April 19, 2022
I also cover this in a YouTube video. Click here to watch!
Welcome back, dentists! This blog is part two in a series of three on this very important topic: having a comprehensive, written financial and retirement plan. My focus is on developing a financial plan for a dentist, because it is very different than developing a financial plan for a doctor.
In last week’s blog – Financial Planning for Dentists: PART ONE – we talked about the structure of the dental practice and when you are ready to sell the practice. We also walked through some of the key differences between selling the shares of your corporation versus selling the assets of your corporation.
In today’s blog, we are going to talk about putting bumper guards around you and your family in the event that life throws you a curveball.
Here’s what I know for a fact –
Your most important asset is your ability each and every day to get up and go to work to earn a living. And so, if something had happened to you last night and you couldn’t work today, the question I always ask is…
What is going to be your paycheque?
If the worst happened to you, the best way to address this issue is something called Disability Insurance – it will step in to become your paycheque for the rest of your working life.
Disability insurance premiums should always be paid for with personal tax dollars. Because if you are ever diagnosed with a disability, all of the income you would receive would be “tax-free income.” This is very important!
When designing a disability policy, you have to look at certain features that are “must-haves” in order to fully protect yourself.
The first feature is called “Own Occupation”. If you don’t have this feature, then after two years into the disability benefits, the insurance company can force you to do any other job you are capable of doing. BUT, if you do have the “own occupation” feature in your plan, then the insurance company can’t force you to do any other job than the job you were doing the day before you became disabled.
In addition to “own occupation,” you should also have a feature called Cost of Living Allowance (or COLA) because if you ever went on claim, you want to make sure that your monthly benefit is keeping up with inflation.
The third feature you should look into is Future Income Option (or FIO). As long as your income has gone up, this feature allows you to purchase additional monthly benefits, but you do not need to undergo any future medical underwriting.
The fourth and final feature we should look at is called the Return of Premium (or ROP). This works like clockwork – every seven or eight years, if you haven’t filed a disability claim, then you get 50% of the premiums back that you paid and you receive this money “tax-free”. So, either you get a disability and you receive the monthly benefit, or you get 50% of your money back.
Now that we have taken care of you and your family should you get a disability, we now need to focus our attention on your dental practice.
Most, if not ALL dentists who own a practice – which includes frontline staff as well as hygienists – will need something called “Overhead Insurance”. This type of coverage kicks in to protect your practice should you be diagnosed with a disability. It will pay for your rent, wages of your staff, etc. For more details on this, follow the coordinates at the very bottom of this article to get in touch with us.
The next bumper guard to look at in protecting you and your family is “Critical Illness” insurance. I have a number of videos on my YouTube channel that go into great depth on this subject, so I won’t repeat myself.
Here’s what I want you to know and remember
We design “guaranteed” Critical Illness policies for our clients – either you are going to get a covered critical illness and the policy will pay out, or once the surrender clause kicks in, you can ask for 100% of your money back. You can’t ask for more guarantee than that!
In next week’s blog – Financial Planning for Dentists: PART THREE – I will get into how to leverage your practice to build a tax-free “personal” retirement paycheque, purchase rental real estate, and offer a brief overview on why it is important for you to have a second corporation.
If you are interested in developing a comprehensive written Financial & Retirement Plan, contact me at the coordinates below to apply to become my client. Thanks for reading and always remember: when we design financial plans for our clients, we make sure that your money outlives you in retirement.
For the best life insurance advice and information, subscribe to my YouTube Channel and hit the notifications bell to be notified when we post new videos. The channel allows me to share my passion for personal financial planning and I produce content that I would want to watch – and because of that, I promise to give you 110% effort in every video that I make.
By John Moakler, BMath, CFP, CLU
President and Senior Executive Financial Planner
Moakler Wealth Management
1 416 840 8544