Income Protection and Business Overheads Insurance

Having both a Business Overheads and Income Protection policy optimises the opportunity to keep the practice running at full capacity while supporting your personal income, and without the need to rely on the business’s cash flow.

Business Overheads Insurance

Business Overheads Insurance is designed to ensure your practice has an insurance-backed safety net in place. It protects you against disruption to trading from staff absence that could have a financial impact on the business, and ultimately you as the business owner.The policy is bespoke to your needs, offering tailored levels of cover that take into account the specific overheads related to your business. The policy can cover the costs of staffing, utilities, ongoing NHS contract commitments, lease agreements, business loans and more, giving you the choice to continue drawing from the practice, or to re-invest it into the business for continuation of trade.

Absences covered include sickness, personal accidents, compassionate leave, suspension while under investigation, jury service, travel delay and revalidation, and pay a weekly benefit. Whereas more severe injuries or illness, such as paralysis, have specific lump-sum benefits paid out to relieve the financial impact of short staffing on the business. MIAB’s range of policies give you the option to choose from a range of flexible add-ons, or take out cover with features such as maternity, paternity or adoption as standard.The ‘benefit-driven’ option means you do not need to provide receipts and evidence – other than medical certificates – in the event of a claim.

With UDA commitments to fulfil as an NHS or mixed practice, it is vital you are able to continue trading to ensure your contracts are maintained. Business Overheads Insurance offers protection to aid the continuation of these services.

Income Protection

If you find yourself unable to work due to sickness or an accident, having Income Protection insurance ensures you continue to receive a monthly income to support you while you focus on getting back to health. Cover can start from as soon as day one, or extend to a maximum deferment period (also known as an excess period) of 12 months. The most common deferment period is three months, though as with most insurances, the longer the deferment period, the lower your premiums will be.
Similarly to Business Overheads Insurance, the level of cover provided is tailored to your individual needs, whether you are full-time or self-employed. It offers up to 60% of your gross salary tax-free, and is payable monthly. The policy has elements of cover available which can be added on to the standard cover, to further support you with a one off lump-sum payment. For example, if you were to break your arm, fracture cover would pay you an immediate amount in addition to any benefit you’re set to receive from the policy (after your chosen deferment period).
MIAB cover you under ‘own-occupation’, meaning you won’t be expected to return to work in a different role. If you never return to work as a dentist, the plan will continue to pay until the expiry date, or retirement.

How the two work together

A Business Overheads policy will provide protection for the business in the first 12 months of absence, covering bills, staff, and other associated costs to enable you to continue taking your own personal drawings. Once the maximum payable limit has ended, your Income Protection policy will start (if you’ve set the policy deferment period at 12 months). With an Income Protection policy in place – that will continue to pay-out until you return to work as a dentist, expiration of the policy, or retire – you’ll be safe in the knowledge that your personal and business expenditure is covered. For example:

You are diagnosed with Stage 3 cancer, and after a series of tests, deemed unable to work. As a business owner, you decide you’re going to bring in a Locum or pay staff overtime to cover your existing and future booked sessions to ensure UDA commitments are met. Though necessary, this comes at a substantial cost. For example, a principal dentist whose labour and overheads costs totalled £3,000 per week would, if insured, receive up to £156,000 if absent as opposed to forfeiting this amount.

The Business Overheads Insurance policy will cover the cost (up to the insured amount) of additional staff you’ve hired, so you’re free to continue taking personal drawings. The policy also allows you to cover the overheads associated with the business, including rent, fixed running costs and bills, and keeping the doors open so your staff continue earning revenue for the practice.Twelve months since the policy inception date has now passed. You’re still unwell, but have reached the maximum payable claims period. Your business remains active, but you may feel you want to take a step back, or sell the business to a fellow professional. However, there are outstanding bills, the doors are open, and there are staff to pay. Your Income Protection policy with a 12 month deferment period will now start to pay out. This covers up to 60% of your personal income and gives you reassurance that your family and home are secure, so any drawings from the business can be put back into the practice to pay for remaining bills and staff earnings. This example is just one of many reasons you should take advantage of insurance-backed policies, so it’s worth considering how using these as a contingency plan will protect you personally and as a business owner.

Whether you’re a sole-trader, or multi-partner venture, Business Overheads Insurance and Income Protection are tailored to your business and personal needs.

For more information on either policy, you can contact Specialist Advisers, Anmol Paul, on 01438 870733, Paula Storey on 01438 730211 or complete a quote request form on their page.