Insurance Planning for Healthcare Providers


Insurance Planning for Healthcare Providers – Look Beyond Malpractice


What’s the best thing you can do for your private practice? Invest in a business insurance plan that protects your personal and commercial assets against liability. Do not assume that personal liability insurance applies to situations that are covered only by a comprehensive business owner’s policy. What’s the best thing you can do to protect yourself and your family? Create a safety net with disability insurance should you become ill or otherwise physically unable to practice, and invest in a life insurance policy as part of your estate plan.

Insurance can be complex, but it pays to be educated about this important financial instrument for asset protection and retirement planning. Let’s examine how life insurance and disability insurance complement your malpractice, supplemental and business liability insurance.

LIFE INSURANCE

A diversified retirement portfolio should include life insurance. In its simplest form it can help you build wealth, protect assets, and then transfer it to future generations in a tax-advantaged manner. Whole life polices provide a cash value feature accessible while you are alive, some even now offer a long term care benefit. Polices are structured to either offer a fixed return on your cash or a variable one depending on how the funds are invested. You can change the levels of life insurance coverage you have as you build your career. Start with low-cost premiums at first. Transition to more coverage as you require more protection for your practice and your growing family. If you have a spouse or dependents that would require a cash inflow upon your death, life insurance is a must.

Ask yourself these questions:
•    Will my current coverage help me reach my goals? Have my goals changed
•    Do I know what benefits are actually guaranteed?
•    Do I have enough coverage? How and when should I ask for a review of my options?

The tax-advantaged benefits make life insurance an effective way for physicians, doctors and dentists to supplement their traditional qualified savings plans. It can provide money for your heirs to pay estate taxes.

Know the differences between term and whole life, and the unique benefits of both. Term life insurance is less expensive because it’s temporary and has no cash value. Term is designed only to protect your dependents in case of premature death. If you die within the term, your beneficiaries receive the payout. If not however, when the term expires and the policy is up for renewal generally the premiums will be significantly higher. Whole life insurance premiums are much higher because the coverage lasts for a lifetime, the death benefit is guaranteed, and the policy has cash value. The cash value grows tax-deferred, so no taxes are due on gains while they’re accumulating. You can do many things with the cash value, including taking out a loan, drawing from it for retirement or funding the policy. There are whole life insurance options that include universal, variable and variable universal.

DISABILITY INSURANCE

Disability income insurance pays monthly cash benefits to replace lost income when you are physically or mentally unable to work. Insurers typically provide coverage for either two-thirds of a physician’s income or the insurer’s maximum benefit amount, whichever is the lesser of the two. As income increases, disability coverage should account for changes, so re-evaluate disability income protection often. Don’t assume disability will be most likely due to an accident or an injury. Illnesses are the most common cause of disability according to the AMA. Neurological problems, back pain, arthritis, and cardiac issues are the most common disability claims. Other than group coverage through your employer, options include coverage offered through a professional association like the American Medical Association or local medical society, or individual coverage through an insurance agent which tends to be expensive.

Ask yourself these questions:
•    Will I receive compensation while I am disabled if I am not attending to patients?
•    Who will cover my patient load and for how long?
•    What if the disability is permanent?  

Medical practices often use buy-sell agreements to cover situations such as the death, retirement or termination of a partner. But the disability of a partner is often overlooked and many buy-sell agreements don’t adequately address the possibility of one partner becoming unable to work due to a disabling accident or illness. Be sure your practice structures its buy-sell agreement to cover the potential disability of a partner and fund it through buy-sell disability income insurance.
 
Contact Us: Good insurance coverage is an important building block in your overall financial plan. As such it should be monitored and adjusted as you move through different phases of your career, and when appropriate as you age and your financial situation changes.

We know you have questions – we have answers. If you already have an insurance plan and are not sure if it the right one for you, or if it provides enough coverage, call us at 855-534-2727 for a FREE insurance audit, or simply take our insurance survey which qualifies you for a complimentary assessmentCLICK HERE.

 

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