Disability Income Insurance

Your ability to earn and income is your greatest asset.  Make sure you have the appropriate protection in place.

One of the first insurances that dentists obtain before working is disability insurance.  Disability insurance is a key piece of your financial plan as it allows you to replace loss income for being sick or disabled for an extended period of time.  Most insurance companies provide discounts to graduating dentists for applying for a policy pre graduation.  At Virtus, we are an independent firm and work with all of these insurance carriers.  This allows us to put the focus on YOU and what is best for YOU.  Here are a few things to consider when purchasing a policy.

Who to purchase from?

Insurance carriers do not allow you to purchase a policy directly through them.  You must purchase through an agent or advisor.  Most insurance companies have career agents who work directly for that company.  These agents potentially get paid higher commissions or have incentives for selling that company’s product over others.  At Virtus, we are independent agents.  This allows us to take a more unbiased approach and consider multiple carriers when choosing the best option for you.  As your financial advisor, it is important for us to save you as much money on this disability policy as possible while still obtaining a strong contract.  Our hope is that you never have to use this contract!  This allows you to put these additional savings towards other parts of your financial plan. 

Base Policy Definitions

Most new grads will start off with the “select professional limit”.  Depending on the carrier, this will be a $5-6k / monthly benefit.  Some new grads will be able to obtain more benefit based on their initial compensation.  If your employer is giving you a base salary or daily guarantee, you will typically qualify for additional benefits.  You will choose an “elimination period” and “benefit period”.  This will determine when the insurance carrier begins to pay benefits and for how long they will be paid for.   The most common elimination period is 90 days.  The most common benefit period will go to age 65.  As you progress in your career and begin making more money, you will be able to increase your monthly benefit.

D4?  When to do your application

The good news is that you do not need to start your disability policy until after you begin working.  As long as the insurance carrier has received your application before their set deadline, you will receive the discount associated with your dental school / residency.  Many insurance agents will try to force you into completing an application very early in your D4 year or residency program.  Their reasoning here is that if they can lock you into an application, then you are less likely to consider other options from competitors.  Do not complete an application until you are comfortable with the coverage you are obtaining and the person you are working with.  Most insurance carriers allow you to complete an application up until graduation day and still receive the discount. 

Policy Riders

  • Own Occupation – The most important rider to have on your policy.  If you cannot perform the material duties of your “own occupation” and you decide to work in another occupation, this rider allows you to still earn a benefit.  You will see different terms for this with each insurance carrier, but the majority have the exact same definition. 
  • Residual / Partial Disability – Did you know that most disabilities are considered partial?  If you can still work in some capacity, but you have lost income that is greater than 15-20% of your pre disability earnings, then you will qualify for a partial benefit.  This benefit will be proportionate to your income loss. 
  • COLA – The “Cost of Living Adjustment” rider helps your benefit keep up with pace with rising living costs and inflation on an annual basis.  Once you go on disability claim, the insurance carrier will increase your benefit each year. 
  • Catastrophic Disability – An additional benefit that the insurance carrier pays to you if you cannot perform 2 of the 6 activities of daily living.  This benefit will typically be equal to your base benefit but will max out at $8000 / month.  
  • Increase Options – Most disability contracts will come with two increase options.  The first will be an automatic increase for the first several years of your policy to help your benefit keep pace with cost of living increases and your rising income.  The second is a optional increase that allows you to increase your benefit above and beyond the automatic increase.  This option gives you the ability to increase your benefit without having to go back through medical underwriting.