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 become 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 recent survey more than half of employees surveyed felt they had less than a 2% chance of becoming disabled during their working years¹, but in reality more than 25% of Americans entering the workforce today (1 in 4) will become disabled before they retire.²

Perhaps you believe that you’re fully covered by a group policy or the association coverage you may have purchased.  While group DI 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 DI policy, you need to know what features to look for—and the language the insurance 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:

• Non-cancellable and Guaranteed Renewable: 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.  This will also guarantee premiums until age 65.  With a group policy, you run the risk of being dropped and left unprotected at a time in your life when, due to your age or to a change in your medical condition, it could be very difficult to qualify for coverage with another provider.  The premiums for your classification can also be increased at anytime.
• Conditionally renewable for life: Although premiums may increase after age 65, your policy should be guaranteed renewable for life, as long as you are at work full time.
• Own-Occupation definition of disability: Own occupation coverage defines “totally disabled” — and therefore eligible for benefits — as not able to work in your own occupation even if you are at work in some other capacity. As a highly skilled professional who has invested much into your education and training, you want to make sure you have a genuine own-occupation coverage…say that even if you can teach, for example, in your field—but cannot practice dentistry—you are still eligible for benefits.  A few companies even consider you ADA-recognized specialty your own occupation.
• Residual Disability coverage:  Through a rider, a good individual DI plan can provide you with a benefit when you suffer a loss of income as a result of partial disability—even if you have never suffered a period of total disability. This kind of residual coverage is not available with most group plans.
• A choice of Riders:  Riders offer optional additional coverage such as annual Future Increase Option, Automatic Increase and Cost of Living Adjustments, or “COLA.”

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 too hard to establish and grow.  Special business DI policies, available from the same DI providers who offer high-quality individual coverage, offer your practice protection while you recover from a disability.

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).  OE 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 overhead expense policies—including the salaries of all regular employees who are not members of your profession.  In a practice such as yours for example, salaries for your receptionist and assistant 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 of 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 a disability occurs, hard feelings and the conflicts of interest that can result from a partner’s disability can 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 the other planning possible: your ability to earn an income.

¹ CDA 2010 Consumer Disability Awareness Survey.

² Social Security Administration Fact Sheet, January 2011