Dentaltown New Grad Edition 2019 - 49

Policy

Elimination periods. How long you must be disabled before you start collecting your
benefits. The typical elimination period is 90 days-shorter elimination periods drive up
premiums, while longer elimination periods may not save you enough. It may be better to
allot premium dollars for purchasing a longer benefit period than an elimination period
less than 90 days. Your life won't be any different years from now if you had benefits that
began after 60 days, but what if benefits stopped paying you at age 65 when you might
have qualified for benefits payable to age 70 or beyond?
Benefit periods. How long a policy will pay benefits. For young dentists who likely
haven't saved much or anything for retirement, I recommend the longest benefit period
that they can afford. While a lifetime benefit is still available from one carrier, it is very
expensive. If you cannot afford this, then at least consider benefits payable to age 70, 67 or 65.
Partial disability coverage. This means you'll be eligible for partial benefits if you
suffer a loss of income due to sickness or injury but are still working in your occupation.
Many claims are partial claims. Without this feature, you'd most likely receive benefits
only if totally disabled. Compare the partial features closely between companies: If, when
and how much benefit you would receive if your income would be reduced because of a
disability is directly dependent on the contract language. Don't assume that "partial" from
one company equals the same "partial" from another company.
Future purchase options. This gives you the opportunity to purchase more coverage in
the future without any medical underwriting. You should purchase the maximum benefit
your income qualifies for in the beginning, and you should also maximize the amount of
benefit you can acquire in the future as your income increases.
Cost of living adjustment (COLA) riders. If you have a claim that lasts a long time,
your monthly benefit should increase every year to keep pace with inflation. Different
companies have different riders and costs for this rider, and it's not in the scope of this
article to address the details.
To give you an idea of the impact of this rider, the potential benefit for a 25-year-old
dentist with a $5,000 monthly benefit to age 67 is $2,505,000. This is simply $5,000
per month times the number of months of benefit. The same example, by just adding a
3% guaranteed compounded COLA rider, provides the dentist with a potential benefit
of $4,906,392. This rider is costly, yet well worth it. Remember, you're just staying even
with purchasing power.
Student loan protection riders. As the cost of dental school continues to rise, so does
the level of debt that young dentists have when they begin their careers. I rarely meet young
dentists who have no debt, and, on average, I see most dentists graduating with around
$350,000 in student loans. Unlike other kinds of debt, federal student loan debt cannot be
discharged during bankruptcy under current law. It makes sense to safeguard your ability
to continue loan payments during a period of disability. Depending on the company, you
can add up to an additional $2,500 per month of disability benefit above and beyond what
you might purchase to protect your income. This additional benefit can be for 10 or 15
years from the time you purchase your contract.

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Dentaltown New Grad Edition 2019

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