May is Disability Insurance Awareness Month
Did you know that May is Disability Insurance Awareness Month? Disability insurance is often the forgotten part of securing your financial picture. After all, who likes the idea of potentially paying years and years for a product that may never be needed. However, this coverage becomes essential should you be unable to work due to injury or illness. And for a dentist or dental specialist, because motor skills play such an important part in your ability to your job, having adequate protection is critical to protecting you personally as well as your practice.
PracticeCFO wants to make sure that you have an understanding of how these plans and policies work and has a long-standing partnership with one of the foremost experts in the insurance space, Brian Leet. Brian is non-captive (meaning he doesn’t work for a specific insurance company), so he is free to find the best policy from any insurance company. He has been helping dentists and dental specialists with disability and life insurance solutions several years and we hear very positive reviews about his responsiveness and candor.
We asked Brian to put together a list of items many dentists overlook when it comes to their disability and life insurance plans.
1.Insufficient benefit amounts
It is very common for dentists and dental specialists to purchase coverage while in dental school and residency. These can be great starter policies with smaller face amounts offering limited protection. Once in practice, incomes are substantially higher, but there is insufficient protection. You should know your family budget and your disability policy should be able to cover that expense should the time come.
2.Business Overhead Expenses are exposed
Your practice is an asset. It has value and for many of you, the sale of your practice in the future is a part of your retirement plan. One way to protect the value of the practice if you become disabled is with a Business Overhead Expense (BOE) policy. BOE policies are designed to cover the ongoing expenses associated with the practice in the event you are unable to work due to disability. Premiums for these policies can be paid for through the practice and deducted as a business expense.
3. Collaterally assign personal policies over to a bank
Many dentists have taken out business loans to purchase or remodel their practice. Many lenders require the use of life and disability insurance to ensure that should something happen to the borrower (e.g. disability or premature death), their investment is protected. Many borrowers collaterally assign their personal life and disability insurance policies to secure the loan. What they may not realize is that by assigning a personal policy over to the bank, it can no longer protect you as intended. Instead, use a disability loan protection plan that is specifically designed to protect the loan in the event of a disability. Additionally, consider a life insurance policy that’s just for the loan. They tend to be less expensive than personal policies anyway since they generally cover a shorter period of time.
4. Purchase inadequate coverage through an association plan
Many associations, including the American Dental Association, offer insurance to their members. What’s not often exposed are some of the inadequacies of the policy language that create more opportunities for the insurance to not work in your favor come claim time. If you have an association plan, we recommend having it reviewed to see if there are any gaps in the coverage so that there won’t be surprises come claim time.
5. Premiums Increase over time
Insurance has its version of an adjustable rate mortgage where premiums increase over time. Much in the same way it can make sense to refinance a home or business loan to get more favorable rates, the same can sometimes be true with insurance.
If you want to take an inventory of the coverage you have in place to confirm that it’s appropriate, or if you think there’s a gap in your coverage, please reach out to your PracticeCFO advisor and they will make an introduction to Brian.