May is disability income insurance awareness month, an effort focused on educating all Americans on the importance of disability income protection.
In celebration of disability income insurance awareness month, here’s some information you should know about disability income insurance policies as a dentist.
What Is Disability Income Insurance Awareness Month?
Every May, insurance professionals work to make the public aware of what disability income insurance coverage is and how it can help. Although this type of policy can be critical to withstanding loss of income due to a disability, many professionals aren’t aware of this important way to prepare for the unexpected.
Benefits of Disability Income Coverage
Disability income insurance may help replace a portion of your lost income in the event a disability, caused by sickness or injury, affects your ability to work.
Millions of Americans have minimal or no savings lack adequate savings in case of a disability that prevents them from working. Add to that the increased cost of medical care and you can easily see why having such coverage may be important.
When’s an Appropriate Time to Purchase Disability Income Insurance?
An appropriate time to purchase this coverage may be when you are young and healthy. Age and health are important factors when purchasing disability income insurance. Other things equal, premiums are lower at younger ages and health problems are often less of an issue at younger ages. In addition, purchasing disability insurance while as a dental student or resident may offer discounts not available to those who wait until they are in practice to obtain the coverage.
Why to Consider Individual Policies
Individual disability income insurance policies may offer stronger guarantees with respect to premiums and policy provisions. Association group disability insurance and employer-provided long-term disability insurance may not provide the same underlying guarantees of individual disability insurance policies. With association group disability insurance coverage, the premiums are generally scheduled to increase at specified intervals and are non-guaranteed. Employer-provided long-term disability insurance is typically not portable in the event of a job change.
You can tailor an individual policy to fit your specific situation and even add enhancements. Known as riders in the industry, these enhancements give you the ability to add additional customized benefits to your policy. As your income grows, as it likely will as you progress in your dental career, you may be able to increase your coverage.
Employer-provided group long-term disability insurance is seldom portable. If you leave the employer, your long-term disability coverage may terminate. This may present a significant problem especially in the event of a health issue that may make it more difficult to purchase new coverage to replace the employer provided coverage that was lost. Individual coverage will follow you to your new job.
Determining Your Premium
Your premium will be based on various factors, including whether you prefer a level or graded premium. Here’s the difference between the two:
The cost of a level premium will remain steady, and not increase with age. Your premiums will remain unchanged typically to age 65 as long as all premiums are paid when due. Of course, as your income grows and you increase your coverage, added to your original level premium will be the cost for the new increment of coverage. The younger you purchase a level premium insurance plan, typically the more cost-effective your premium.
This premium begins at a lower rate, compared to a level premium for the same policy, and increases yearly. This can initially be the cheaper option, so it’s often preferred by residents or dental students. It can save you a significant amount of money, compared to the level premium, when you are just getting started in dentistry, for the first few years of the policy.
Eventually, you can opt to convert your policy to a level premium when you can more easily afford to pay for a level premium policy. Changing from a graded premium to a level premium does not require any additional underwriting.
The earlier a graded premium policy is converted to a level premium policy, the lower the new level premium will be. Each year that you wait to convert from graded to level premium, the level premium that you can convert to may increase.
Factors to Consider When Considering Disability Insurance Coverage
The following are additional factors that will be considered when determining the amount of your insurance coverage:
The greater your income, the more disability insurance coverage you will need to offset its absence. That’s why your current income level is one important aspect to consider when contemplating your coverage amount. The greater the amount of coverage provided, the higher your premium will be.
Waiting Period Length
Your coverage can also be affected by selecting the waiting period you must observe before you’re eligible to receive your policy’s benefits. For example, a policy with a 90 day waiting period means it will start paying out 90 days after your injury or illness. In general, you can expect to pay more for shorter waiting periods.
Length of Benefit
Finally, you can pick a different length of benefit, depending on what you’d like to cover for yourself. Often, a policy may provide benefit periods until age 65, 67, or 70.
What about Riders?
As mentioned above, you can add riders to enhance the benefits of your disability income insurance. Some of the riders most commonly added include the following, but there are a variety of other options to review also:
Own Occupation Rider
May be added to the policy by rider or built in to the base contract. In any event it is a definition of disability covering disabilities that prevent you from working in the specific occupation for which you have been trained or are currently working in.
Partial or Residual Disability Rider
Enables you to see patients part time and work a reduced number of hours, if you’re able to, while still receiving benefits for a partial disability.
Cost of Living Rider
This rider helps to keep disability benefits consistent with inflation through annual benefit increases after you have been disabled.
Student Loan Rider
Provides additional coverage if you’re disabled. The benefits are paid directly to your student loans.
Catastrophic Disability Rider
Provides additional coverage in the event of a severe disability. Benefits are paid in addition to your regular monthly disability benefit to help you while you’re out of work.
Future Insurability Option
This may allow you to increase your coverage amount as your income grows without redoing full medical underwriting.
Who Should Purchase Disability Insurance?
If your health and well-being rely on your ability to generate income, you should consider disability income insurance to protect yourself. Whether you are a new dentist, just starting out, or a seasoned professional, disability income insurance is something to consider as a means to protect your future and long-term goals.
To purchase a disability income insurance plan, you work with a provider to determine an appropriate policy for your needs.
Treloar & Heisel and Treloar & Heisel Property and Casualty are divisions of Treloar & Heisel, Inc.
Insurance products are offered through Treloar & Heisel, Inc.
This information is intended for general informational purposes only and is not intended as advice. Please review your insurance policy contract for the binding terms and definitions. Please consult with a licensed insurance professional regarding this topic.