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The Case for Disability Insurance: It’s Impossible to Predict Tomorrow

| February 02, 2018
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Protecting your income, as a dental professional, is the basis of sound financial guidance.  According to statistics offered by the American Dental Association, a dentist has a “45 percent chance of becoming disabled for a substantial period of time during their lifetime by age 40.”  Ultimately, when you think about the idea of having to take a hiatus from work—or not being able to work at all—it is necessary to realize that you could be forsaking earning several million dollars.  Therefore, it is imperative to consider adding a sound disability insurance policy as you embark on your finance strategy.

A Case Study to Consider

A few years ago, I met with a 32-year-old dentist who was referred to me by his CPA for some “holistic financial guidance.”  He became a client and in the process, I encouraged him to think seriously about disability insurance.  Absolutely convinced it was a waste of money (his dad was a dentist who had had a policy for years—and never used it), he pushed aside my suggestion because cancer, diabetes, mental nervous conditions and the like didn’t run in his family.  Therefore, he couldn’t justify the expense. 

About two years later, we were reviewing some strategies and the dentist mentioned that he was interested in applying for some additional life insurance—his wife was pregnant with twins and he was in the process of buying his own practice.  I applauded his decision, but also advised him, again, that it was more likely that he would become disabled than suffer a premature death.  Reluctantly, he decided to move forward with applying for a disability policy along with business overhead disability coverage. Three weeks later he was approved.

Then, on a Saturday morning, less than a month later, my cell phone rang.  It was my client’s wife telling me that he had been in a car accident the night before that resulted in him breaking his practicing hand and suffering a herniated disk in his back.  He had literally made one payment on his new disability policy and was now being told it was likely he wouldn’t work for a year—if he could ever return at all.

Embarking on a journey that required him to engage in 18 months of rehab, six days per week, my client was finally allowed to return to work. However, during this 18-month period, he collected a total of $475K in benefits from the two disability policies.  Moreover, when he was able to practice again, he couldn’t move as fast, which reduced his production capability.  He was lucky that the residual disability rider that had been purchased with the policy paid him a 50 percent monthly benefit for another year, which totaled $46K.  In all, over the course of 30 months, my client collected over $521K in disability benefits—all from making just one payment on the policy.

He had only owned the practice for two weeks when his accident occurred, his wife didn’t work, the couple had recently purchased a new home, and he held over $300K in student loans.  Additionally, his father had co-signed on his practice loan—meaning that if he didn’t have the business overhead disability policy, he wouldn’t have been able to make his monthly loan payment and his dad would have been on the hook.  So, do you understand now why disability insurance is important when protecting your future?

Think Seriously About What Long-Term Disability Could Mean

According to the Council for Disability Awareness[1], the following statistics are pertinent:

  • Musculoskeletal/connective tissue disorders cause 28.5 percent of new claims
  • Cancer was the second leading cause of new disability at 14.6 percent
  • Injuries cause 10.6 percent of new claims
  • Mental disorders cause 8.9 percent of new claims

A dentist might be trained to work through adversity—but at the end of the day, you are only human. There is a physical toll that the practice of dentistry can take on an individual, and you must also consider that you never know what tomorrow holds.  Just as my client never expected to be injured in a car accident, there is no guarantee that any of us will make it through life unscathed.

I would encourage you to learn more about how disability insurance could help protect you and your interests.  Please contact me if you would like to perform an audit on existing policies or if you are in the market to purchase your first policy. I look forward to the opportunity to help you.

Bio:

Victor Holloway is Founding Partner of The Medicus Group, a financial advising firm exclusively servicing physicians and dentists.  Based in Charlotte, North Carolina, The Medicus Group addresses the needs of clients nationwide. Victor invites you to learn more about his firm by calling (980) 235-7885, emailing vholloway@cplanning.com, or visiting www.mymedicusgroup.com.

[1] Council for Disability Awareness. http://www.disabilitycanhappen.org/docs/disability_stats.pdf

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