As we have heard so many times in life, the only constant is change. Life is always “happening” — sometimes it's
expected, and sometimes it's not. One thing we all know is that being prepared for either can make a big
difference in our lives and those we care about. As a dental professional, you likely know better than most that
staying on top of things means less work and heartache in the long run. That practice applies to your life insurance
coverage as well.
Many would argue that the right amount of insurance is the cornerstone of a strong
financial plan, which will ensure everything else we accumulate and build will be protected.
To help you consider whether it's time to supplement your existing life insurance
coverage, consider these questions below.
Have you experienced a lifestyle change in the past year or so? For example, moving from a double to single family
income, welcoming a new child or buying a new home? Are you caring for, or expect to be caring for, an aging
Any of these changes can spur the need to consider the adequacy of your life
insurance protection. You need enough to cover your financial obligations and
outstanding debt, which is usually 10 – 12 times your annual income1. This accounts for
inflation, market returns and average household expenses.
When one partner leaves the work force to take care of a growing family, the remaining
income becomes even more critical to securing the lifestyle and goals of the family.
Don't overlook the importance of insuring the stay-at-home caregiver. At a minimum, a
surviving caregiver would want enough coverage to pay someone to provide the
services the stay-at-home parent was providing for free.
Are you planning to open your own practice or thinking about expanding your current one?
Most lenders will require that you have life insurance to collateralize your loan should
you die prematurely. Additional life insurance could also help a spouse or other loved
one cover business debt or obligations associated with the practice you leave behind.
Could long-term financial goals be met if your income were to stop?
Would there be enough assets to cover a child's (children's) college education; would
the surviving partner have sufficient income to pay off the home mortgage or cover
other substantial outstanding debt, freeing them to meet everyday living expenses (i.e.,
bills, groceries, entertainment, vacations, housing costs) on a reduced household
income? Would there be enough income or assets to cover the cost of care for an aging
Do you have a child that will require your financial support into adulthood?
Ensuring an adult child will have the care and support they require is an important
motivator for confirming you have adequate life insurance. It could help cover the costs
and expenses associated with a child's care as well as help ensure the quality of life
they were used to continues.
Do you have a large estate and are concerned about tax liabilities?
Federal estate tax rates can be a significant percentage of your gross estate and must be
paid in cash within nine months of death. Quite often it's the estate's personal assets
that are used to cover tax debt. However, assets such as an IRA or a personal residence
are not easily liquidated on short notice without substantial tax penalties. Proceeds from a
life policy are typically received income tax free and could be used by your beneficiaries
immediately to fund estate taxes while preserving assets.2
You've already covered an important base by making sure life insurance is at the
cornerstone of a sound financial plan. However, and as we know so well, our lives,
lifestyles and financial obligations have a way of changing. That's why it's a good idea to
find the time to periodically review your coverage to make sure it's enough.
As you age, it gets more expensive to buy life insurance. Moreover, certain health
conditions can make premiums increase — or worse, make it difficult to qualify for life
insurance coverage at all. Now's the time to ensure the cornerstone of your financial plan
is up to date by periodically reviewing your coverage to make sure it's enough.