofcritical illness cover just as
an emergency fund maybe 50k,100k.
So if something happens it'sreally unexpected, maybe they
need some changes to the housefor mobility or whatever.
They've got that as a fallbackposition, so that's probably the
sort of things you consider atthat point.
That is a fallback position, sothat's probably the sort of
things you consider at thatpoint.
So if you're moving on fromthere, you uh may be thinking
(07:57):
okay, life is going well, I'mgoing to buy my dental practice.
Not, obviously not.
Speaker 1 (08:01):
All dentists do oh wait, oh wait, wasn't there a
part in between kids, wasn't it?
Oh, kids, yeah.
Well, I think the kids, it cancome, come either way.
It can come either way, can'tit.
Speaker 3 (08:11):
Yeah, I mean, I think what children bring to the
equation, as I know fromexperience, is they're
incredibly expensive.
So, again, they're probablygoing to increase your payments
by not far off a decent mortgageand at that point you
definitely will be thinkingincome replacement is incredibly
(08:31):
important.
So if you've got two adults, nochildren, they're entitled, in
my opinion, to take the riskthat they can just cover some
fairly basic things, and if itall blows up in their face, then
they're entitled to take thatrisk.
As an insurance broker, Ididn't actually have any life
insurance until my wife becamepregnant, because up until that
(08:54):
point I thought I'm old enoughand ugly enough I'll take the
risk.
But as soon as I realized I hadresponsibility to children
perspective, that's when I sortof loaded up with life insurance
.
If I'm honest, I wish I'd havedone it earlier, because with
these insurances, the earlieryou put them in place, the
cheaper they are in the longterm.
So that was me probably notfollowing my own advice, but if
(09:18):
I'm honest, I didn't.
Children were never originallyin my plans, so it's a bit of a
shock.
I'm really glad I did become adad.
But yeah, so you never knowwhat the future holds.
So trying to future-proof yourinsurance advice is not a bad
thing, not a bad thing at all um, so yeah, so at that point.
Replacing your income on death,I think, becomes absolutely
(09:40):
essential.
Um, critical illness cover isan option um, and with that you
can get children's criticalillness cover included as well.
So that's not a bad reason toconsider that as well, because
it means if one of your childrensuffers a critical illness, you
get a payout potentially, whichmeans you might have options in
terms of private medical careif required, taking time off
(10:02):
work without any financial loss.
So it's not a bad thing toconsider.
And I guess, as you said, nextstage, after that, once you've
got the children covered off, um, if you're then going to go and
buy dental practice, if that'syour ambition, it doesn't change
your personal requirements agreat deal, but what it does do.
You'll find most of my clients,when they're buying dental
(10:24):
practices, they're going toborrow the money and commercial
lending.
Almost always, if not always,you're going to have to have
life insurance to cover thatborrowing, and the life
insurance policy is thenassigned to the lender so that
if anything happens to peoplethat are borrowing the money,
the lender automaticallyreceives that money.
(10:44):
So those policies and usuallysingle policies, are not in
trust.
They're assigned to the lenderand that's normally a condition
of the of the lending, and thathas to be in place before the
money's transfer.
So but at that point often youmay be sort of thinking you know
your outgoings have increasedsignificantly and again you're
(11:06):
then looking at potential incomeprotection options.
Now, if you're doing this to alimited company, you might be
thinking at that point someexecutive income protection
because you want to make sureyou can cover some more of the
expenses, because if you've gota three, four thousand pound a
month loan requirement you'vegot to pay off.
Um, that's an additionalexpense as well as your, your
(11:26):
personal expenses.
So that may be the time tothink about if you can get more
personal income protection anoption, or potentially some
income protection through thebusiness which funds that, or
key person income protectioncould be an option.
It is possible to take a policyas a business which is covering
(11:48):
profits, so it's designedbasically to keep the business
solvent.
Um, if the person is unable towork, so again, so that's an
option that's available.
Um, now, one thing I haven'tcovered um all of these stages,
that's the, the life and theillness insurances.
