Imagine buying a brand-new, cherry red Ferrari. Imagine the thrill of pushing well past the speed limit on a wide-open road and all the heads that turn as you pull into a parking lot. Now imagine driving that car every day without ever purchasing insurance. Imagine accidentally hitting the accelerator instead of the brakes as you crash into the back of another vehicle. You thought taking your old car to the mechanic was expensive; now imagine a Ferrari. Any accident, no matter how minor, could result in a significant financial loss. As a dentist, your body is that Ferrari. Your hands, vision, and expertise are that engine.
Disability insurance is the coverage that protects your most valuable asset: your physical ability to earn an income.
Why is disability insurance so crucial for dentists?
As you well know, dentistry is a physically demanding profession that relies heavily on fine motor skills. An unexpected injury, illness, or condition could jeopardize your ability to practice, leaving you without the income you’ve worked so hard to secure. Unlike people who work on a phone or in front of a computer, even a minor injury, like a muscle strain or nerve issue, can significantly impact your ability to practice clinically.
What’s the right kind of coverage to have?
To ensure comprehensive protection, all dentists should prioritize “own-occupation” disability insurance. This type of policy pays benefits if you’re unable to perform the duties of your specific dental specialty, even if you can work in another capacity. Additionally, you should consider riders like cost-of-living adjustments and future increase options to adapt as your income grows.
How much coverage should I have?
A good rule of thumb is to secure enough coverage to fully replace essential expenses, including mortgage or rent, student loan payments, other insurance premiums, and everyday living costs. I usually recommend coverage that covers 100% of fixed monthly expenses with a small buffer for unexpected costs. This approach ensures that you can maintain your lifestyle, support your family, and avoid financial strain while focusing on getting healthy.
Why do some people choose to carry less coverage?
Everyone’s situation is unique. Some dentists may choose to carry less coverage based on their personal financial situations. Dual-income households may feel less vulnerable to the loss of one income, especially if the other partner’s earnings can cover essential expenses. Others might have substantial savings or passive income streams, reducing their reliance on active income from a dental practice. Additionally, lower debt obligations or a more frugal lifestyle can make partial coverage sufficient for maintaining financial stability during a period of disability. However, it’s important to weigh these factors carefully to avoid underestimating future needs.
What are some pitfalls in coverage?
Many dentists mistakenly believe they are adequately covered, only to discover gaps when it’s too late. Here are some things to keep in mind as you review your disability coverage needs:
- Focusing Only on Price Instead of Coverage – A cheaper policy might have weaker definitions of disability, shorter benefit periods, or loopholes that make it harder to collect benefits when you need them most.
- Failing to Review and Update Your Policy – Your financial situation changes over time, and so should your coverage. Reviewing your policy every few years ensures you have enough protection as your income and expenses grow.
- Not Knowing If Benefits Are Taxable – If your employer pays for your disability insurance, the benefits are taxable when received. But if you buy a private policy with after-tax dollars, the benefits are tax-free—a major advantage.
- Not Working with a Specialist – Many general insurance agents don’t fully understand the complexities of disability insurance for dentists. Working with an expert who specializes in dental and medical professionals ensures you get the right coverage.
Why is disability insurance so expensive?
The American Dental Association (ADA) released a statistic showing that 1 out of 4 dentists will be disabled long enough to collect benefits at some point before retirement. That statistic is based on actual disability claims submitted by insured ADA members, and frankly, it’s alarming.
Disability insurance is expensive because claims are more common than people realize. Nobody likes paying for insurance, and I often hear clients complain about how expensive disability coverage is. It’s definitely frustrating, but imagine how frustrating life would be if you actually needed the coverage and didn’t have it.
What about my practice?
If you own a practice, your personal disability policy won’t cover your business expenses, such as rent, payroll, and utilities, if you become disabled. That’s where Business Overhead Expense (BOE) insurance comes in. BOE coverage ensures that your practice can stay afloat while you recover, preventing financial losses and giving you the option to return to work when you’re ready.
The Bottom Line
Just as you wouldn’t drive an expensive car without insurance, you shouldn’t rely on your skills alone to safeguard your income. Disability insurance isn’t just a safety net; it’s a crucial investment in your financial security and peace of mind.
I’d argue that the biggest financial risk for dentists isn’t market downturns—it’s losing the ability to practice. Review your coverage regularly to ensure it aligns with your career growth and personal needs. If you’re unsure whether your current policy is enough, now is the time to review your coverage and make sure your future is protected.