Editor’s Note: Part 3 of a 3-part series on disability insurance for dentists and students. See Part 1 Disability Insurance 101: “My Occupation” and “Noncancellable and Renewable Guaranteed” and Part 2 “Timeframes and Covenants: How Should I Design a Disability Insurance Plan?” Please read.
The first two articles went into more detail about what to look for in individual disability insurance policies. These policies often help dentists pay their personal bills and maintain a lifestyle for themselves and their families in the event of an accident or long-term illness. how is? Click here to learn more about overhead disability insurance.
scenario: You have just been in a terrible car accident. You are in the backseat of an ambulance on your way to the emergency department of your local hospital. After the initial shock subsides, a few questions come to mind.
- Can I practice dentistry again?
- Did you pay your last disability insurance premium?
- How much disability insurance do you currently have?
- Can I get an alternate dentist?
- Can or should I sell my clinic?
- Will my patient stick with me?
- Will my staff follow me?
These and many other questions arise. It’s not just your personal income that needs to be insured. Similar but different insurance policies should be taken out to protect your practice.
Burden policy (also known as business burden policy)
This type of policy pays for the costs of practice, including the policyholder’s salary, rent, and utilities due to injury or illness. If you own a clinic, you should strongly consider this, especially if you are responsible for a significant portion of your clinic’s revenue.
A real benefit to your practice, overhead policies often take effect after 30 or 60 days, so you have to wait 90 days for cash to flow into your business, as you see with regular personal disability insurance policies. there is no. General dentist payouts for individual disability policies often range from $5,000 to $20,000 per month, and overhead policies typically range from $10,000 to $50,000, making it easy for busy people to pay. A definite plus for the clinic.
The key difference is the period for which the policy is paid. Individual disability insurance typically provides benefits until retirement age. However, under our overhead policy, payments are typically for 12-24 months. The reason is simple. A medical practitioner will be able to get a sense of what he wants to do in a medical practice within two years of an accident or illness.
When you set up your burden cost policy:
- Purchase time: Walking into the office on a Monday morning knowing that, say, $30,000 in earnings will be paid for a year or two to cover employee wages, rent, utilities, and other expenses Even if you have an accident that suddenly makes you unable to do so. It can provide many comforts for your business. This will give you time to create a practice game plan. At the very least, I know I can pay my staff, maintain hygiene, and possibly add an associate to keep things running while I work with my family, lawyers, accountants, and brokers to explore options.
- Create certainty: This lets staff know that no matter what happens, there is a clear plan and payroll will continue for the duration. In this tight labor market, sharing with your team that you have a contingency plan may help them choose where they work. I’m not saying this is a panacea. This is another sign that you are thinking of the whole team when planning your practice. This does not replace an inclusive culture, team building, or good mentorship. It just enhances the excellent work you are already doing.
- Maintain value: We often hear stories of dentists across town having accidents or being diagnosed with cancer. They have two jobs for him. Paying attention to one’s health, a very personal and comprehensive endeavor, is to determine one’s own practice tendencies. If you have overhead costs and an emergency plan in place, there is no need to make hasty decisions. If the practice is sold, it will be at full value and on your terms.
Other questions to consider
As with individual disability insurance, there are nuances.
- Are profits taxable? You should consult a tax expert, but this policy has the unique ability to be paid in practice and has the advantage of being tax-free.
- Can I start with a small plan and scale to more coverage as my business grows? There are riders that allow you to purchase more coverage later without having to answer new medical questions.
- Can I pay for a replacement dentist from my benefits? probably! For this reason, you should consult a dental disability insurance broker. They help us make all these decisions based on their past experience with other clients.
Author’s Note: This series was meant to be comprehensive, but intended to give busy dentists and dental students a little more information than they probably have. If you have any further questions, feel free to contact Jim Kachmar.
