As a Field Sales Consultant with Henry Schein, I take responsibility for the success of my dental customers and their long term success. Disability Insurance is a huge part of one’s dental career, but I understand the process can be overwhelming.
Over the past several years, Jeff Arsenault with Venture Insurance Group has been a tremendous resource to dentists when it comes to Disability Insurance. Below you will find 10 Tips for Evaluating Disability Income Protection. Thanks, Jeff!
It took years of education and training to get where you are today, and now you have a lifestyle and financial future to protect if you become too sick or injured to continue working. Protecting your income is a smart move, and your biggest asset! Consider this, a 35 year old dentist earning $100,000 annual income, with a 3% increase in income every year, and retires at age 65. During this 30 year working career, this individual will generate approximately $4.8 million in income. If you ask people what their largest asset is, most will say their home, but truthfully it is their ability to get up each day and earn a living. Buying disability insurance to protect this income is one of the most important financial decisions you can make.
Purchasing an Individual Disability Insurance policy can become a difficult and confusing process in today’s market, especially if you are purchasing coverage for the first time. There are a lot of things to consider such as which carrier to choose and which Definition of Coverage.
Here are 10 easy tips to help you make the best decision possible when purchasing income protection:
1. Strength and Financials of the Insurance Carrier or Company Matter
It is important to make sure that the company you are buying from has a very strong financial history, and top ratings from the major ratings agencies. You also want to buy from a carrier with a strong claim paying ability and positive claims experience. We want to make sure that your carrier will be in the Disability Insurance business for the life of the policy.
2. You want a Guaranteed Renewable and Non-cancelable Contract
When comparing disability carriers and contracts, you will want to make sure you purchase a contract with language that offers both Guaranteed Renewability and Non-cancelable protection. Meaning, once the policy is placed in force and as long as you pay the premium, the insurance company cannot cancel the contract, and it guarantees that the policy will renew at the same rate for the life of the contract.
3. Definition of Total Disability is a Big Deal
If you ever become too sick or injured to perform the duties of your occupation, it is the definition of total disability found in the contract that determines how your policy will pay. The most comprehensive definition of disability is “own occupation” also called True Own Occ, Specialty Own Occ, Regular Own Occ depending on the carrier. This would allow the claimant the ability to work in another occupation, and earn an income, if they are unable to perform the material and substantial duties of their specialty occupation.
4. Prepare for Partial Disability claims with Residual Benefit Rider
Most disability claims are not “total claims”, the majority are defined as “partial loss”. It is important that your contract has this Residual Rider which would pay a % of the benefit based on lost earnings.
5. Expect to spend between 2-3% of your Annual Income
There are a lot of factors that determine the ultimate insurance cost or premium, but it is a good rule of thumb to consider that the annual cost of insurance will equal 2-3% of your Gross Wages.
6. Evaluate and maximize Future Purchase Options
It’s important to understand and maximize your ability to purchase more benefit in the future without having to prove medical insurability. Most carriers allow you to purchase a rider or have it built in at no cost, which will allow you to increase your monthly income benefit based solely on financial documentation. As you grow in your income, your benefit should be designed to grow with you!
7. Be prepared and understand how Exclusions or Limitations work
When you apply for Disability Insurance, the underwriter is evaluating “every bone and muscle in the body”… so to speak…and if there are pre-existing conditions, injuries or illnesses, the contract will most likely have an exclusion or limitation of coverage on the policy. It is important to know that this is more common than not…again, another good reason to get coverage as early as possible.
8.Look for Discount opportunities
Experienced agents have a strong understanding of the different discount programs that are available through associations, affiliations, schools, offices with multi-life programs, etc…don’t forget to ask!
9. Work with an agent experienced and knowledgeable in DI
It’s important that your agent be able to explain to the you in simple terms the different definitions and riders of a contract…there are a lot of moving parts to a DI contract, and you want to make sure your purchase is a smart one…but most importantly, make sure your agent has your best interest in mind first!
10. Ask a lot of questions, and do research on-line
No one expects you to become an expert on disability contracts before you buy a policy, but it is important to do your homework and understand the basics of what you are purchasing. I find that it is best to work with an agent who acts as an educator first, then helps guide you through the purchase process based on knowledge and experience.
Jeff Arsenault is the Managing Partner of Venture Insurance Group. VIG is a full service independent insurance agency, providing healthcare professionals all over the country with the necessary insurance and financial resources to protect them personally and professionally. He has spent the last 13 years working very closely with dental professionals, students and residents in the Southeast with important insurance coverage like life and disability insurance. Jeff can be reached at any time at (919) 270-6585 or by email at firstname.lastname@example.org. Jeff has offices in Raleigh, Greensboro and Huntersville, NC.
Henry Schein Dental