Monday, April 14, 2014

Insurance for Life

Just when I thought life as a dentist could not get any more exciting, I began to face some serious decisions about disability, retirement, and death at a very young age. As much as I like to plan ahead (vacations, parties, outfits, etc.), thinking about at what age I will retire, when I will die, and how to make sure my family is financially secure when I am gone can get pretty depressing.

Like many recent graduates these days, I signed up for disability insurance when I was in my general practice residency. I was making some cash (finally!) and knew that it was better to lock in a policy when I was still young and healthy. I am only now starting to decide if I would like to increase this policy. Unlike malpractice insurance, disability insurance is optional and many dentists cancel their policy or do not sign up at all if they never lock in a reasonable rate. The premiums can go up so high that it does not make sense for them financially. On the other hand, when you are a recent graduate and you are making (hopefully) a fraction of your income potential, you do not want to spend the extra money every month on something that seems so far away (retirement) and unlikely to happen (long-term disability).

Long-term disability indicates that you will be disabled and unable to work for a period longer than three months; you should have three months worth of savings in your bank account to get you through any period where you would not be able to work before your benefits kick in. How many 30-year-old young professionals are responsible enough to have taken this precaution? My own informal research has indicated not too many. When I was in dental school, I was afraid of going skiing. I knew one unfortunate accident and I could face the horror of missing clinic, resulting in delayed graduation date. These days, the possibility of losing a few months of income, which your insurance will not cover if you are out of commission for less than three months, is equally as terrifying.

You can become disabled at any age. But for most of us, retirement and death are hopefully far on the horizon. Why do I need to think about this now? How prepared can you be for all of life’s unpredictability and not drive yourself crazy in the process? While dentistry is a relatively stable profession, I cannot help but notice tons of recent articles in the media about how tough it is out there in the job market. Many individuals that were successful for years in various fields have lost their jobs later in life and are having the hardest time of all finding employment, faced with fierce competition from recent graduates. Having a sense of security for those later years in life can be priceless. How many dentists between the ages of 30 and 35 have already started saving for retirement? Does it make sense to increase your policy to have you covered for life in case something unfortunate occurs, or to use that extra money for savings and/or investment purposes? There are many options, and they should be carefully evaluated based on your individual needs.

In addition, you have financial advisors and/or insurance brokers trying to reach out to you constantly via email, LinkedIn and other forms of social media. Everyone has a different plan and they try hard to get some one-on one-face time. I try to avoid this sales tactic since it is time-consuming and dealing with salespeople is not my favorite activity. However, it is important to talk to a few different sources, get your facts straight and ultimately make an informed decision about your financial future, rather than pushing it off until you are older. As for more seasoned dentists reading this blog, what advice do you have for the younger generation? Is there something you would have done differently if you could go back and change things? Please share your thoughts in the comments.

Have a great week!

Lilya Horowitz, DDS

1 comment:

Ed Paul, DDS said...

Well stated. My only advice I'd give to anyone younger than I (50) is to start saving for retirement as early as possible with as much as possible. Then once you have kids (if you do) funnel money into a college fund, again, early with as much as you can. You'd be amazed how quickly the savings, and the bills add up.


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