Unlike home and auto insurance where people may consider these as “mandatory” policies, disability income and life insurance often take a back seat.
“’I’ll get to it at some point’ is a common phrase when it comes to these types of policies,” Tara Cain, Insurance Account Manager at CWA Risk Solutions said. “If we insure our homes and cars, why wouldn’t we protect our income and our loved ones?”
Disability income and life insurance are two vital coverages to protecting your wealth. Whether you’re focused on kicking off your career or you haven’t reviewed your existing policies in a few years, educating yourself on insurance can help you make informed, financially smart decisions.
While insurance can seem incredibly technical and complex, here are a few key factors to know about disability income and life insurance.
Think of Disability Insurance as Income Replacement
Historically, the dental industry has a significantly high number of disability insurance claims, and that often stems from the nature of dentists’ work. Every day, dentists work bent over and extensively using their hands, which can lead to neck and back pain or wrist injuries and hand tremors. Dentists’ livelihoods are heavily dependent on their physical ability to do their work.
At its core, disability income insurance is an income replacement. In the event that a doctor is unable to work due to injury or illness, this insurance provides a steady income stream and prevents you from depleting all of your personal savings.
TAKE NOTE
From basic income to business overhead, disability insurance comes in multiple formats, and doctors often wonder what disability coverage they should get. CWA Risk Solutions’ recommendation is to apply for as much coverage as you qualify for. Even for students, you can qualify automatically for coverage without having proof of income.
Life Insurance Offers Protection for Your Loved Ones
While life insurance covers the insured person’s life, it essentially offers financial protection to your family in the event of your passing. Your loved ones can use the payout to cover whatever they choose, from mortgage payments, loan payments, medical bills and more. Life insurance can help your family feel financially supported for at least a portion of time.
TAKE NOTE
There are a variety of life insurance policies, including term life, whole life and permanent life. For new doctors, CWA Risk Solutions’ recommendation is have at least a 30-year term life insurance in place.
The Earlier You Apply, The Better
New doctors often put disability and life insurance lower on their priority list.
“It’s completely valid to get out of dental school and want to focus on launching your career, especially with student loan debt weighing on your shoulders,” Tara said. “Even if you’re running three miles a day and staying healthy, now is the time to get coverage because the earlier you apply, the better.”
When insurance carriers determine a rate for a policy, one of the biggest factors is age. The younger you are, the less likely you are to have a history of medical conditions, and thus, the cheaper the policy is going to be. This makes it the ideal time to purchase disability and life insurance. It provides a better chance of securing full coverage without limitations, a smoother underwriting process, and more affordable premiums.
Insurance Riders Add Customization to Your Coverage
Insurance riders are additions to tailor your coverage, and they ensure your coverage adapts to real life as your income and personal needs change. Here are a few of the most common riders for disability and life insurance.
- Own Occupation (Disability): If you are unable to work in your current role and choose to transition to a different occupation, this rider allows you to continue receiving benefits in the event of an approved claim. For example, if you sustain an injury that prevents you from practicing dentistry, the insurance carrier won’t question it if you transition to a new occupation. This rider is often missed among established doctors.
- Future Increase Rider (Disability): This rider expands coverage as your income grows. This is especially helpful if you know you’re going to own a practice in the future. With a large underwriting process and an in-depth review of your health records that takes place to begin your coverage, this rider removes the risk of not being able to secure increased coverage in the future. CWA Risk Solutions has found that many established doctors are significantly under-insured. Especially when your salary increases, you’ll want to check on your disability coverage.
- Student Loan Payments (Disability): If disability insurance replaces your income, what happens to your student loan payments? This rider helps cover your student loan payments when you encounter unexpected setbacks.
- Conversion Rider (Life): This rider allows you to convert your life insurance policy at any point. Many policy holders use this rider to convert their term life policy to whole life or permanent.
Major Life Events Call for Insurance
Any major life event (i.e., graduation, marriage, children, buying a house, purchasing a practice) indicates a potential for insurance coverage. It’s important to talk to your insurance advisor if you encounter any life event to review your current coverage and plan for the unexpected.
When you buy a dental practice, in particular, the bank requires you to have specific policies. Oftentimes, they require property and casualty, liability, and malpractice insurance. But these insurances protect your business, not you personally. Disability income and life insurance can provide that personal protection and ultimately safeguard your wealth.
Plan Ahead
No one likes to think about the “what if,” but it’s important to plan ahead and have preventative measures in place. CWA Risk Solutions, Cain Watters & Associates’ in-house insurance agency, cuts through the complexity by educating first, then finding tailored solutions that can save you time, money, and worry.
At NDP, we want to help you thrive in all aspects of practice ownership. Contact our team to learn more about other resources and tips that can help you in your journey.