The different types of insurance available to a dental practice owner are overwhelming. There is liability insurance, malpractice insurance, data breach insurance, and property insurance.
The list goes on, but there is one type of insurance that is often overlooked. Own-occupation disability insurance, while sometimes being overlooked, can cost a healthcare professional nearly everything without it.
What is Own-Occupation Disability Insurance?
Own-occupation disability insurance compensates a working professional if they cannot carry out their professional duties. This serves as added protection for your financial assets and future.
So, for example, a dentist would carry dental disability insurance. If that dentist gets into a boating accident and cannot return to work immediately, their dental disability insurance policy would pay a portion of the dentist’s regular income during recovery so that they do not lose 100% of their pay.
The Two Types of Disability Insurance
Disability insurance comes in two categories – short-term and long-term.
Short-term insurance is a temporary insurance policy that covers 60-80% of lost income when a professional cannot work temporarily. Short-term disability insurance ordinarily spans three to six months but never more than twelve months.
Long-term insurance is an insurance policy that covers longer-lasting or even permanent disability. When a professional becomes disabled, this policy covers 60-80% of lost income after taxes. Long-term insurance provides benefits for extended periods and may even offer benefits until retirement.
Why Is Own-Occupation Disability Insurance Important?
Disability insurance means if a professional cannot perform their occupation due to disability, their insurance will cover a portion of their lost income. Own-occupation disability insurance is crucial to professionals in high-earning positions, however.
For these professionals, the littlest incident can cause catastrophic losses because of the high business operation costs and the significant wages lost.
What Do Providers Consider When Determining Insurability?
There are three factors that insurance companies consider when issuing a policy -age, health, and income bracket.
The younger and healthier a working professional is, the easier it is to get occupation disability insurance.
Income level determines how much disability insurance a professional can purchase. For example – the higher a provider’s income, the more disability insurance they can buy. Providers may also get the opportunity to purchase additional insurance if their income increases.
Level Versus Graded Premiums
Own-occupation disability insurance offers two types of premiums – level and graded. A policy with a level premium charges the same premium regardless of age. A graded premium policy, however, begins with lower premium payments that increase over time.
The benefit of graded premiums is that they are much more affordable for dentists just starting. The advantage of level premiums is that while they are more expensive for dentists just starting, premiums will not skyrocket over the years.
Individual Vs. Group Disability Insurance
There are two types of disability insurance that a dentist can purchase depending on whether or not they are working with a group practice or starting their dental practice.
As a dentist working in a group practice, there is often the option to buy into group disability insurance. Some dentists that invest in this type of insurance policy also invest in an individual plan to ensure they have the most comprehensive coverage possible.
Dentist can maintain their individual disability insurance policy for as long as they make premium payments. A policy can follow the insured even if they move practices. For most dentists, these policies remain in effect until professional retirement so long as they are in good standing.
Own-Occupation Disability Insurance Waiting Periods
Own-occupation disability insurance almost always features a ninety-day waiting period before benefits are payable. So, for example, if a dentist becomes disabled, they are looking at waiting for ninety days before benefit coverage begins.
Some policies offer shorter waiting periods before benefit coverage begins, but this option does increase the policy price considerably.
How Does Own-Occupation Disability Insurance Compare?
With so many different types of insurance to consider, different policy types can get confusing quickly. Let us look at how dental disability insurance coverage compares to other commonly confused insurance policy types…
Dental-Disability Insurance Vs General Liability Insurance
General liability insurance protects a business rather than an individual. This insurance policy covers the business owner if someone claims to have been hurt or had their property damaged while on the business premises. For example, general liability insurance covers the claim if a dental client slips and falls inside the dental office.
General liability insurance can also assist in claim coverage for libel and slander. For example, if a competitor accuses a dentist’s office of intentionally harming their practice through an advertising campaign, general liability insurance would help the business to pay defense and legal costs.
Dental-Disability Insurance Vs Business Income Insurance
Business income insurance covers revenue lost due to business losses. For example, if a business is robbed or a tornado tears through the business offices and forces it to close its doors temporarily.
Dental-Disability Insurance Vs Workers Compensation Insurance
Worker’s compensation insurance provides employees with benefits if they are hurt or become ill while in the workplace. Workman’s comp coverage helps with expenses related to medical costs, wages lost due to time off work, disability benefits, and – if necessary – funeral expenses.
For example, if an employee injures their back while stocking cabinets and cannot return to work right away, the workman’s comp will cover their lost wages.
Dental Disability Insurance Vs Professional Liability Insurance
Professional liability insurance helps to protect a dentist and their practice if mistakes get made during the commission of professional services.
For example, if an employee accidentally administers the wrong medication to a patient in the dental chair and that patient has an adverse reaction. If that patient then sues the dental practice, professional liability insurance helps to pay legal expenses.
Own-occupation disability insurance is necessary for any professional, but for those with high earning potential, it is mandatory.
A good disability insurance policy does not just provide temporary alleviation, but it protects a lifetime of earnings for the professional covered and for their family, too!