Guardian Disability Insurance Brokerage

Starting a New Dental Practice or Buying Into an Existing Practice?
Protection to Consider
by Paul Baader

Disability Income Insurance: While you were completing your training you have most likely heard of disability income insurance, whether through a colleague in passing or an insurance representative during a Lunch & Learn presentation. Regardless, you are aware of this type of insurance, and understand that it is designed to protect the loss of your income in the event that you are unable to work and earn a living. No matter how prepared you are, accidents do happen, and a disability can be the result. Anything from a sports injury, a broken limb, a car accident, an illness, a complicated pregnancy, a heart attack, cancer, or a serious back injury can result in your not being able to work chair side doing your usual job, which in turn means a loss of income. If you are in the process of or have recently purchased a practice, this can be devastating. Not only are you in a fair amount of debt, but now you are unable to provide for yourself or your family.

Disability insurance is one of the MOST important insurance products available to all of the dental specialties. I would actually rank it second behind malpractice insurance. That is why it is imperative to educate yourself on the various disability contracts available in the industry, and to speak with a disability specialist. This is not the type of insurance that anyone should shop for price alone. You need to understand why there is a difference in costs between various policies, and to do a price vs. quality analysis.

Professional Overhead Expense Insurance: Your presence in your new office is crucial to your new patients, to protecting your family’s financial well-being, and to the growth and development of your new professional practice. As noted above, it is obvious that you need to protect your income in the event that you are unable to work as a result of an accident or illness. However, what about your many new business expenses that will still need to be paid during a disability? Staff salaries, lease or mortgage payments, utilities, supplies and other costs will have to be paid, while the income that is normally used to pay these expenses will decrease or disappear in the event that you are unable to work.

As the owner of a private practice, a disability can be twice as devastating. Not only will it threaten your quality of life at home by reducing or eliminating your ability to earn the income that you will need to meet your monthly expenses. At the same time, more long term financial damage is taking place. As your monthly expenses from running your new business are piling up, your disability can result in the permanent loss of your hard earned patients, and potentially, the loss of your practice. Professional Overhead Expense disability insurance is designed to provide you with a reimbursement for your monthly business expenses if you are disabled and cannot work (i.e. rent, electricity, water, heat, supplies, laundry, etc). A high quality overhead expense policy will even cover a portion of the salary of a professional temporary replacement that you hire to fill in for you while you are totally disabled.

You have devoted countless hours and years to get to this point in your career where you have the ability to buy your own practice. You have insured yourself against a malpractice suit, and the contents of your practice against fire, water, theft, etc. You have most likely already protected your family and your lifestyle against the possibility of your becoming disabled. It only makes sense to ensure that your practice will survive in the event that you are disabled.

Business Reducing Term Insurance: As you may already be aware, many practice finance companies (Matsco, HPSC, AFTCO, etc.) are now requiring that a lender secure some form of term life insurance AND disability insurance to satisfy loan requirements prior to or shortly after funds are dispersed. In these situations, Guardian’s Business Reducing Term* policy can help. Exclusively offered through Guardian, the Business Reducing Term policy is specifically designed to fund financial obligations that require monthly payments that will expire at a given time. Through the Reducing Term insurance policy you can insure against a disability that would prevent you from meeting such fixed payments as funding business loans, purchase agreements, and salary guarantees. Also, any personal disability insurance that you may have currently or will purchase in the future will be paid in addition to any benefit received through the Reducing Term policy.

Disability Buy-Out Insurance: As a new owner, you understand the importance of you being able to come to work every day to grow your practice and to build a rapport with your patients. If you are buying into or forming a partnership, imagine how difficult running your practice would be if one of the partners in your practice is unable to come to work due to an injury or a sickness. As the owner of your practice, you understand how important every person’s contribution (doctor, hygienist, assistant, receptionist, etc.) is each and every day. Anything from an extended vacation to maternity leave can interfere significantly with your practice’s daily operations.

Of course a disability has a much more serious impact than a long vacation. Quite frankly, a disability has the potential to upset your practice’s financial future even more so than a death or retirement, which are two events that are more often planned for. The inability of a partner to work can create any number of difficult issues on top of the actual disability. A Disability Buy-Out policy is an ideal solution for funding a buy-sell agreement among partners if one becomes disabled. This type of disability insurance is designed specifically to provide the company’s owners with the money they would need to reimburse a disabled owner for his or her financial interest in the company. In addition, the contract allows for the principals to structure an arrangement to suit their particular business model.


Paul Baader is a Field Representative of The Guardian Life Insurance Company of America (Guardian), New York, N.Y.

*Policy Form AH55-A issued by The Guardian Life Insurance Company of America, New York, N.Y. Product availability varies by state.
Policy Forms 3200 & 4200 underwritten and by Berkshire Life Insurance Company of America, Pittsfield, MA, a wholly owned stock subsidiary of The Guardian Life Insurance Company of America, New York, NY.