Many tools are made to serve only one purpose. For example, you know that a blade is designed to cut. But there are many types of specialized knives, and for the most part, they aren’t meant to do double duty. You wouldn’t use a surgeon’s scalpel to slice vegetables for dinner.
In a similar vein, there are two different types of disability insurance that serve different purposes; for comprehensive protection, you should consider having both.
As an independent physician, your personal disability plan won’t properly protect you if you expect it to do double duty. Personal disability insurance is designed to cover your family and personal expenses; it is not designed to pay the operating expenses of your practice. Therefore, we recommend that you carry both personal Disability Insurance (DI) and Business Overhead Expense (BOE) insurance to protect your finances if you should suffer a serious illness or injury.
Why is Business Overhead Expense Insurance so Practical?
Many physicians do not believe they will become sick for a long period of time or suffer a serious injury. They may believe that their personal disability insurance could be a temporary fix, and the strained financial situation that would inevitably follow would work itself out in the long run. It is good to hope for the best, but it is better to plan for the unexpected.
Now ask yourself, what would happen if you are not able to practice and your cash flow stops for a long time? Consider how BOE insurance would complement your personal disability insurance and help your practice keep running:
- BOE insurance would pay for the expenses of your practice; including rent, utilities, office supplies and equipment, loan payments, and property taxes.
- BOE insurance would pay for the expenses associated with your professional staff, including employee salaries, payroll taxes, and maintenance services.
- BOE insurance would pay for the expenses associated with replacing you as a valuable member of your team: a locum tenens physician can be hired, ensuring that your patients’ health needs will continue to be met, and your partners’ schedules will not be overwhelmed while you recover.
- BOE insurance would protect the viability, reputation, and momentum of the practice you have worked so hard to establish, maintaining your professional standing in the community.
- Because you would not have to cover business expenses with your personal funds or personal disability benefits, BOE insurance protects and preserves your personal finances.
Does Your Disability Insurance Need an Upgrade?
As an independent physician, you must obtain, not just the proper type of coverage, but the proper amount as well. Many physicians have obtained personal disability insurance in the past, but may not have examined their coverage amount in light of their current financial situation and standard of living. Please consider the following reasons that your personal disability coverage may no longer be properly protecting you:
- In recent months, your salary has increased, but your disability protection has not been adjusted accordingly.
- If you deduct your disability insurance premium as a business expense, your benefits will be taxed as income. If you are sick or injured and unable to work, your taxed benefits will leave you with less income than you expect – right when your family needs it most.
- You depend on your salary and your annual bonus to live, but most disability insurance carriers will only cover up to 60% to 65% of your annual salary, not any other income. When you do the math, you learn you are underinsured and your income is not properly protected.
Overwhelmed? No Time? We Can Help
There is a great deal to consider when deciding how much insurance coverage you need in order to protect your personal finances and your medical practice. That is why it is so helpful to have a trustworthy advisor on your side. At TMA Insurance Trust, we work for the good of Texas physicians, not any insurance carrier. We have both the time and expertise to assist you. Let us help you examine your personal situation - we will then provide you with options so you can get just the right disability protection for your needs. Reach out to us today for a personal consultation.
For over 60 years, TMA Insurance Trust advisors have been serving Texas physicians, their families and staff. TMA Insurance Trust prides itself on offering unbiased information and strategies to members, along with exclusive group rates on a range of the highest-rated plans in the industry.