By Jean Fallago, JD, LLM
President, Almonte Fallago Group
It is important that you know what type of disability policy you are buying to protect your revenue stream in the event that it is cut short or interrupted by either a temporary or permanent disability. Firstly, the best definition of disability is the inability to perform the substantial duties of 'your occupation', often referred to as an 'own occ' policy.
Mostly all policies cover both a partial disability and a total disability. You have to be careful to read on to ensure this definition prevails for the duration of the benefit period. Some policies have this definition for the first 5 years of your disability and thereafter you are eligible to receive benefits only if you are unable to be retrained for another occupation. Once you are comfortable with the definition of disability, you have to look for what is called 'offsets'. This means that any benefit payable under the policy is subject to an offset for (i) any social security benefits that you collect and (ii) earned income from any other source.
Thus, if you obtain a faculty position and earn income, it is offset against the benefit amount that you are insured for. Not all policies have offsets, so be selective. Lastly, beware that the shorter the benefit period, however, the reality is that you are more likely to become disabled the older you get. Although It is usual for a policy to provide for a declining benefit amount once the insured reaches the age of 60 and coverage typically ends at age 65, if you are not disabled. However, it is important to read the policy and make sure that the benefit payment period extends beyond the age of 65 should you become disabled prior to attaining age 60. Disability coverage is truly a matter of "you get what you pay for".
You can keep the premium reasonable by lengthening the waiting period before you become eligible for benefits. Many companies will also offer a 20% discount on individual policies if the practice has 3 employees to cover. Business Overhead Expense insurance is also available to cover monthly overhead expenses in the event of a partial or total disability. If practice overhead as an example is $30,000 the policy will pay $30,000 so that any individual insurance benefit you receive will be available to replace your personal loss of income.
More importantly, dollar for dollar, business overhead expense is much less expensive than individual disability insurance and it is best to use a combination of both. Having represented many disabled dentists, I was enlightened at the very physical aspects of the dental occupation which only serves to support the absolute necessity to have disability coverage.