Times have changed—today's dental disability income insurance won't offer you the same coverage your father had. Andy Upchurch, RHU, REBC, explains the changing trends in disability insurance and what you need to know to protect yourself.
With our ever-increasing medical capabilities, the need for today’s practicing dentist to acquire top-quality disability income insurance has never been more integral to the long-term protection of the practitioner’s balance sheet. Now that formerly fatal illnesses and injuries can be managed, morbidity—the measure of frequency of disabilities—has increased, while mortality—the measure of frequency of death—has decreased.
Despite the increased need for disability income insurance, you will find it a little more difficult to find the same coverages that were available to your peers 20, 25, and 30 years ago. Let’s take a look at the good, the bad, and the ugly as they pertain to changing trends in dental disability income insurance.
There are a few benefit enhancements worth a look these days that weren’t necessarily around for your predecessors.
Retirement contribution protection— Some companies offer riders that will actually make your retirement plan contributions for you while on claim. This is in addition to your monthly benefit. Since most benefits end at age 65 or 67, you will want to have your retirement nest egg intact.
Student loan protection— The cost of dental school education has skyrocketed. Many students are leaving school with $300,000-plus in debt. Riders are now available to make your student loan payments when you are on claim as well. Again, this is in addition to your monthly benefit, so the funds needed for daily living expenses won’t be drained to make your loan payments.
Catastrophic illness protection— None of us like to think about a catastrophic injury or illness, but if one occurs, it will bring with it an avalanche of additional costs. These riders provide an extra monthly benefit on top of your regular coverage in the event that the unthinkable strikes.
Longer elimination periods (waiting periods)— Gone are the days of 7- and 14-day waiting periods for benefits on individual disability income insurance, and both 30- and 60-day elimination periods are rare and, if available, very expensive. Be prepared to purchase 90- or 180-day elimination periods and do the planning necessary to survive the wait in the event of a claim.
Higher premiums— Your predecessors paid a fraction for the coverage you are seeking today, especially when it comes to rates for females. Twenty-five years ago, rates for men and women were the same, but that’s no longer the case. This increase in cost has also opened the door for lower-cost options in the marketplace, but those lower premium options may also leave you vulnerable in key areas.
Fewer options— When I started in this industry in 1992, the number of insurance companies in the disability insurance marketplace would fill the front and back of a sheet of paper with double columns and small font. Today, you could easily fit that list on one side. This is a testament to the difficulty of managing this specialty risk, but the consequences of this industry contraction are fewer options and less competition.
Limited coverage for mental conditions—Although you may not think this applies to you, it is one of the larger claim segments insurers have to manage. Many companies have limited their exposure to this segment of claims by limiting the amount of time they will pay claims for these afflictions (i.e., 12- or 24-month limitations). Don’t take this lightly as this is an important aspect of any quality policy.
More stringent underwriting— It’s not as easy to be approved for coverage today as it was 20–30 years ago. Companies are managing their risk and exposure on the front end of the process, ensuring that the risk they take meets specific standards. This makes the case for purchasing early in your career (usually at your healthiest) with options to purchase additional coverage in the future built into your policy.
Varying definitions of disability— The very cornerstone of your policy, the criteria by which you will be deemed disabled, looks much different today as there are multiple definitions of disability. "Own occupation," "true own occupation," "transitional own occupation," and "any occupation" are a few of the iterations available. They all use very similar language, so it can be difficult for laypeople to know definitively what they have.
While much has changed, one constant remains: Today’s dentists still need top-quality disability coverage to protect their balance sheets and their families from the long-term effects of disability. You’ve heard it before, but it bears repeating: Your ability to practice dentistry is your most valuable financial asset. Be diligent in making sure you properly protect it.
Editor's note: This article first appeared in the Apex360 e-newsletter. Apex360 is a DentistryIQ partner publication for dental practitioners and members of the dental industry. Its goal is to provide timely dental information and present it in meaningful context, empowering those in the dental space to make better business decisions. Subscribe to the Apex360 e-newsletter here.