9 Disability Insurance Tips for DentistsSubmitted by Mission Financial Planning on June 28th, 2021
Dentists need the ultimate in disability income protection. It’s not enough just to buy a policy off the shelf; you need to know that it will pay the benefits you expect when it’s needed the most. Each of these tips provides a vital piece of the disability insurance puzzle.
Seek Value over Price
“You get what you pay for” is not something you want to hear when protecting your most valuable asset. Paying the least expensive premium will be the least of your concerns when you actually need the benefits.
Disability insurance is not a commodity; it is a contract that specifies when and if benefits will be paid.
- There are many more important components of a disability policy beyond price that should be carefully considered such as the exact definition of disability.
Review the Company Ratings
- Your disability company could be your primary income source for a long time, so it’s important that its financial integrity be unquestioned.
- The financial strength of disability insurance companies is assessed and ranked by third party rating services. You should consider companies with a rating no lower than A+ by AM Best.
Be Wary of Group Plans
Group plans can be subject to change and they may be cancellable.
If you change groups you may lose your coverage.
- Disability income benefits from some group plans are taxed as ordinary income.
- Monthly benefits may be capped.
- Most disabilities are partial, be careful your group plan covers partial disability.
Scrutinize the Definition of Disability
For dentists, a policy that pays a benefit when they are unable to perform the specific duties of their own occupation is much more valuable than one that pays only if they can’t perform the duties of any occupation.
Protect your Purchasing Power
Over a 20 year period your purchasing power could be reduced by half due to inflation. A monthly benefit of $5,000 would amount to $1.2 million over 20 years without adjustments for inflation. With inflation adjustments of 3 percent a year, the total benefit amount would be $1,641,000. Buy the cost of living adjustment.
Buying Multiple Policies Saves Money
Dentists working in a multi-doctor practice together could save as much as 50 percent in premium costs by purchasing their individual disability policies as a group.
The 90-Day Waiting Period is Usually the Most Cost Effective
The 90-day waiting period is typically the best option for keeping your premium low while maximizing your coverage. To go from a 90-day waiting period to 60 days could almost double your premium. Conversely, by extending the waiting period to 180days you would only realize a 5 percent reduction in premium.
Only Buy Policies That Are Guaranteed Renewable and Non-Cancelable
They lock in your rate for the life of the policy and guarantee that your policy will be renewed each year regardless of your health or employment status.
They go wherever you go – from state to state or job to job.
Buy from a Specialist
Disability insurance is a specialty that few insurance agents truly understand especially as it applies to the demands of high earning professionals such as dentists. A specialist can also shop a health condition to find the best company to provide coverage. Be sure to work with an independent disability insurance specialist who has access to products from the top disability insurance carriers.
Mission Financial Planning does not sell insurance. We refer to agents who other clients have worked with on a cost-effective high-service basis. We do not receive any compensation for referrals.