A 3-Layer Strategy to Protect Your Practice
Medical professionals regularly bear witness to the devastation that a severe illness or injury can wreak. Most of the time, you’re focused on your patients, not on yourself, but disability can also strike medical professionals. Protecting your practice from the impact of disability requires some planning. One insurance policy might not cover all of the risks that you face as both an individual and a practice owner, but by layering three disability insurance products, you can achieve the level of protection that you need.
You’ve Invested Heavily into Your Practice
You’ve invested both your money and time into becoming a doctor and establishing a practice. According to EducationData.org, the average medical school debt is $215,900, and this doesn’t even include loans taken out to pay for premedical education. Around 76% to 89% of medical school graduates have educational debt, and 43% of them have premedical education debt.
To establish a practice, you might take on even more debt. Business News Daily says you should try to secure a minimum of $100,000 to cover equipment and startup costs, plus another $100,000 as a line of credit to cover payroll and bills until you can establish a stable revenue stream to cover these costs.
Of course, all this hard work and financial investment can pay off in a rewarding career and an attractive income. The U.S. Bureau of Labor Statistics says that physicians and surgeons earned a median pay of $208,000 in 2020. Owning your own practice can allow you to earn this income while also setting your own hours and taking control over the path of your career.
But what happens if an illness or injury prevents you from doing the demanding work needed to keep your practice going? What happens to your own finances once your income disappears? What happens to your practice?
Don’t Wait to Protect Your Practice
The Social Security Administration says that one in four 20-year-olds will experience disability before reaching retirement age. Disability can come in many forms, from cancer to back problems to depression. Medical professionals are not immune. In fact, in some ways, they may have even greater risks. This is because certain conditions that would not push them out of the workforce entirely could render them unable to continue work in the medical field. For example, a hand injury could force a surgeon out of practice.
Disability insurance provides important coverage. Not all policies are the same, so make sure you’re getting the right coverage types for your needs. Here are three layers of protection to consider:
- Individual Disability Insurance (IDI): This policy provides coverage that will ultimately safeguard your personal finances. If you are unable to work due to an illness or injury, IDI can replace a portion of your income, under the terms of the policy. Look for a policy that provides own-occupation coverage that kicks in if you can’t work in your chosen profession, even if you could still work in another field. Also look for plans with extra benefits to cover student loans, fully portable coverage, and non-cancellable and guaranteed renewable terms. If you have a team of three or more people in need of income protection, a Multi-Life DI policy might offer significant savings. Ask for a quote for yourself along with two other highly employees in your practice.
- Business Overhead Expense (BOE): As a practice owner, you also have to think about the financial health of the practice itself. A BOE policy can cover overhead expenses if the practice owner becomes disabled. The coverage period usually lasts for 12 to 24 months, and the benefit typically covers certain overhead costs, such as rent, utilities, salaries, insurance premiums for employees, payroll and property taxes, professional membership dues and equipment expenses.
- Bank Loan DI: For practice owners with bank loans, Bank Loan DI offers important coverage. If the practice owner becomes disabled, the benefit can cover the monthly loan obligation.
Is Your Practice in Jeopardy?
You’ve devoted your career to improve the health and wellbeing of others. Don’t forget to focus on self-care and your own financial health. Look into getting the disability insurance coverage you need to protect both your practice and your own income.
Daniel C. Steenerson, CLU, ChFC, RHU, is the president of Disability Insurance Services, headquartered in San Diego, Calif. Disability Insurance Services is a leading provider of income protection products and services for physicians, medical practices and Graduate Medical Education programs. To learn more visit diservices.com.