In January this year, Dentists Provident launched a viable option to the Day 1 Income Protection market. Until now, none of the Dentists Provident (DP) plans had approval from the Irish Revenue Dept. meaning that Dentists were not entitled to tax relief on their premiums. Any claim that was made on a DP plan was tax free but only for the first twelve months making it very inefficient from a cost perspective.
The newly launched DP ‘Select Income Protection’ Day 1 policy has received approval from the Irish revenue so tax relief is allowable to Dentists on the new plan. However to avail of this new policy, all applicants (both new and existing members) will have to undergo underwriting and this particular factor may not suit all DP existing clients.
What’s different from the old Dentist Provident plan? The main difference between the new and the old plan is that there will no longer be a savings element to the new version. Some DP members have policies that were initiated as far back as the early 1980’s and many of those polices will have an appropriation account attached that will give them a bonus at age 60. Current Dentist Provident members will be familiar with annual notifications of bonus declarations on their savings.
The new select plan will not have that savings element attached to it making it purely a protection product.
There are a number of additional benefits to the new plan, all of which are important when considering the best option for your circumstances:
Maximum cover is now €8333 per month or €100,000 per annum. Previously it had been €78,000.
New applications will be taken up to the age of 56, previously the maximum age of application was 50.
Cover and claims on the new product will go to age 65, they previously went to age 60.
Waiver of premium is now in place on the Select product which means that in the event of a member claiming, they won’t have to pay their membership premium during that time.
Guaranteed premiums are now available to members if they choose. Previously on the old plan, membership premiums increased on an annual basis in line with risk and age. A Dentist can still have this option if they wish, alternatively they can choose to have the premium stay the same for the remainder of their career. The guaranteed premium is a more expensive option in the beginning but over time gives significant savings to members, particularly the younger they are when they join.
Tax relief is now available on premiums as the scheme is revenue approved. The rate at which relief is given relates to the highest marginal rate the Dentist is paying. This increases from 20% to 40% at €34,550 so anyone earning in excess of that will get 40% relief on premiums.
Indexation is available on the new plan meaning you receive a higher amount of cover each year.
As mentioned above, to move from the old to the new will involve undertaking the entire application process including underwriting. This means that illnesses suffered whilst under the existing plan may not be covered as they become pre-existing conditions on a new application. From experience though, many Dentists are grossly under covered as they may have initiated their claim a long time ago when their income was lower and have never properly reviewed it. The introduction of this new plan certainly gives more options to Dentists for their Income Protection cover.
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