Dentists Who Invest Podcast

What Cover Do I Need To Protect Me And WHEN with Warren Robins [CPD Available]

• Dr. James Martin • Season 3 • Episode 369

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The financial security of your dental career depends on more than just clinical excellence. After investing years and significant resources into becoming a dentist, have you protected that investment against life's uncertainties?

This eye-opening episode features insurance specialist Warren Robins guiding us through the evolving insurance needs of dentists at each career stage. Beginning with newly qualified associates, Warren emphasizes the critical importance of income protection as the foundation of financial security. Securing this coverage early—when you're young, healthy, and premiums are lowest—locks in your ability to receive income even if unable to practice dentistry.

As we progress through life events like marriage, mortgages, and children, insurance needs expand accordingly. Warren explains why standard mortgage life insurance often falls short for high-earning professionals and introduces Family Income Benefit as a cost-effective alternative to expensive lump-sum policies. For practice owners, we explore the commercial insurance requirements of lenders and how to protect both personal and business finances through executive income protection and key person coverage.

With NHS waiting lists exceeding 7.4 million patients, Warren makes a compelling case for private medical insurance, particularly for self-employed practitioners whose income depends entirely on their ability to work. He frames it as a logical extension of the private dentistry model—why would you offer premium care to patients while accepting standard waiting times for yourself?

The episode concludes with inheritance tax planning strategies for dentists approaching retirement, demonstrating how whole of life policies can provide tax-efficient returns to beneficiaries while potentially qualifying for premium discounts through inheritance tax relief.

Don't miss our exciting announcement about free verifiable CPD available to all UK dentists who listen to this episode! Simply click the link in the description to complete a short questionnaire and receive your certificate. Take this opportunity to simultaneously enhance your professional knowledge and protect the career you've worked so hard to build.

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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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Speaker 1:

What insurances do I need and when is it suggestible to look into them corresponding to my career stage, because this is something that we don't have much clarity on as dentists. When, specifically, is it a good idea to think about a specific type of cover? And that's why we have Mr Warren Robbins with us today on the Dentistry Invest podcast. We're going to be walking through the typical career path of a dentist and what insurances it is highly suggestible to look into at each respective stage of one's career.

Speaker 2:

I'm also super excited today to announce a brand new feature for the Dentistry Invest platform, and that is free verifiable CPD to all UK dentists who have enjoyed this podcast episode. Whenever you finish the episode, all you have to do is click the link in the podcast description. It'll take you right through the dentist invest website. You'll be able to complete a short questionnaire and, once passed, you fill in your reflections and we'll go ahead and email over to you your verifiable cpd certificate, which is entirely free. What that means is this podcast episode will be able to contribute towards your verifiable CPD hours during this learning cycle.

Speaker 1:

What insurances do I need and when? Well, we're going to structure this podcast like a little bit of a journey today, because those needs change as we move through life. So, on that note, the way we're structuring this podcast today is what are our needs as an associate? What are our needs when we get our first mortgage? What are our needs whenever we get kids, whenever we have a family? Then, for those out there who buy a dental practice, that's the next stage for some in the audience, and then after that we're having a conversation about what our needs are whenever we get close to retirement age. Therefore, on that basis, one does it sound like a good idea to start off with the associates, the new, so the brand new associates yeah, absolutely, absolutely.

Speaker 3:

So I guess the associate is you start in the the work journey, um, the point you are at is where you've invested a massive amount of time, effort and probably money to get through school, dental college, get your qualifications, and you're then at the point where you're starting to get the return on your investment. So you're going to get the money coming in, um, and if something happens to you and it stops you working as a dentist, then potentially you don't get your return on on the investment of time and money. So the thing we talk about a great deal and we've had conversations about before is, at that point, income protection is almost certainly the first thing you want to be considering, because if you get it when you're young, fit and healthy, you're effectively locking in a minimum return on your investment. So you can choose your amount of cover based on maybe up to about 65% of your earnings and you know that, regardless of what happens to you in the future you have an accident, you hurt your hand, you get an eye injury, back injury, whatever, anything that stops you you working you've got a guaranteed amount of money that's going to come in and guarantee you some return on on all that effort and the money and time that you've invested in to become a dentist, um, and I know from chatting to dentists it's a pretty high pressure thing that you know it's. So it's not to be underestimated how much work goes into to getting qualified as a dentist, um, and you should be on the career path to earn in a nice six figure salary. But if you can't work and something happens and you haven't got any protection, then you know who knows what you're going to do. You might end up in a warehouse earning 25 grand a year and all that effort you've put in is not going to be rewarded.

