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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.

A look at insurance plans that can help minimize your financial risk.

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 Disability Insurance

If you were to become disabled, how long could your practice keep running without you? What would happen to your staff? Office overhead disability 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 help maintain the value of your business if you decide to sell.

Separate from disability income protection, office overhead expense disability 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 a replacement.

Additionally, if you are taking out a loan to purchase a practice, your lender may require you to carry office overhead disability 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.

If you are interested in learning more about the ADA® Members Insurance Plans, underwritten by Protective® that offers a variety of personal and business financial protection products, please call us to speak to an Insurance Plan Specialist at 866-607-5338 or email ADAPlanSpecialist@protective.com .

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The information on this website is not a contract. Protective refers to Protective Life Insurance Company (PLICO) and its affiliates, including Protective Life and Annuity Company (PLAIC). PLICO, founded in 1907, is located in Nashville, TN and is licensed in all states excluding New York. PLAIC is located in Birmingham, AL, and is licensed in New York.

Protective® is a registered trademark of PLICO. The Protective trademarks, logos and service marks are property of PLICO and are protected by copyright, trademark, and/or other proprietary rights and laws. ADA® is a registered trademark of the American Dental Association (ADA). ADA Members Insurance Plans® is a registered service mark of the ADA. The ADA trademarks, logos, and service marks are the property of the ADA and used by Protective with permission. In some states, the ADA is entitled to receive royalties from the ADA Members Insurance Plans.

ADA Members Insurance Plans refers to the group life, disability, and supplemental medical policies issued by PLICO and PLAIC to the ADA.

Policies issued by PLICO in all states except New York: Term Life Insurance1 (TL-P 1-21), Student Term Life Insurance (TL-ST-P 2-21), Universal Life Insurance1 (TP-P 11-20), Level Term Insurance2 (LT-P 1-21), Disability Income Protection Insurance3 (IP-P 7-20), Office Overhead Expense Disability Insurance4 (OE-P 9-20), Student Disability Income Insurance3 (ST-P 8-20), Hospital Indemnity Insurance (HI-P 11-20), and Critical Illness Insurance (CI-P 7-20).

In New York, policies issued by PLAIC: Term Life Insurance1 (TL-P-NY 1-21), Student Term Life Insurance (TL-ST-P-NY 2-21), Universal Life Insurance1 (TP-P-NY 2-21), Level Term Life Insurance2 (LT-P-NY 2-21), Disability Income Protection Insurance3 (IP-P-NY 12-20), Office Overhead Expense Disability Insurance4 (OE-P-NY 01-21), Student Disability Income Insurance1 (ST-P-NY 1-21), Hospital Indemnity Insurance (HI-P-NY 1-21), and Critical Illness Insurance (CI-P-NY).

Consult the policy for benefits, riders, limitations, and exclusions. Benefits adjusted for misstatements of age or sex. Benefits are provided under a group policy issued to the ADA. Each Plan participant will receive a Certificate of Insurance explaining the terms and conditions of the policy. An insured must maintain continuous ADA membership to remain eligible for insurance.

1For term life insurance and universal life insurance, premiums increase annually based on age. The Premium Credit is not guaranteed but reevaluated periodically. Universal life recommended premiums consist of the costs of insurance (which vary based on the member’s age and coverage amount), the amount a member places into the Policy Value Account and service charge. Premium deposits may fluctuate or remain level.

2For level term life insurance, premiums are fixed based on the member’s age, gender and coverage amount at issue.

3Premiums increase every five years based on age for disability income protection. Premium Credit is not guaranteed but reevaluated periodically.

4Premiums increase every 10 years based on age to age 60 and every 5 years thereafter to age 75 for office overhead expense disability. Premium credit is not guaranteed but reevaluated periodically.

Coverage for dental student members is issued regardless of condition if under age 60. Coverage automatically renews each academic year. Individuals may convert coverage to the plans for practicing dentists after graduation by paying member premiums and maintaining continuous ADA membership.

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