Posted by Amy Carbone on Jul 28, 2023 11:21:20 AM
As a dental professional, you have invested significantly in your career before it even gets started. A long-term disability can put that investment in jeopardy by affecting your ability to earn an income. Disability income insurance is one way to try to protect that investment and your income while you recover.
Group policies may be available to you as part of a professional membership or employment. An individual policy, on the other hand, may be purchased directly from an insurance company or broker.
There’s a lot to consider when comparing group versus individual coverage and in the event that you suffer a disability at some point in your career, your financial future may weigh heavily on that decision. Explore the differences as you consider which type of policy is right for you, your family, and your lifestyle.
Disability Income Insurance Considerations
Unlike some group policies, your age and health may play a role in the pricing of an individual disability income insurance policy. A younger, healthier person will have lower premiums than an older person with long-term or chronic illnesses and or health risk factors. Both, however, may be able to pay the same premium in a group policy.
A major differentiating factor may be the degree of decision-making you’ll have (or even be aware of). In group coverage, the owner of the policy (typically an organization) may renegotiate terms and/or change coverage without your consent or interests in mind. Essentially, you “rent” a group disability policy while you are employed by the organization.
With individual coverage, your consent may be required for all policy changes, provided your policy is non-cancelable and guaranteed renewable up until you reach a certain age. This means that the insurer can’t change or cancel your policy without your consent, as long as your premiums are paid on time. You own and control an individual, non-cancelable disability policy.
A major consideration in your decision-making process will be cost. The premiums you pay (the premium is the cost of the policy to you) will either increase over time or remain level year to year. Level premiums generally remain consistent from the time your policy begins to age 65. If coverage is increased, the cost for the additional coverage is added to the original premium. “Graded” premiums may begin with a lower premium cost than a level premium policy, but premiums increase annually. Be sure you understand the premium structure of any policy, group, or individual.
A major appeal of group disability income insurance coverage may simply be affordability. Group coverage may be less costly than an individual policy, depending on a variety of factors. It is important to note that the cost for group coverage also increases with your age. A group policy may be less expensive initially, but after a certain point, becomes more expensive than an individual policy with a level premium structure.
The Kind Of Coverage
Make certain that the policy you chose provides coverage for both total and partial disabilities. In dentistry, an "own occupation" definition of total disability may be advisable. Under this definition of total disability, you are protected in the material and substantial duties of the occupation that you were engaged in just before the start of the total disability. Full benefits may be payable even if you return to work in a new occupation.
Definitions of total disability may change after a certain duration of total disability. It is oftentimes advisable to make certain that the policy you are considering provides an "own occupation" definition of total disability for the entire period for which you are eligible for benefits.
Partial disabilities are disabilities in which you are still able to work but are losing income (e.g., reduced hours due to a back problem). Disability benefits for partial disabilities are often paid in proportion to your income loss.
Under this definition of total disability, you are generally protected in the material and substantial duties of the occupation that you were engaged in just before the start of the total disability.
A Word About Group Disability Income Insurance
Group policies are typically not transferable if you leave the organization or employer that owns the policy. That may leave you with gaps in your coverage or without coverage and the subsequent need to acquire an individual policy when your age or health may negatively affect premiums or the availability of coverage. You may have the option to convert to an individual policy but that is typically quite expensive.
As your income increases, the ability to increase your coverage in the future and to what overall amount (regardless of health) should also be considered when comparing your group policy vs. individual policy options. This feature is typically referred to as a Future Insurability Option and may be very important should your health status change. A cost-of-living adjustment option may also increase your benefits over time, in order to help keep pace with inflation. Ultimately, there are many different benefits that you may want to consider including with your policy.
Choosing Your Disability Income Insurance Coverage
When comparing policies, the right choice for your lifestyle, family, and needs may not always be immediately clear. Make sure you thoroughly understand your options and talk to an advisor you can trust, before making a decision.
Whether you choose group coverage, individual coverage or group coverage supplemented with an individual policy, having disability income insurance is crucial to your financial well-being if and when you’re faced with the unexpected.
To find out more information, read our complimentary guide, Disability Income Insurance for Dentists.
About Treloar & Heisel
Treloar & Heisel, an EPIC Company, is a premier financial services provider to dental and medical professionals across the country. We assist thousands of clients from residency to practice and through retirement with a comprehensive suite of financial services, custom-tailored advice, and a strong national network focused on delivering the highest level of service.
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