Speaker 3:

Um, so yeah, so early stages on, get your income protection in place, guarantee that you're going to get some sort of lifestyle guaranteed and return on 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. You've, uh, met missile mr right, um, and you got married. Most likely at that point you're gonna get the mortgage, as most people do. So your needs change. Now the income protection need is still there. That really never goes away. Um, so probably what's happened is your outgoings are going to have increased. So at that point you may need to review your income protection arrangements, because as your expenditure or your income goes up, your expenditure goes up. Children, mortgage partners tend to be quite expensive, so, but that's hopefully going to be reviewed automatically as you go on. The next thing you're looking at, then is life insurance, but that's hopefully going to be reviewed automatically as you go on.

Speaker 3:

The next thing you're looking at, then, is life insurance. So you have a mortgage. Clearly, what you need to do is to make sure that if something happens God forbid that you have the mortgage paid off. So most people see that as fairly obvious. So, if anybody's got a mortgage, you're going to speak to an insurance broker or a mortgage broker.

Speaker 3:

Mortgage. You're going to speak to an insurance broker or a mortgage broker and they're certainly going to recommend pretty much 99.9% or 100% of the time, have life insurance to pay off the mortgage. Point of that is it's a debt-free family home. Now, that's fantastic because you've got a debt-free home for the family if, if the person that's covered it is no longer here. But what you need to consider is what that's actually doing is that's removing the monthly mortgage payment. Now, if it's a good-sized mortgage £2,000, £3,000, £4,000 a month. You've lost those outgoings, you've lost that expenditure, and that's really the fundamental point of taking mortgage life insurance. However, if you're bringing home £7, nine thousand pounds a month, there is a big drop, so there's a big deficit. Now if your partner cannot cover those remaining bills and you know you might have children in private school, whatever it may be good car loan, then you need to think about do you need to cover that deficit?

Speaker 3:

Now there is a life insurance policy which is not that well known and it should be and it pays out on a monthly basis. It's called family income benefit and it's designed particularly to replace lost income if somebody dies. You can do it through a big lump sum. The big lump sum insurances tend to be very expensive, reason being if you've got three quarters of a million pounds worth of cover, something happens and then that liability is carried to the very end of the policy by the insurance company. So if you die on the last day of the policy, the insurance company pays out three quarters of a million pounds, whereas with the income based ones, a liability of the insurance company reduces year on year. So therefore it tends to be a lot better value and it's also probably easier to work out exactly what you'd need in terms of monthly benefit compared to a lump sum maybe spent over 20-25 years. So so that's the sort of thing there.

Speaker 3:

You can also look at other illness covers. Critical illness cover is also an option. Most people, if they're going to take it, they tend to take it to cover a mortgage so that if they have a heart attack, cancer, something like that, the mortgage is gone, so not just death, but also in the event of a critical illness. Now if you have income protection that covers all of your outgoings, including your monthly mortgage payment, then to a degree that is a bit of a luxury.

Speaker 3:

So a lot of people I speak to they're happy that they can pay off their mortgage over the original term if they have any sort of illness, critical or otherwise and they may consider taking a smaller amount of critical illness cover just as an emergency fund maybe 50k, 100k. So if something happens it's really unexpected, maybe they need some changes to the house for mobility or whatever. They've got that as a fallback position, so that's probably the sort of things you consider at that point. That is a fallback position, so that's probably the sort of things you consider at that point. So if you're moving on from there, you uh may be thinking okay, life is going well, I'm going to buy my dental practice. Not, obviously not.

Speaker 1:

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 can come, come either way. It can come either way, can't it.

Speaker 3:

Yeah, I mean, I think what children bring to the equation, as I know from experience, is they're incredibly expensive. So, again, they're probably going to increase your payments by not far off a decent mortgage and at that point you definitely will be thinking income replacement is incredibly important. So if you've got two adults, no children, they're entitled, in my opinion, to take the risk that they can just cover some fairly basic things, and if it all blows up in their face, then they're entitled to take that risk. As an insurance broker, I didn't actually have any life insurance until my wife became pregnant, because up until that point I thought I'm old enough and ugly enough I'll take the risk. But as soon as I realized I had responsibility to children perspective, that's when I sort of loaded up with life insurance.

