Why Getting Two Disability Policies is Important for Future Practice Owners
Disability Insurance Basics:
When planning on future ownership positioning, it is important to properly obtain coverage that will protect your income for the future. A single disability policy can typically cover up to $20,000 per month when approved to show the financial income to qualify for the benefit.
Over the course of your career, your income rises and your coverage amount should increase accordingly. An important feature to note is that disability benefits are tax free however one policy will not be enough to cover the income that a practice owner earns.
Obtaining Two Policies Before Practice Ownership:
It is important to get two policies before becoming a practice owner down the line in your career. The rationale behind this is that when you are older, the second policy will be more expensive due to insurance carriers seeing a higher age as more of a risk
to insure. At a younger age, the rate in which you lock in as well as your health saves far more money than applying for a second policy later in your career. Once you enter into a disability policy, you are not subject to a medical underwriting again and maintain far better pricing compared to entering into a second policy when you are older.
Amount of Coverage for a Second Policy:
While it seems like getting a second policy at a young age could be expensive, in reality it saves money long term for future practice owners. While the benefit amount you can get is situational depending on your own needs at the time, the benefit of the second policy can start off as a base of $1,000 just to start someone off.
This is because it is the lowest amount in which you are able to lock in your rate and current health at a young age and is very inexpensive in comparison to getting a higher amount of coverage years down the line. Once income rises over the course of your career, you can begin to raise the limit of your second policy to ensure the income you make as a practice owner is fully protected. Without a second policy, practice owners are not sufficiently protected for the level of income earned and in the event of disability, will suffer a severe income loss.
If you have any questions about practice ownership positioning or disability policy specifics, contact a CFS Agent.
Written by: Neal Cudahy
