Pennwell web 500 329

Drilling for Hidden Profits in Your Dental Practice

April 16, 2012
Dentists can become their own sources of financing and recapture the interest they would otherwise never see again. Pamela Yellen tells you how.

Dental professionals tap alternative methods of savings and financing.

by Pamela Yellen

Have you ever sat down and totaled how much you’ve spent on financing costs for your practice? If not, it might be because you know the answer would make you gasp. Whether you finance or lease your equipment, it can cost you hundreds of thousands of dollars in interest payments you’ll never see again if you use traditional methods of financing.

Many dentists and dental lab owners are not aware there are ways to bypass banks and other lenders to become their own sources of financing, while recapturing the interest they would otherwise never see again. Financially savvy dental professionals are using these methods to get the capital they need to build cutting-edge practices, while building savings for retirement.

It may sound too good to be true, but this strategy has been around for over 100 years. Famous people like Walt Disney and J.C. Penney used it to finance their businesses when no banker would lend them a dime.

This method uses a little-known, turbo-charged variation of a financial asset that has increased in value during every market crash and in every period of economic boom and bust for more than 160 years — dividend-paying whole life insurance. But this is not the kind of whole life policy most advisors and experts talk about.

With this variation, you don’t have to die to “win.” A large portion of the premium goes into a rider that significantly boosts the growth of money in the policy and reduces the commission the agent receives by 50 to 70 percent.

This method of saving and paying for your office improvements allows you to “bank on yourself.” Could it be right for your practice? Here's a checklist for you to use to give your financing and savings plans a check-up:

  • Take the time to sit down and add up how much you have spent on financing costs for your practice. Whether you finance or lease your equipment and office, it can cost you hundreds of thousands of dollars in interest payments over the years. Do you know how much you are paying over time?
  • If you pay cash to equip your practice, factor in the cost of tying up money that could otherwise be earning interest or investment income. For instance, if you were to pay $100,000 in cash for equipment or furnishings, your actual cost is $100,000 plus the loss of interest that your $100,000 could have earned.
  • Determine how your financing method impacts your plan to save for retirement. Relying on traditional methods can be costly because the interest you are paying to banks or other lenders is being diverted from what you could be saving toward retirement.
With this method of self-financing, it is possible to recapture the interest that you would otherwise pay to lenders. A few companies even allow you to take loans from your policy and continue to pay you the same guaranteed annual cash value increase, plus the same dividend as if you had never borrowed anything from the plan. (Dividends aren’t guaranteed, but some companies have paid them every year for over 100 years.) This feature allows you to use your money in the policy and still have it working for you.Although you do pay interest on policy loans (typically at below-market rates), that interest ultimately benefits you as the policy owner, just like all the interest and investment income the company earns. In fact, if you borrow $100,000 from your policy and pay it back at the interest rate the company charges, you’ll end up with the exact same cash value as you would if you didn’t use your policy for financing.In-the-know dentists are also using this strategy to double as a bullet-proof retirement plan alternative. It allows them to build savings every year by a guaranteed and predictable amount, no matter what happens with stocks or other investments. It also allows them to know exactly how much their retirement account will be worth on the day they want to begin using it and at every point along the way.
As a consultant to financial advisors, Pamela Yellen investigated more than 450 savings and retirement-planning strategies seeking an alternative to the risk and volatility of stocks and other investments. Her research led her to a time-tested, predictable method of growing and protecting savings now used by more than 400,000 Americans. Her book, “ Bank on Yourself: The Life-Changing Secret to Growing and Protecting Your Financial Future,” is a New York Times best seller. She has appeared on every major TV and radio network, including ABC, NBC, CBS, CNN, FOX, and NPR. Her articles have appeared in thousands of publications and websites, including “USA Today,” “The Huffington Post,” and Fortune Small Business. Learn more at