Most people think, “What are the odds that a disability will keep me from working?” The answer is, it may be more likely than you think.

According to the Social Security Administration, 56 million Americans, or one in five, live with disabilities. Thirty-eight million disabled Americans, or one in 10, live with severe disabilities¹. And 86 percent of Supplemental Security Income (SSI) recipients collected these benefits because of disability and blindness². If you need to live on your salary, it’s crucial to consider the consequences for you and your family if you were not able to work, and to prepare for that dire possibility.

At Altfest, we have deep experience in providing fee-only financial planning and investment management services to those in the dental profession.  When working with our dentist clients, we help them tackle aspects of their financial well-being, including those that often can be overlooked, such as disability insurance. Since Altfest doesn’t sell any kind of insurance, we can offer truly objective insights into what would work best for you. Here’s what you need to know.

 

 

Type of Policy

Dentists most often acquire disability insurance through one of three methods: group coverage through an association or affinity group; or individual coverage through an agent; group coverage through your practice.

Group coverage through your practice or an association can be less expensive, but it comes with limitations including lack of portability if you change jobs or the chance that the insurer could drop you from the plan, even if you are paying scheduled premiums. Also, many group policies may have earnings caps for coverage. For a high-earner such as a dentist, these coverage caps could lead to being seriously underinsured. Individual coverage offered through agents can be more expensive, but it offers more generous benefits, definitions and options as well as flexibility in terms of coverage.

 

What You Need to Consider

Because you don’t know when you might become disabled, the sooner you get coverage, the better. Plus, the younger and healthier you are, the lower your premiums will be. Also, obtaining proper classification of your dental specialty is important, as different classes can result in varying premiums for the same benefits.

Disability insurance sometimes is considered “paycheck-protection” insurance — a planned replacement for your occupational income. To ensure this, though, pay attention to the most important feature of disability insurance: how your policy defines total disability. For dentists, this usually means you should get an “own occupation” policy. This type of policy will provide benefits for a disabling condition that prevents you from performing the specific skills and duties of a Dentist but allows you to return to work in another occupation. For example, a disabled dentist might have to give up accepting patients, but she could become an instructor for residents. Own occupations coverage would insure, and provide benefits for, the inability to perform the specific duties of a Dentist yet allow the Dentist to return to work in another profession. Many group policies provide “own occupation” coverage for a specified period of time only and then convert to “any occupation”. It is important to understand what is covered by your policy.

Another factor you should be aware of in your policy is its components of coverage, including residual disability and inflation riders, or other provisions. Do you have enough coverage on your income? Do you need more coverage from an individual or supplemental plan? Are you covered by the policy when you return to work yet continue to experience an income loss? What if you are able to work but not full time, are you covered? Will the benefit amounts increase as your income or living expenses increase over the years? As all coverage and policy language vary, you need to review your coverage to ensure you have the appropriate coverage for your current situation.

 

Protecting Your Business

If you have your own practice, disability insurance is even more important because you are taking care of yourself as well as the future of your business.

First and foremost, business overhead expenses need to be covered while you are unable to work. Typically, a business-overhead expense rider within the disability insurance policy will provide the business funding to maintain necessary operations for a period of time.

If you have a business partner, you also need to think about the consequences of that person’s being disabled. Is the disabled partner going to continue drawing a salary or share of profits if a replacement must be hired at the same time? If necessary, disability buyout insurance creates the capital to acquire the disabled partner’s share.

 

What Altfest Can Do

At Altfest, we have our own insurance review processes, incorporating in-house knowledge and increasingly artificial intelligence (AI) technology. As part of our wealth management services, we can review your existing disability policy and identify potential gaps for your disability plan considering your broader financial plan for you to discuss with your agent.  With your consent, we can recommend or contact independent insurance agents to determine the most suitable policies for you. You’re under no obligation to change your current carrier, we simply seek to find the best policy that makes you feel comfortable. Our review helps you understand the coverage you’re buying, and why it suits your needs.

Altfest is proud to be the preferred wealth manager for members of the New York State Dental Association (NYSDA) since 2010. Learn more about our comprehensive financial wellness services for dentists at altfest.com/dentists.

 

Schedule a complimentary consultation at this link or contact Jesse Frehling at jfrehling@altfest.com or (212) 796-8732

 

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Sources: 1. Social Security Administration Publication No. 05-10570. Released: January 2018. “The Facts about Social Security’s Disability Program.” 2. Social Security Administration Publication No. 13-11785. Released: September 2017.” Fast Facts & Figures about Social Security, 2017.”

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