Disability Insurance

Why It's Important

Disability Income Protection is a core concern for a dental professional. There are a few reasons for why a dentist/dental specialist would require it.

Why You Need it & How it works

1. Personal Income Protection:

Unlike many other professions dentistry involves physical labor as well as having a high education. With the average student loan debt out of dental school being over $350,000 protecting your income is extremely crucial to the financial plan. Carrying personal disability ensures that if you could not work as a dentist that student loan payments would be covered, rent/mortgage payments are paid and a normal lifestyle can be maintained. In a perfect world one would want as much disability insurance as possible but like everything else it is important to have in moderation. With disability insurance being tax free just imagine what amount of cash you and your family would certainly need to maintain a normal lifestyle and make that monthly amount your minimum goal of coverage then you can always increase the amount in the future as your need and income rise.

2. Business Overhead Expense:

With the dentist/dental specialist being the primary driver of income for a practice it is crucial to have this coverage as a business owner. Even if you do not believe it to be necessary nine times out of ten a bank will refuse to give you a loan unless you carry some form of business disability insurance or commit your personal coverage to paying them first. What Business Overhead Expense does is if the owner and/or any owning partners are disabled, the insurance company pays monies towards the business loan, salaries, utilities, taxes , legal fees , etc.. This insurance protects the practice and saves the owners from having to make split second decisions on fire selling the practice or selling off share in the practice if an owner/partner is disabled. It is a key insurance towards protecting the business and offsetting any unnecessary business risk.

Key Items to Note When Purchasing a Plan:

1. Always buy Level Pricing:
Some Insurance carriers offer a graded price this makes coverage 40% less expensive now but you do not lock in your age or rate. For Example: If Dr. Patel buys $5,000 a month of disability insurance for $100 a month Level the price will never change. If Dr. Patel buys $5,000 graded the price is only $60 a month but now every year Dr. Patel ages the price will increase exponentially until it is leveled out. So if you wait two years to level out you might end up paying $120 a month to lock in the price. Even if you need to buy less to start you can always increase your coverage in the future so just make sure you never get trapped into a policy where the price can change. Treat it as if you were to get a loan from a bank fixed is always the safest and most reliable because there is zero chance of change.
2. Protect your Occupation :
There is a very important feature a Dentist/Dental Specialist needs to have in order to be protected with disability insurance. This feature is known as own occupation. If you become disabled with this feature you are then able to do any other job, make any level of income and the insurance company still has to pay you as if you are unable to do anything. Where this is important.. In Dental/Dental Specialty there is a lot of physical demanding labor to go to work. If one is disabled they may still want to teach dentistry or change from a specialist to a general dentist or from a clinical owner to a passive owner and hire an associate doctor to continue making a strong income. This feature protects you from not receiving payments if you can continue to work in another job within your field or another.

Companies will call this feature : Own Occupation , Regular Occupation , True Occupation or Pure Occupation. All are synonyms for the same thing just different for branding purposes. The only companies current that are known to offer this feature and have a strong financial rating are : MassMutual , Principal , Guardian and Ameritas.

3. Make Sure your Contract is Non-Cancelable and Guaranteed Renewable:
All this means is that the insurance company is Guaranteeing the features of the plan. It grandfathers you into all of the riders/features that are purchased and their definitions even if the insurance company changes things in the future. This is very important as every few years contracts change so you want to make sure you never have to worry about those changes affecting your rates/payout or any other benefits in the insurance policy.
4. Protect against inflation with Cost of Living Adjustment Rider ( COLA 3%):
This feature is as simple as it sounds. COLA allows for your benefit to grow by a compounded 3% interest rate each year to protect against inflation. It is very important to have this feature as items like food , gas and rent increase in cost over time. The value of a dollar becomes weaker and weaker every year that passes so we recommend always having this rider/feature to prevent your benefits from depreciating if you are disabled early.
5. Partial Disability (Also known as Enhanced Partial, Extended Partial):
Another rider/feature that is crucial in building a dental specific disability plan. Partial disability allows the insured the get paid as long as they lose a minimum of typically 15-20% depending on which carrier they choose. As long as a loss in Wages/Time/Duties occurs the insured is then paid that portion of the benefit until their benefit period ends on the policy. 1 in 4 Dentist typically go on claim in their working career and most of these claims are muscle/skeletal claims (hands,neck,back). Given most claims are basic wear and tear they start out as partial claims and eventually turn into full payout/ total disability claims.
6. Future Increase Option / Benefit Increase (FIO/BU/BIR):
The increase option on the plan can go by many different names as listed above and each company has some little differentiation in how they work. On a basic level this feature allows the insured to increase their coverage without having to do the medical check again. This feature allows you to increase and keep the same rates, health and contract for your whole career which is probably the main reason anyone buys insurance in the first place. Locking in the discount is key as most dentists/dental specialists get preferred pricing if they buy as a student or resident in a program. The discounts are then locked into your contract even if you buy the most minimal amount of insurance. The main objective in buying insurance early is to buy enough coverage so that you can increase to the maximum level of coverage in the future so that way future health cannot prevent one from insuring their future needs.
7. Waiting Period:
Set at either 30, 60, 90 or 180 Days this is how long an insured must wait until they start receiving monthly benefits.
8. Benefit Period:
Set as low as 5yrs, 10yrs , until age 65, 67 or age 70 this is how long an insured is paid their monthly benefits.
9. Additional Features:
There are some extra riders/features that come for free with each insurance company. There are also some features that you can buy with each company that we did not review. Typically when customizing your plan, your financial advisor will review all four of the approved plans and itemize the pros and cons of each one. There is no blanket best plan and no plan that pays better than another. Each plan has different advantages that may or may not matter to the insured. It is very important to review each company carefully and pick based on which one aligns best with your values and concerns.

Our Plans

At CFS Dental Division we customize every plan to our dentists / dental specialists based on a one hour consultation on learning about you and putting these differences into more simplified terms so that you can make the most educated and informed decision on what you think is best for your individual situation and needs.

The leader in helping Dental Professionals protect their future and achieve financial independence.

CFS Dental Division