Disability Income Insurance
Disability income insurance exists to protect your most important asset: your future cash flow. That is why it is a crucial part of any dentist's financial plan. Whether it is due to injury or illness, if you cannot work in dentistry, we need to ensure enough money is coming in to support your family.
Be cautious of who you are getting your disability income insurance information from. There can be major biases from insurance agents when designing your policy as agents are paid a percentage of the overall cost of the policy. This can create a bad incentive for agents to make the policy more expensive than it needs to be.
Term Life Insurance
Life insurance is a staple financial planning item for anyone who has someone else depending on them for support. Term life insurance specifically is a relatively low cost way to ensure their family's standard of living and success of their financial goals even if one or both parents where to pass away. Term options for life insurance typically range from 10 to 30 years for most carriers. Once the term or duration of the policy comes to an end, you stop making payments and the coverage ends. The benefit amount calculation should be somewhere between 10 to 15 times ones annual income. Other factors that go into the death benefit calculation typically include income growth rate, number of children, cosgined debt, and financial goals like kids education.
Permanent Life Insurance
Permanent life insurance is not typically the most cost efficient way to get death benefit coverage. However, I have seen time and time again dentists buying it solely because an insurance agent sold them on it. Life insurance compensation is similar to disability insurance compensation. The agent who sells it to you gets paid a percentage of your annual policy premium. The more expensive the policy, the more they get paid. Be sure to understand your term life insurance options before purchasing a permanent policy.