Um, probably one thing whichcomplements all the way through
(12:13):
these various stages is privatemedical insurance.
Now, private medical insuranceto some degree is a luxury and
you know there is a nationalhealth service but a lot of
people because the waiting listsin 2023, they were 7.7 million
(12:34):
people on the waiting list forthe NHS has dropped down to
about 7.4 million, and that'sthe reason that private medical
insurance has been more popularin the last 12 months than I
think it's ever been before thefact that you've got something.
There is an NHS system, butthere is a private option.
Yeah, there's obviously somevery obvious dental equivalents
(12:56):
there, so there's a parallel.
So the reason I think it goes,particularly if you're
self-employed, income protectionis brilliant, because if you're
off long-term, you've got thelevel of income replacement.
It's not going to be the fullamount of your income If you
have the private medicalinsurance.
The big benefit of that, ifyou're working for yourself
(13:17):
particularly, is that do youwant to go into a waiting list
of 7.4 million people or do youwant to try and jump to the
front of the queue, get yourselffixed and then get back to work
, earning your full income asquickly as possible and doing it
most likely in the hospital ofyour choice, um, probably in a
private room rather than a ward,um, and all the nice bells and
(13:39):
whistles that come with that.
Seeing a consultant of yourchoice, um, and potentially
having access to to better drugsthan you get through the NHS
one of the big benefits ofprivate medical cover you're not
going to be worrying about thepostcode lottery which you may
have heard of.
So essentially, a good privatemedical insurance policy will
guarantee that you get the bestdrugs for whatever condition
(14:01):
that you're suffering from andsee a consultant quickly and
surgery in a hospital of yourchoice.
So for me, when you considerthe cost of that versus the
income that you couldpotentially lose if you're off
work for three or four extramonths, it's a bit of a
no-brainer.
And and if you particularly ifyou work in predominantly
(14:23):
private work rather than NHS, asa dentist, I think it's pretty
obvious why people go down theprivate route, and I think it's
maybe crazy not to do the samesort of thing to protect
yourself when it comes tomedical cover as well.
So now getting towards thelatter stages so eventually
(14:43):
you're going to retire Hopefullyyou haven't had to use your
income protection and you'veaccumulated large amounts of
money and you then get to thepoint where the children are
sort of thinking what am I goingto do with mum and dad's money
when they're gone?
And you might be thinking abouthow to most efficiently get
that money to your, youroffspring and your beneficiaries
(15:06):
without the dreaded inheritancetax.
And the aussie inheritance taxis a massive thing at the moment
and I think the um the mostrecent figures that rachel
reeves has pulled in is somehuge amount by some like 8.4
billion, I think I was readingrecently.
Um, so the chancellor and thegovernment is going after
inheritance tax more and moreand more, and insurance can be
(15:28):
used as a tool to mitigate someof that liability.
Now, the most simple one ifyou've got something that you
want to gift to your childrenwhen you're alive, it can be
done as a potentially exempttransfer.
And I will stress that I'm notan expert and I'm not giving
advice on inheritance taxbecause it's not my field, but I
do arrange insurance where thisis done.
(15:50):
So if you're going to giftsomething, there is a potential
IHT liability for seven yearsand that liability drops after
three years and goes down byroughly 20% to the end of the
seven year term.
Now you can take a lifeinsurance policy that mirrors
that IHT liability and it willdrop down in line with the
liability.
So if something happens duringthat seven-year term and if
(16:14):
somebody dies, then thattriggers the IHT liability and
you've then got that covered fora relatively small amount of
money.
So that's the first thing.
So if you are going to look attransferring your wealth to your
children while you're stillalive, it makes sense to cover
the liability through aninsurance policy.
The second option is, if youknow you're going to be
triggering an IHT liability whenyou die, you can take a whole
(16:39):
of life insurance policy.
Now, again, you need advice onhow much cover you'd need, but
in terms of the basics of whatit does unlike a term insurance
policy where the insurancecompany is basically taking a
gamble.
So they're going to go.
We're not going to charge agreat deal of money because
we're betting that you're goingto outlive the policy.
