Just like its name implies, disability income insurance – commonly known as “DII” - is a type of insurance that will pay you a benefit if you are no longer able to work due to disability or sickness. Say, for example you break your arm or get diagnosed with cancer: if you had DI, it would keep providing you with 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 completely 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 I’ll outline some of the basics of a disability income insurance policy.
How Does Disability Income Insurance Work?
Keep in mind, benefits don’t begin the moment you experience an injury or illness. First, you must satisfy something called an “Elimination Period,” a waiting period and represents the amount of time you have to be out of work in order to become eligible to receive your disability benefits. The industry standard is 90 days; however it can be 60 days or even 180 days.
The next thing you’ll want to look at is your “Benefit Period”. The Benefit Period is how long your policy is in effect to cover your needs: typically policies go to age 65, 67, or 70. Say for example you had a policy with a Benefit Period of age 65 and you became permanently disabled at age 32. In this example, you would receive a monthly benefit every month (after you had satisfied the Elimination Period) until age 65.
Disability Policies usually have “Riders” attached to them. Riders are available at an additional cost to the policy. Think of a rider as additional coverage you attach to you disability policy to cover specific situations such as a partial disability or a catastrophic one. Your broker or agent will know the types of riders to attach to a policy but typically you’ll want riders to cover you for the following things:
Understanding What a "Disability" is for Disability Income Insurance
Companies use different definitions to define what type of work you are allowed to do once you become disabled and start receiving disability income. You’ll want to make sure your policy’s definition is tailored to your actual occupation and gives you the most freedom. Here's a guide to disability income insurance for dentists.
Most disabilities in dentistry start out as partial disabilities and gradually become worse. It could be a bad back or sore neck. These types of riders will supply you with a proportionate benefit while you scale back work and recover.
These are riders that provide an additional monthly benefit in the case that you become catastrophically disabled. Different companies will have different definitions for what they consider catastrophic.
You’ll want the ability to increase your coverage throughout your career since your income will (hopefully) increase over time.
These types of riders automatically increase your benefits each year if you are disabled and are receiving benefits. Essentially they protect your buying power. This is to keep up with inflation because $4,000 today isn’t going to be worth $4,000 in twenty years.
This post was originally published on February 11, 2016 and has been updated.
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