Just like its name implies, disability income insurance – commonly known as “DI” - is a type of insurance that may pay you a benefit if you are no longer able to work due to disability or sickness. Say, for example you injure your back or are diagnosed with cancer: if you had DI, it would help replace at least a portion of your income while you were unable to work. A good way to think of it is as: “insurance for your income.” Since a dentist’s ability to generate an income is primarily dependent on his or her ability to physically complete clinical work, you see how critical it is to have DI.
Whether you’re in dental school or in residency you’ve more than likely had a presenter visit your program to speak about disability income insurance. Most of the time these presentations focus on the company itself as opposed to explaining what this insurance can actually do for you. In this article, we'll outline some of the basics of a disability income insurance policy.
How Does Disability Income Insurance Work?
Similar to a deductible on other types of insurance, it is the number of days that you must be disabled.
Keep in mind, benefits don’t begin the moment you experience an injury or illness. First, you must satisfy something called an “Elimination Period. Similar to a deductible on other types of insurance, it is the number of days that you must be disabled before any benefits are payable. The most common elimination period on an individual disability income insurance policy is 90 days.
The benefit period is the length of time for which disability benefits may be payable in the event of a disability. Common benefit periods include "to age 65", "to age 67", and "to age 70". Say for example you had a policy with a benefit period of "to age 70" and you became disabled at age 32, benefits may be payable each month to age 70 while you continue to be disabled under the terms of the policy.
Disability policies usually have “Riders” attached to them. Riders are available at an additional cost and may add important enhancements or coverages to the basic policy. Your broker or agent will know the types of riders to attach to a policy. Examples of riders may include the following:
As a dental professional, you are very susceptible to disability. Disabilities which may be minor inconvenience for those engaged in other occupations, may result in your inability to ever practice dentistry again. "Own Occupation" is a definition of disability covering disabilities that prevent you from working in the specific occupation for which you have been trained and are currently working in. Full benefits may be payable even if you return to work in a new occupation.
Not all disabilities are total disabilities, some disabilities are partial or residual in nature. For example, you suffer a back disorder and are able to continue to work but on a more limited basis. Even though you are still working in your practice, you may be suffering a significant income loss due to the disability. Partial/residual disability riders may help make up some of your lost income.
These are riders that provide an additional monthly benefits in the event that you become catastrophically disabled. Different companies will have different definitions for what they consider catastrophic disabilities.
You’ll want the ability to increase your coverage throughout your career since your income will typically increase over time. Increase options allow you to increase your coverage level as your income grows without regards to any changes in your health..
Cost of living rider, as it is often called, may provide post disability increases to your monthly benefit after the first claim anniversary and annually thereafter while you continue to be disabled under the terms of your disability insurance policy. This helps offset the impact of inflation and is important in the event of a long running claim. $5000/month will typically have more buying power today than it will have in 20 years.
Student Loan Rider
This rider provides additional monthly benefits payable directly to your student loans.
Learn More about Disability Income Insurance for Dentists
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This post was originally published on February 11, 2016 and has been updated.
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