Dentist Disability Insurance
Dentists are among the most prevalent group of professionals to purchase individual long term disability insurance. Whether you are a general dentist or specialist, associate or practice owner, there is an essential need to protect both your training within the dental field and income from a potential injury or illness. The initial process of shopping for the right disability insurance policy should focus on understanding that price should not be the primary factor to compare various plans. Income protection policies vary greatly in how you are protected and contract provisions need to be the primary focus when comparing to see which one is the right for you.
What are the advantages of an Individual Disability Insurance Policy
- Non-Cancelable and Guaranteed Renewable Individual Disability Insurance policies have locked in premium rates and the contract language cannot be changed by the insurance company. Fixed premiums are important since disability insurance gets more expensive as you get older. The disability income market may also not offer the same level of coverage in the future, so preserving your contract language provisions is very important.
- Many individual disability income protection policies provide a variety of beneficial optional riders to purchase such as inflation protection and future purchase options, where a policyholder can add more coverage in the future without additional medical underwriting by the insurance carrier.*
- Individual Disability Insurance coverage is ‘portable’ - meaning the plan stays with you regardless of where you work as long as you continue funding premiums. This is very helpful if you are a salaried associate who may one day leave to start your own dental practice.
- The benefits paid to you while on claim are tax-free1
What should I look for when selecting an Individual Disability Insurance Policy?
Understand the renewability provisions which define your rights in maintaining your disability income protection. If a policy is just guaranteed renewable only, it will
remain in force as long as your continue to pay for your policy on time, but the insurance company has the right to increase your premiums.
When you purchase a policy that is both non-cancelable and guaranteed renewable to at least the age of 65, the insurance company can not change your premiums or the contract language in anyway. Keep in mind, you can always decide to drop the coverage at anytime and are not required to continue with paying premiums.
• True Own Occupation Definition of Disability - Disability income insurance policies provide a monthly benefit for total disability.
When you read a disability insurance contract, the most important component of the policy should be how it determines you eligible to receive benefits for an illness
or injury. A typical true own occupation definition will read:
-Total Disability means that, solely due to injury or sickness, you are not able to perform the material and substantial duties of Your Occupation. You will be Totally Disabled even if you are gainfully employed in another occupation so long as, solely due to Injury or Sickness, you are not able to work in your occupation.
-Your occupation means the occupation (or occupations, if more than one) in which you are gainfully employed during the twelve months prior to the time you become disabled.
This essentially means the insurance company will recognize you as totally disabled if because of sickness or injury you cannot perform the duties of your occupation and will not force you to work in another occupation. Also, equally important, you will have the choice to earn an income working in another occupation without jeopardizing your benefit payment so long as you remain totally disabled from the occupation which you were performing at the start of your disability.
Ideally - you should select a policy that includes an additional contract provision that recognizes your dental specialty. An example usually follows the above definition with:
- If you have limited your occupation to the performance of the material and substantial duties of a single medical specialty or to a single dental specialty, we will deem that specialty to be Your Occupation.
• Residual or Partial Disability Benefit Rider - This very important benefit is usually offered as an optional rider to purchase on most disability insurance policies. Consider that you may suffer an injury or illness that doesn't cause a total disability, but limits your ability to work and causes a loss in your income.
Most contracts will provide some form of a benefit to you if, due to an injury or illness, you suffer a loss of time and duties and a loss of income in your occupation. How much of a benefit you receive depends on the contract and income loss. Some carriers also provide a recovery benefit period which, in the event you return to work full-time but still have a loss of income, will pay you a benefit.
What other Disability Income Insurance plans should I consider?
- Retirement Protection Plus Insurance - If you suffered a long term disability, what would happen to your retirement savings? A successful retirement means you have sufficiently saved over your years of working to build up a nest egg but that would be very difficult to do without your income. This plan helps ensure that your retirement savings continue to grow while disabled and not gainfully employed by paying a monthly benefit into a trust established by you.
- Overhead Expense Disability Insurance - If you own a dental practice, you have two families to protect - your ones at home and your business. Who would pay the monthly overhead business costs if you were disabled and could not work? This policy provides protection to cover your ongoing monthly expenses, such as rent, utilities, and taxes as well as salary for a temporary replacement and current employees who have no ownership interest in your business. This premium is also tax-deductible. Every owner of a practice really should have this in addition to their own income protection disability insurance plan.
- Business Reducing Term Insurance - If you have a fixed loan obligation, such as a student loan or loan to purchase a practice, you probably need disability insurance to secure the payment. This type of policy is perfect for long term loan obligations that last longer than a 2 year payment period, which is typically the maximum length of an Overhead Expense Disability Insurance Policy. The Insurance company pays the principal and interest payments directly to the financial institution if you are disabled. Candidates for this coverage are, again, owners of a dental practice with a loan and young dentists with high amounts of tuition loan debt.
1Policyholder pays premium with after-tax dollars. Please confer with your tax advisor about your own specific situation.
* Disability income products underwritten and issued by Berkshire Life INsurance Company of America, Pittsfield, MA, a wholly owned stock subsidiary of The Guardian Life Insurance Company of America, New York, NY.