Opening a practice? 3 insurance plans to consider.
Deciding to open your own dental practice or buy into an existing practice is an exciting career milestone, though it
can also involve many decisions. One of the most crucial: what insurance coverage you’ll need to best protect your
practice, family and future earnings.
Here’s a look at the types of insurance you should consider and why they’re important:
1. Personal Income Protection Disability Insurance
You’ve made a big investment in your career as a dentist, especially now that you’re becoming a practice owner, so it’s
important that you have protection for your personal income in case you become disabled. This insurance can help you and
your family maintain your lifestyle while covering living expenses like your mortgage, car payment and utilities.
Make sure to look for coverage with a true “own occupation” definition of disability, so if you become disabled
from your specialized area of dentistry, you can continue to receive benefits even if you are able to work in another
area of dentistry or choose to work in a new profession. As your career progresses, you should review your coverage
often to ensure you have enough coverage in place as your income and debt grow.
2. Office Overhead Expense Insurance
If you were to become disabled, how long could your practice keep running without you? What would happen to your staff?
Office overhead insurance can make the difference between keeping the doors to your practice open during a disability and
having to close them permanently. This coverage also can maintain the value of your business if you decide to sell.
Separate from disability income protection, office overhead expense insurance helps cover business expenses like your
office lease or mortgage, employee salaries, practice loans, utilities and professional association dues. Some policies
also cover student loan payments and provide replacement dentist coverage if you are totally disabled and need to hire
Additionally, if you are taking out a loan to purchase a practice, your lender may require you to carry office overhead
insurance to ensure that loan payments will continue even if you are disabled. Since practice expenses often increase over
time, plan to review your coverage periodically to make sure you are sufficiently protected.
3. Term Life Insurance
Adequate term life insurance coverage can protect your family by helping to ensure that your loved ones will be able to
maintain their standard of living in the event of your death, especially if your debt has increased with the purchase of a
practice. Term life insurance also can help address business issues: It’s sometimes required by lenders as collateral for
a practice loan, so the loan would be repaid even if you were to pass away.
In addition, life insurance is often a key part of the buy/sell agreements that are used when buying into an existing
practice. In this scenario, each dentist purchases insurance on the life of the other, owns the policy and pays the premium.
This strategy ensures that the practice can remain financially stable, and funds are immediately available,
if one of the owners dies.