Most people want to avoid thinking about getting hurt, but the fact is, injuries and illnesses do happen. The point isn’t to dwell on the negative but to focus on how income may be replaced in the event of an unforeseen health event. Disability income insurance is a way to manage this risk.
Many people get confused by all the different insurances available. But once you understand what you do or don’t have, you’ll be better equipped to determine who will pay you if you are unable to generate income.
Let’s start with the basics: health insurance
Depending on your level of coverage, health insurance may pay some portion of your doctor’s bills, medical tests, hospital expenses and medication. Health insurance does not help replace your income if you are disabled.
Disability income insurance
Disability income insurance pays you a predetermined amount if you suffer a disability and are unable to work. You will need to wait for a period of time (about three months or more) before the payments kick in, and the benefits period will depend on the terms of the policy. An individually owned policy, meaning one that you buy for yourself, likely makes the most sense for people leaving school. The right time to buy insurance is generally when you’re young: It’s more affordable and you’re healthy. We typically recommend occupation-specific or “own-occupation” coverage for people in the dental profession because it allows you to receive payment for your disability and still provides you with the option to generate income from a new occupation.
Group disability
Group disability may be provided by a practice or corporate entity. It may be more restrictive than an individual disability income policy.
For example, if you’re paying part of the premium, you don’t have the guarantees that the premium will stay the same. You don’t have the guarantee that the company that issued the policy will continue to issue that specific policy. And you don’t have the continuity of coverage if you leave that employer. Group policies should be viewed as supplemental, not be the main source of your disability income coverage.
Social Security coverage
Social Security has some disability coverage, though the definition of disability is restrictive, and it may be difficult to qualify for payments. Also, the coverage is minimal and unlikely to cover most dentists’ financial needs.
Long-term care
Long-term care insurance doesn’t pay you either. It pays for, or reimburses you for, nursing home or home health care expenses. In order for your long-term care insurance policy to kick in, you need to be unable to perform two of the six activities for daily living: toileting, bathing, transferring, eating, dressing and continence.
Your ability to generate income is likely your greatest asset. If something happened to you, it would have a significant impact on your cash flow. Whether you’re just starting your training or you’re already in practice, one of the first things you need to do is protect your ability to earn an income. While health insurance will help pay to get you back to good health, disability income insurance will help replace income while unable to work.
Work with an experienced adviser who understands the risk factors associated with the dental professions and can help you design and select a policy that’s appropriately suited to your needs.
~Alex Spiller, Financial Services Professional, Treloar & Heisel, Inc.
Treloar & Heisel and Treloar & Heisel Risk Management are divisions of Treloar & Heisel, Inc.
Insurance products offered through Treloar & Heisel, Inc.
Treloar & Heisel, Inc. does not offer health insurance.
The policy descriptions in this article are intended for general, informational purposes only. Please refer to your insurance policy for the binding policy definitions.
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