What Every Dental Professional Needs to Know

Disability Income Insurance:

What Every Dentist Needs to Know

When you educate your patients about the basics of preventative dentistry, you're not only showing them how to keep their smiles beautiful for life.  You're also helping them avoid learning the hard way about the most common dental disasters-up to and including the loss of their teeth.  

But have you prepared as well for your own future-in particular, your financial future?  What if, for example, you suddenly became disabled-through an accident...an injury...or an illness-and are unable to work?  Are you fully prepared for such a scenario?  

Statistics show that disability is much more commonplace than most people think: In a survey more than half of employees surveyed felt they had less than a 2% chance of becoming disabled during their working years*, but in reality more than 25% of Americans entering the work force today (1 in 4) will become disabled before they retire**.

Perhaps you believe that you're fully covered by a group policy or the association coverage you may have purchased.  While group disability insurance is often relatively inexpensive and easy to administer, it can also fall short just when you need it most-leaving you in for some unpleasant surprises when it's too late to correct the situation.  

Want to be better prepared?  Consider the following:

Learn to Speak the Lingo:

The right disability income policy can help you keep your household going if you suffer a long-term disability. But before you go shopping for a policy, you need to know which features to look for—and the language the insurance industry uses to describe them. The following terms are part of the language describing high-quality policies, and are what you should look for to get coverage you can count on:

To avoid the possibility of losing your coverage just when you need it most, choose a policy that’s non-cancellable and guaranteed renewable to age 65 or 67. This provision will guarantee that as long as your premiums are paid on time, your policy cannot be cancelled, premiums cannot be increased and policy provisions cannot be changed. With group or association coverage, you run the risk of being dropped and left unprotected at a time in your life when, due to your age or a change in your health, it would be difficult to qualify for coverage from another provider. Unlike group long term disability, individual disability income coverage stays with you even if you change jobs.

A true Own-Occupation policy considers you totally disabled—and therefore eligible for benefits when, solely due to injury or sickness, you are unable to perform the material and substantial duties of your occupation even if you are gainfully employed in another occupation. As a highly skilled professional who has greatly invested in your education and training, you want to make sure you have true own-occupation coverage. Group long term disability plans rarely include a true own-occupation definition of total disability.

Through an optional rider, a good individual disability income policy can provide you with a residual benefit for when you suffer a loss of income as a result of partial (residual) disability—even if you have never previously suffered a period of total disability. This kind of residual coverage is not available with many group long term disability plans.

This benefit is important for many dental professionals. It provides a benefit, even if you have recovered, if you continue to suffer a loss of income due to an injury or illness that caused your disability*. The best policies have a recovery benefit payable to age 65 or 67. Guardian is the only carrier not to require a period of total or partial disability to qualify for a recovery benefit. All other carriers do.

Optional riders offer additional coverage such as Students Loan Protection Rider, Lump Sum Disability Benefit Rider, Retirement Protection Plus Disability Benefit Rider, Catastrophic Disability Benefit Rider, Future Increase Option Rider with annual increase options, and Cost of Living Adjustment (COLA) Riders***. 

Protecting your practice, as well as yourself:

As a dental professional, you must also protect the source of your income: the practice you've worked so hard to establish and grow.  Special business disability insurance policies, available from the same disability income providers who offer high-quality individual coverage, offer your practice protection while you recover from an injury or an illness.

For example, to help meet the expenses of running the office while you are disabled, consider a separate type of disability coverage known as Overhead Expense (OE).  Overhead expense benefits reimburse your practice for expenses such as rent for your office, electricity, heat, telephone, and utilities, as well as interest on debts and lease payments on furniture and equipment.  Overhead expense insurance specifically designed for professionals reimburses some additional costs not included in regular business overheard expense policies-including the salaries of all regular employees who are not members or your profession.  In a practice such as yours, for example, salaries for your receptionist and assistants would be covered, but not the salary of your dental professional partner(s) or employee(s).  However, high-quality professional overhead policies will cover at least part of the salary of a professional temporary replacement for you, such as a dentist retained to fill in during your total disability.  

In addition...

Dentists who are partners in a group practice will want to consider a policy known as a Disability Buy-Out (DBO).  In much the same way that life insurance benefits can be set aside to fund a buy-out by the remaining partner if the other partner dies, this type of policy is designed to fund the healthy partner's purchase of the disabled partner's share of the practice.  With the proper agreement in place before disability occurs, hard feelings and the conflicts of interest that can result from a partner's disability can be avoided.  

The fact is, as part of your overall planning, you owe it to yourself to look into protection for the one thing that makes all other planning possible: your ability to earn an income.  

*CDA 2010 Consumer Disability Awareness Survey

**Social Security Administration Fact Sheet, January 2011

***Optional riders are available for an additional premium. Restrictions and limitations apply. The Student Loan Rider provides coverage for period of ten or fifteen years from the policy date. When a qualifying total disability occurs, benefits are only payable during the remaining portion of the ten or fifteen-year term that has not elapsed when the disability begins. Retirement Protection Plus is not a pension plan or a substitute for one. While medical information is not required when exercising a future increase option, applications to exercise an increase option will be financially underwritten, taking into consideration both the applicant’s then current income, as well as all disability insurance which is then in force, or for which the insured has applied or is eligible to receive. The COLA benefit is not necessarily protection against increases in the cost of living.