How Much Insurance Do I Really Need?

After my last post, a few dentists asked me how much insurance they need.

Unfortunately, I had to say it depends…

It is similar when we create a treatment plan for our patients; we do not give every patient the same solution. We assess risk in terms of decay, periodontal disease, large restorations, and aesthetic concerns, along with their values and long-term goals. Insurance should be approached in the same way.

Here are three different dentist stories.

Anthony was early in his career when he developed a serious medical condition. He recovered and returned to work. Physically, he was fine. Financially, the long-term impact was significant. Because of that illness, he later found he could no longer obtain income protection insurance. Unfortunately, his illness became a preexisting condition.

Eric was a specialist further along in his career. He had put insurance in place years earlier and assumed it was adequate. As his income grew, his cover stayed the same. When a health event occurred, he discovered he was underinsured. His insurance plan had not kept pace with his professional success.

Amy owned a practice. She had income protection and received a payout when she was unable to work. However, the benefit was structured around her personal income. Her practice overheads continued. Staff wages, rent and debt repayments did not pause. The policy was not wrong. It was simply incomplete for her situation.

Three dentists. Three different career stages and risk profiles. Three different treatment Dentists think their home or practice is their biggest asset. It is not. It is their future income. If you could not work for the next 10, 20 or 30 years, what would that cost? For most dentists, it would be several million dollars. That income funds your lifestyle, your family and your business.

Insurance exists to protect against events you cannot predict. For dentists, protection usually includes:

Income Protection: Designed to replace your personal income if illness or injury prevents you from working. An Agreed Value policy can provide better certainty at claim time.

Health Insurance: Provides access to private specialists, diagnostics and surgery without long public waiting times. This can be particularly important for treatments not funded by Pharmac, including expensive cancer medications. Its important to have a company that will not change your policy to your detriment.

Trauma Insurance: Provides a lump sum on diagnosis of a serious condition such as cancer, heart attack or stroke. This allows you to focus on treatment and recovery without immediate financial pressure.

Total and Permanent Disability Insurance: Provides a lump sum if you are permanently unable to work in your profession. Dentistry relies on your physical health, fine motor skills, and vision. If those are compromised, your clinical career could end even if you are otherwise well.

Life Insurance: Provides a lump sum to clear debt and replace income for your family in the event of your death.

Business Insurance covers fixed practice costs and debt when you cannot generate clinical income. This helps protect the practice you have worked hard to build.

ACC works in conjunction with your insurance plan, so your levies can be reduced as long as they are covered by your insurance for yourself and your family.

Like a treatment plan, insurance is not static.

Jo’s situation shows why early planning matters. Allan’s situation shows why regular reviews are essential as income grows. Wendy’s situation shows why personal and business risks must be considered together.

Every few years, or whenever income, debt or family circumstances change, your cover should be reviewed. Risk changes over time. Your protection should be as well.

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