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Insurance planning strategies of Physicians

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Insurance planning strategies of physicians: phase 1: a smart start to your financial future.
OMA Insurance
5/1/2011
To assist physicians in managing their insurance and financial needs, OMA Insurance Services has prepared a four-part series that provides planning tips for physicians at  each of the four main stages of their career — from early practice to retirement. This month’s column offers practical advice for physicians entering the “Phase 1: Start of Career” stage of practice.

To assist physicians in managing their insurance and financial needs, OMA Insurance Services has prepared a four-part series that provides planning tips for physicians at each of the four main stages of their career — from early practice to retirement. This month's column offers practical advice for physicians entering the "Phase 1: Start of Career" stage of practice.

After years of medical school and training, your hard work is starting to pay off in the form of regular income and, hopefully, a little more money at your disposal.

Chances are, the last thing on your mind is planning for your financial future. After all, the future may seem like a faraway land at this stage of your career, and it's certainly easier to live (and spend) in the present.

However, it is important to bear in mind during this initial phase of practice the value of taking a few simple steps to obtain the right insurance coverage and protect your financial well-being, which will:

  • Provide an income stream if you cannot work due to accident or illness (Disability Income and Professional Overhead Expense Insurance);
  • Protect the financial future of your family, and cover any debts (Life insurance); and,
  • Reduce the costs for medical expenses not covered by government plans (Extended Health Care and Dental insurance).

Keep your money in your pocket: Disability Income and Professional Overhead Expense Insurance

If an accident or illness means you suddenly cannot work, losing that income stream could have a serious and long-lasting impact on your future career if you are unable to keep up with your bills, debt repayments, and other financial commitments.

Fortunately, there are two different, yet complementary, types of protection that will help tide you over until you get back on your feet. Disability Income insurance provides a monthly income replacement benefit tax-free, while Professional Overhead Expense Insurance helps cover the fixed costs of running your practice (e.g., rent, utilities, payroll, etc.).

When combined, Disability Income Insurance and Professional Overhead Expense insurance help make sure you don't have more money going out than coming in while you recover.

The following case example illustrates this point:

At age 33, Dr. S., having recently joined a group practice, suffered a stroke after an episode of atypical pneumonia.

Although she made a rapid motor recovery, Dr. S. was left with a memory and speech deficit that made it impossible to resume her normal practice right away.

Dr. S. had a mortgage on a new condominium, along with a monthly car lease. Her monthly Disability Income insurance coverage of $10,500 (based on earnings of $300,000) gave her the means to continue to make these payments in full, and also stay on top of general household expenses, without going further into debt.

After nine months of rehabilitation therapy, Dr. S. was finally able to return to work. Her Professional Overhead Expense Insurance allowed her to maintain her office and the practice during the recovery period, along with providing all salary expenses to avoid losing any trusted staff members.

Meeting your obligations: Life insurance

Many people think Life insurance is only for those individuals who are at a later stage in their lives, or have families.

But, regardless of your age or marital status, if you have student loans, a mortgage, and any other consumer debts to repay, you should at least have enough life insurance to cover these debts, as well as basic funeral expenses.

OMA Term Life insurance offers a range of coverage amounts — from $100,000 to $3 million — at competitive rates, with the ability to lock in your rates for up to 10 years at a time.

As an added benefit, members also have the flexibility to purchase coverage for a spouse, and automatically increase coverage without having to re-qualify.

Maintaining your health: Extended Health Care and Dental Insurance

Physicians know better than anyone that an ounce of prevention is worth a pound of cure. For the self-employed professional, regular dental care, eye exams, drug prescriptions, and other proactive health maintenance may fall to the wayside due to the high cost of these types of expenses.

With the OMA's Extended Health Care and Dental Insurance you can lower your out-of-pocket costs for both routine and emergency medical needs that are not covered by government plans — and helps keep you and your family in good health to enjoy the life and career you have ahead.

Taking the right steps, right now

Even in the early stages of your medical career, it is important to put an insurance plan in place to protect yourself and your family.

The chart above provides a summary of the insurance products that can help protect you and your loved ones from financial hardship at each stage of your career.

As an OMA member, you have access to a wide range of easy and affordable solutions, as well as honest and professional advice, that will help you build a smart plan that can address your needs now and in the future.

Next month, we will examine insurance planning strategies for the mid-career stage of the physician practice cycle.