Disability Insurance - Overhead Expense
Often times, a dental practice can be reliant on a short list of dentists to keep their business running. Small office especially may be reliant on only one dentist.
Every dentist should have an individual disability income policy to protect their personal income and every practice owner should have an overhead expense policy to protect their business income. In the event of a disability, this policy will help pay for the business expenses that will continue whether you are working or not.
By being able to continue to pay for staff salaries and office utility bills, you can rest assured that the business infrastructure can remain intact while you recover from an injury or illness.
Disability Insurance - Business Loan Protection
For some practice owners, the loan repayments may be one of their largest monthly expenses. Often times, lenders will require disability insurance in order to reduce the risk of the lendee not paying back the loan in the event of a disability.
However, a business owner should never rely on or assign their personal disability insurance policy to pay back their loans. That policy is to help protect your personal living needs like groceries, rent/mortgage, etc.. A disability insurance business loan protection policy can provide a monthly benefit that covers the loan obligations if the lendee is too injured or ill to work.
Life Insurance for Buy Sell Arangements
For practies where there are mutliple owner dentists, there needs to be an arrangement where a partner's ownership of the practice can be reassigned if a partner were to die unexpectedly.
The agreements typically involve a signed contract that outlines how the other owners or the business itself can buy the shares of the deceased owner. Without this kind of agreement in place or the funds needed to see it through, the estate of the deceased practice owner may sell their shares of the company to outside investors. This is why most arrangements requirelife insurance as the funding instrument.
The life insurance can be used as a way to ensure that the other owners or the business will have the large sum of money needed to buy out the deceased owners shares.