So essentially, they're rollinga dice on whether you survive
(17:01):
or not.
With a whole of life policy,they're essentially going.
If you keep paying yourpremiums, we are going to pay
out x thousand or hundredthousand pounds of money to your
chosen beneficiaries when youdie.
Now the interesting thing withthese policies is, when you look
at the contributions, theydon't tend to be anywhere near
(17:23):
the amount of money that's goingto be paid out if somebody dies
at the expected age.
Now, the reason for that istwofold.
First of all, they'll see,invest the premiums and they do.
They're pretty good at that.
But the biggest thing is a lotof people take these policies
out and then they cancel them.
So if you're one of the peoplethat takes the whole of life
policy and you don't cancel it,you're benefiting from the money
(17:46):
that people have contributedand then cancel their policies
going into the pot.
So if you look at the returns,with a typical whole of life
policy, they're incredibly goodand they're tax-free.
It's pretty much the only timeyou can get a really big return
on an investment with absolutelyno zero, with zero liability,
um, for the profit you've madeon that investment.
(18:07):
The only downside you've got todie to trigger it.
So which, uh, which is notideal, but um, but yeah, in
terms of that, it's fantasticfrom that perspective.
The other thing is the premiums.
If you've got an estate wherethere is definitely going to be
liability, the premiums that youpay towards the, the um, the
whole of life policy are anallowable expense.
So therefore they actuallydeduct from the liability for
(18:30):
the IHT in the estate, whicheffectively means you're getting
a 40% discount on the premiumsthat you're paying in, which
makes the return even better.
So that is you know it's abrilliant investment because
you're actually getting 40%discount on the premiums and the
investment return is'reactually getting 40 discount on
the premiums and the investmentreturn is tax-free.
Speaker 1 (18:54):
As I said, the only downside is you've got to be
dead to to realize those returns.
Speaker 3 (18:56):
Apart from that slight disadvantage, it'll be a
minor, minor matter, minormatter, but no but.
Speaker 1 (19:00):
But I hear what you're saying.
You know it can make sense fora lot of people, particularly
forward thinking.
Have we done this subjectjustice, then?
Warren the journey, so to speak.
Speaker 3 (19:11):
We've skated over it, but essentially what it's
saying is you need change.
You need to constantly beregularly reviewing the
protection provision that youhave in place.
Reviewing the protectionprovision that you have in place
.
And my general philosophy is,if you think you're going to
(19:34):
need some insurance in thefuture and I've learned by my
own mistake in that in terms ofdelaying taking out insurance if
you think you might need aninsurance in the future, it's
generally better to take it whenyou're young, fit and healthy
as possible, because you neverknow what life's going to throw
at you.
So none of us ever think we'regoing to get ill.
None of us think anything bad'sgoing to happen to us, because
we have a massive optimism bias.
But the reality is things dohappen to people and I regularly
(19:56):
speak to dentists where they'vegot medical backgrounds and
sometimes it means they can'tget insurance that they want,
whereas if they'd have taken outfive years ago.
They could have done so.
You know, delaying somethinglike insurance, you've got the
risk factor that you may not beinsurable or it'll be more
expensive in the future.
And if you leave it a few fiveyears, it's definitely be more
(20:19):
expensive because you, becauseyou're five years older.
So so, generally speaking,review your insurance regularly.
If you can afford to futureproof it, take the cover out as
soon as possible.
But I regularly review myclients on policy anniversaries.
I get in touch with my clientsjust to make sure that have
their circumstances changed?
Is the cover I arrangedoriginally still appropriate?
(20:41):
Does it need tweaking?
And it does.
These things do happen.
So yeah, yeah.
So that's a very, very pottedoverview of of how people's
needs change over time.
So and if anybody wants a freeaudit of their current insurance
setup, we're going to go aheadand put a link in the
description of this podcast thatyou can use to connect with
(21:02):
warren absolutely, yeah, morethan happy to take a look, and
my philosophy is always ifyou've got something that does
the job well, I'll tell you tokeep it, and if it can be
improved, I'll tell you that too.
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