Speaker 3:

If I'm honest, I wish I'd have done it earlier, because with these insurances, the earlier you put them in place, the cheaper they are in the long term. So that was me probably not following my own advice, but if I'm honest, I didn't. Children were never originally in my plans, so it's a bit of a shock. I'm really glad I did become a dad. But yeah, so you never know what the future holds. So trying to future-proof your insurance advice is not a bad thing, not a bad thing at all um, so yeah, so at that point.

Speaker 3:

Replacing your income on death, I think, becomes absolutely essential. Um, critical illness cover is an option um, and with that you can get children's critical illness cover included as well. So that's not a bad reason to consider that as well, because it means if one of your children suffers a critical illness, you get a payout potentially, which means you might have options in terms of private medical care if required, taking time off work without any financial loss. So it's not a bad thing to consider. And I guess, as you said, next stage, after that, once you've got the children covered off, um, if you're then going to go and buy dental practice, if that's your ambition, it doesn't change your personal requirements a great deal, but what it does do.

Speaker 3:

You'll find most of my clients, when they're buying dental practices, they're going to borrow the money and commercial lending. Almost always, if not always, you're going to have to have life insurance to cover that borrowing, and the life insurance policy is then assigned to the lender so that if anything happens to people that are borrowing the money, the lender automatically receives that money. So those policies and usually single policies, are not in trust. They're assigned to the lender and that's normally a condition of the of the lending, and that has to be in place before the money's transfer.

Speaker 3:

So but at that point often you may be sort of thinking you know your outgoings have increased significantly and again you're then looking at potential income protection options. Now, if you're doing this to a limited company, you might be thinking at that point some executive income protection because you want to make sure you can cover some more of the expenses, because if you've got a three, four thousand pound a month loan requirement you've got to pay off. Um, that's an additional expense as well as your, your personal expenses. So that may be the time to think about if you can get more personal income protection an option, or potentially some income protection through the business which funds that, or key person income protection could be an option. It is possible to take a policy as a business which is covering profits, so it's designed basically to keep the business solvent. Um, if the person is unable to work, so again, so that's an option that's available.

Speaker 3:

Um, now, one thing I haven't covered um all of these stages, that's the, the life and the illness insurances. Um, probably one thing which complements all the way through these various stages is private medical insurance.

Speaker 3:

Now, private medical insurance to some degree is a luxury and you know there is a national health service but a lot of people because the waiting lists in 2023, they were 7.7 million people on the waiting list for the NHS has dropped down to about 7.4 million, and that's the reason that private medical insurance has been more popular in the last 12 months than I think it's ever been before the fact that you've got something. There is an NHS system, but there is a private option. Yeah, there's obviously some very obvious dental equivalents there, so there's a parallel. So the reason I think it goes, particularly if you're self-employed, income protection is brilliant, because if you're off long-term, you've got the level of income replacement. It's not going to be the full amount of your income If you have the private medical insurance. The big benefit of that, if you're working for yourself particularly, is that do you want to go into a waiting list of 7.4 million people or do you want to try and jump to the front of the queue, get yourself fixed and then get back to work, earning your full income as quickly as possible and doing it most likely in the hospital of your choice, um, probably in a private room rather than a ward, um, and all the nice bells and whistles that come with that. Seeing a consultant of your choice, um, and potentially having access to to better drugs than you get through the NHS one of the big benefits of private medical cover you're not going to be worrying about the postcode lottery which you may have heard of. So essentially, a good private medical insurance policy will guarantee that you get the best drugs for whatever condition that you're suffering from and see a consultant quickly and surgery in a hospital of your choice. So for me, when you consider the cost of that versus the income that you could potentially lose if you're off work for three or four extra months, it's a bit of a no-brainer.

Speaker 3:

And and if you particularly if you work in predominantly private work rather than NHS, as a dentist, I think it's pretty obvious why people go down the private route, and I think it's maybe crazy not to do the same sort of thing to protect yourself when it comes to medical cover as well. So now getting towards the latter stages so eventually you're going to retire Hopefully you haven't had to use your income protection and you've accumulated large amounts of money and you then get to the point where the children are sort of thinking what am I going to do with mum and dad's money when they're gone? And you might be thinking about how to most efficiently get that money to your, your offspring and your beneficiaries without the dreaded inheritance tax. And the aussie inheritance tax is a massive thing at the moment and I think the um the most recent figures that rachel reeves has pulled in is some huge amount by some like 8.4 billion, I think I was reading recently. Um, so the chancellor and the government is going after inheritance tax more and more and more, and insurance can be used as a tool to mitigate some of that liability.

