Insurance can help to protect you against financial risks that could affect you, your loved ones and your dental practice. Therefore, it's important that your insurance evolves along with the changes in your personal and professional situation to avoid jeopardizing your financial well-being. By staying in regular contact with your insurance advisor, you can notify your advisor of any changes in your circumstances that could affect your insurance requirements. The next time you speak with your advisor, consider the following:
1. Have you acquired recent debts or other obligations?
For example, did you obtain a loan to purchase a dental practice or home? Did you get married or add children to your family? If so, then it may be time to increase your life insurance. Your insurance coverage can fulfill a variety of functions, from providing collateral for a practice loan or home mortgage to protecting your family's standard of living in the event of your death. Review your life insurance annually and increase it if necessary. When surveyed1, nearly half of Canadian households said they were not prepared to cover everyday living expenses if the main wage earner died. They would only be able to carry expenses for a few months or not at all. These are compelling reasons to ensure you have sufficient life insurance to safeguard your family's financial security. You should also protect your spouse's contribution to the family with adequate life insurance. If you recently purchased a practice, increasing the amount of your existing life insurance to use as collateral for a practice loan or mortgage may offer greater control and flexibility compared to purchasing any life insurance offered by your lender. As well, it's important to keep your partner insurance up to date if you practise in a dental partnership and have a buy/sell agreement, because the value of the practice can increase over time.
2. Have you named a beneficiary for your insurance policy?
When you name individuals as beneficiaries of your policy rather than your estate, your life insurance benefit will not be subject to probate fees. Naming a beneficiary for the policy may also prevent your creditors from seizing the life insurance proceeds upon your death. Remember to review your beneficiary designations periodically to see if they need updating (e.g., due to changes in your personal or professional situation).
3. Would you receive sufficient benefit payments to cover both your personal living expenses and the ongoing expenses of your dental office, if you were to suffer a disabling illness or injury?
Normally, long term disability (LTD) insurance benefits are designed to help pay for your everyday personal living expenses and the amount of disability coverage you can obtain is tied to your income level. There's a good chance that after you have addressed your personal expenses, you may not have any benefits remaining to cover the ongoing expenses of your office while you're recovering. For many dentists, office expenses (including rent, utilities and employee salaries) can reach tens of thousands of dollars each month. Therefore, along with LTD insurance, you should consider adding office overhead expense insurance to pay the ongoing expenses of your practice in the event of a disability.
4. Have you moved to a new office, or do you have plans for major renovations to your existing dental practice?
If you've moved to a different office, your new office address needs to be listed on your office insurance memorandum. Otherwise, you won't be protected in the event of a fire or other office disaster. It's prudent to communicate the information about your new office location in writing to your insurance advisor.
It's also important to notify your insurance advisor if you are planning major renovations at your dental practice. You may require Builder's Risk insurance to cover the practice while it's under construction. It's temporary coverage that protects your office during the construction/renovation process. When the renovations are complete, you can purchase office contents insurance to cover the replacement costs for your office equipment and new leasehold improvements. Keeping your advisor informed about these relevant changes will help protect you in the event of a loss or mishap.
As a dentist, you have the opportunity to consult with highly credentialed insurance advisors at CDSPI Advisory Services Inc. to obtain assistance with your insurance planning needs. To obtain personalized advice for your evolving personal and practice needs, call 1-877-293-9455, ext. 5002.
- Canadian Life Insurance Ownership Study, LIMRA International; 2006.