Disability Insurance 101: “Own Profession” and “Non-Cancellable and Guaranteed Renewal” Explained
Editor’s Note: This is the first article in a three-part series on disability insurance for dentists and dental students.
Purchasing your disability insurance is overwhelming. Where to start? Internet searches can be confusing and contradictory. There are many terms and endorsements to consider. Even though we admire them, dental instructors may not be aware of the latest opportunities.
My advice is to start with two must-haves that are the most important and non-negotiable for every dentist or dental student: clean profession and non-cancellable and renewable guaranteed.
Own occupancy insurance (“own occupancy”)
This is the preferred definition of disability for dentists and other health professionals. This determines whether a claim (and how much) will be paid…or not.
Some policies require you to show loss of income, loss of duties, loss of time, or a combination of some or all of these. Carriers also ask what your occupation is. For clinical dentists, this can be very specific. Let’s say you keep claiming benefits and get paid for a few years, then you get restless and re-enter the workforce, but not as a dentist. You could go to work at the local dental school, or perhaps invent dentistry’s next great instrument. In any event, if your illness or injury continues to prevent you from practicing clinical dentistry, you can continue to receive your insurance payment each month and earn income from your New profession without compensation.
Here is an example :
2023: You take out a “own occupation” disability policy
2025: You injure yourself and make a claim (say it’s $10,000 per month paid to you by the carrier)
2030: You become restless. You’re still hurt but you’re writing the next great American novel. You earn millions.
Because your policy was clean, you get both the revenue from the book AND the $10,000 from the carrier.
If you didn’t have a definition of disability for your own job, the insurance company would stop sending payments because you’re probably earning more than your pre-disability earnings.
Your own profession might turn out to be the most important aspect of your policy. It literally determines if there is a claim to be made and paid in the long run.
Non-cancellable insurance and renewable guarantee (“non can”)
This means three important things when it comes to your disability insurance policy. No-can:
- Can never be canceled by the insurer (except in case of non-payment)
- Unable to have a price change as stated in your contract.
- Unable to change terms or language.
By contract, if your policy is “non-can”, you never receive a letter in the mail stating that the price you have paid for the past 18 years needs to be increased to meet increasing claims demand, or rising labor costs, or for some reason reason whatsoever. Counterexamples can be found as you renew your health insurance, car insurance, or home insurance policy each year.
Example: If you have car insurance and you receive a few speeding tickets in a relatively short period of time, you might receive a letter from your insurance company stating something like this:
“Expensive [faithful, long-paying and non-claims filing] customer,
It has come to our attention that you have [fill in the blank with any number of infractions.] From midnight on [XX/XX/XXXX]your coverage with us will end.
You could hypothetically file a dozen claims over the years, recover each time, and file a new claim without worrying about receiving such a letter.
The policy you purchased should contain the same words 20 years later. It is important. Imagine if you dust off your policy from the filing cabinet, read it, think all your ducks are lined up to file a claim, and then the insurance company sends you the latest version of the policy. What if the two contracts don’t match? What if the terms of the new contract were more favorable to the carrier than yours? All of this can be avoided by making your policy “guaranteed non-cancellable and renewable” when you first buy it.
Having your own profession and guaranteed non-cancelable and renewable language in your policy is imperative. This means you can recreate yourself professionally after a career-ending illness or injury or start a new non-dentistry career and continue to claim, all while retaining the right to control your policy. It can only change if you choose to make changes to it.
In the next article, I’ll discuss important runners, such as inflation, and ways to increase your policy without answering new medical questions. In the third of this three-part series, I’ll talk about practice ownership and the policies to consider when buying your first practice.