Speaker 3:

Now, the most simple one if you've got something that you want to gift to your children when you're alive, it can be done as a potentially exempt transfer. And I will stress that I'm not an expert and I'm not giving advice on inheritance tax because it's not my field, but I do arrange insurance where this is done. So if you're going to gift something, there is a potential IHT liability for seven years and that liability drops after three years and goes down by roughly 20% to the end of the seven year term. Now you can take a life insurance policy that mirrors that IHT liability and it will drop down in line with the liability. So if something happens during that seven-year term and if somebody dies, then that triggers the IHT liability and you've then got that covered for a relatively small amount of money. So that's the first thing. So if you are going to look at transferring your wealth to your children while you're still alive, it makes sense to cover the liability through an insurance policy.

Speaker 3:

The second option is, if you know you're going to be triggering an IHT liability when you die, you can take a whole of life insurance policy. Now, again, you need advice on how much cover you'd need, but in terms of the basics of what it does unlike a term insurance policy where the insurance company is basically taking a gamble. So they're going to go. We're not going to charge a great deal of money because we're betting that you're going to outlive the policy. So essentially, they're rolling a dice on whether you survive or not.

Speaker 3:

With a whole of life policy, they're essentially going. If you keep paying your premiums, we are going to pay out x thousand or hundred thousand pounds of money to your chosen beneficiaries when you die. Now the interesting thing with these policies is, when you look at the contributions, they don't tend to be anywhere near the amount of money that's going to be paid out if somebody dies at the expected age. Now, the reason for that is twofold. First of all, they'll see, invest the premiums and they do. They're pretty good at that. But the biggest thing is a lot of people take these policies out and then they cancel them. So if you're one of the people that takes the whole of life policy and you don't cancel it, you're benefiting from the money that people have contributed and then cancel their policies going into the pot.

Speaker 3:

So if you look at the returns, with a typical whole of life policy, they're incredibly good and they're tax-free. It's pretty much the only time you can get a really big return on an investment with absolutely no zero, with zero liability, um, for the profit you've made on that investment. The only downside you've got to die to trigger it. So which, uh, which is not ideal, but um, but yeah, in terms of that, it's fantastic from that perspective. The other thing is the premiums. If you've got an estate where there is definitely going to be liability, the premiums that you pay towards the, the um, the whole of life policy are an allowable expense. So therefore they actually deduct from the liability for the IHT in the estate, which effectively means you're getting a 40% discount on the premiums that you're paying in, which makes the return even better. So that is you know it's a brilliant investment because you're actually getting 40% discount on the premiums and the investment return is're actually getting 40 discount on the premiums and the investment return is tax-free.

Speaker 1:

As I said, the only downside is you've got to be dead to to realize those returns.

Speaker 3:

Apart from that slight disadvantage, it'll be a minor, minor matter, minor matter, but no but.

Speaker 1:

But I hear what you're saying. You know it can make sense for a lot of people, particularly forward thinking. Have we done this subject justice, then? Warren the journey, so to speak.

Speaker 3:

We've skated over it, but essentially what it's saying is you need change. You need to constantly be regularly reviewing the protection provision that you have in place. Reviewing the protection provision that you have in place. And my general philosophy is, if you think you're going to need some insurance in the future and I've learned by my own mistake in that in terms of delaying taking out insurance if you think you might need an insurance in the future, it's generally better to take it when you're young, fit and healthy as possible, because you never know what life's going to throw at you. So none of us ever think we're going to get ill. None of us think anything bad's going to happen to us, because we have a massive optimism bias. But the reality is things do happen to people and I regularly speak to dentists where they've got medical backgrounds and sometimes it means they can't get insurance that they want, whereas if they'd have taken out five years ago.

Speaker 3:

They could have done so. You know, delaying something like insurance, you've got the risk factor that you may not be insurable or it'll be more expensive in the future. And if you leave it a few five years, it's definitely be more expensive because you, because you're five years older. So so, generally speaking, review your insurance regularly. If you can afford to future proof it, take the cover out as soon as possible. But I regularly review my clients on policy anniversaries. I get in touch with my clients just to make sure that have their circumstances changed? Is the cover I arranged originally still appropriate? Does it need tweaking? And it does. These things do happen. So yeah, yeah. So that's a very, very potted overview of of how people's needs change over time.

Speaker 3:

So and if anybody wants a free audit of their current insurance setup, we're going to go ahead and put a link in the description of this podcast that you can use to connect with warren absolutely, yeah, more than happy to take a look, and my philosophy is always if you've got something that does the job well, I'll tell you to keep it, and if it can be improved, I'll tell you that too.

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Dr. James Martin

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