What Insurance Does a New Dentist Need?
You spend six to eight years in school learning everything from general science to highly technical dental procedures. However, there is one important topic that is often skipped: insurance.
For most people, insurance feels like a necessary evil. When you’re coming out of dental school, it is probably one of the last things on your mind. However, getting the right coverage and working with the right insurance agent early in your career can save you time, money, and frustration in the future.
In this article, I want to answer a practical question: What insurance does a new dentist need?
Let’s jump right in.
Dental Malpractice Insurance
When you graduate, you will most likely join a DSO or an established dental practice as an associate dentist. The practice may help provide the first type of coverage you need: dental malpractice insurance.
Dental malpractice insurance protects you against claims alleging that your professional care caused a patient injury. Depending on the policy, it can help pay for legal defense costs, settlements, and judgments. It protects both your finances and your professional career when a treatment-related claim or lawsuit arises.
This is the foundational insurance policy for a dentist. Industry claims data shows that malpractice allegations are a real possibility over the course of a dental career. Depending on your state, employer, professional contracts, and credentialing requirements, you may also be required to carry coverage.
You may be wondering, “How much will this cost?”
When you join a practice or DSO, the employer may pay for your policy. However, you should negotiate this as part of your employment agreement. Do not assume your malpractice insurance will automatically be paid for.
You should also ask who will be responsible for tail coverage if you leave the practice. Tail coverage can become a large, unexpected expense. It is a complicated topic, so I won’t dive into all the details here, but you can read our separate article on tail coverage for more information.
If the practice does not pay for your malpractice coverage, you will have to purchase it yourself. New dentists may qualify for substantial first-year discounts, with premiums increasing gradually during the first five years. Your final cost will depend on your state, specialty, procedures, policy limits, and insurance carrier.
Malpractice insurance may not be a major expense during your first year, but it can become much more expensive as those new-dentist discounts expire. Keep that in mind as your career and income progress.
Most importantly, work with an insurance agent who understands dentistry. Talk to other dentists about their experiences, but make sure the person advising you understands your profession, the procedures you perform, and the details of your employment agreement.
Disability Insurance
The next type of coverage you should consider is disability insurance.
You have entered a profession with high earning potential. Over time, you may also take on significant financial obligations, including student loans, a mortgage, practice debt, and family expenses.
Early in your career, you may feel that a disability is unlikely. Unfortunately, an illness or injury can happen at any age.
Disability insurance protects a portion of your income if an illness or injury prevents you from working and earning a paycheck. That benefit can help you continue paying your personal and financial obligations while you recover.
One of the most important parts of a disability policy is its definition of disability. The terminology and contract language vary by insurance carrier, but these are the primary definitions you may encounter.
True Own-Occupation
Under a true own-occupation definition, you are considered totally disabled when an illness or injury prevents you from performing the material and substantial duties of your occupation.
You can generally work in another occupation and continue receiving your full disability benefit.
For example, a dentist who can no longer practice clinically may be able to collect disability benefits while working in teaching, consulting, administration, or another business.
At Insurance by Dentists, this is the definition we recommend for dentists.
Modified Own-Occupation
Under a modified own-occupation definition, you are considered disabled when you cannot perform the material and substantial duties of your occupation and you are not working in another occupation.
If you choose to work elsewhere, your benefits may be reduced or discontinued.
Transitional Own-Occupation
A transitional own-occupation policy may allow you to work in another occupation while receiving benefits. However, the insurance carrier may reduce your benefit if your disability benefit and new earnings exceed your income before the disability.
Any Occupation
Under an any-occupation definition, you are considered totally disabled only when you cannot work in any occupation reasonably suited to your education, training, or experience.
This is a much harder definition to satisfy because the insurance carrier may deny benefits if it believes you are capable of performing another type of work.
Specialty Own-Occupation
Some disability policies may recognize your dental specialty as your occupation.
For example, if you primarily practice oral surgery, orthodontics, or endodontics, the policy may treat that specialty as your occupation. Whether this protection applies will depend on the policy language and the duties you were performing before the disability.
The important question is not simply whether a policy uses the words “own occupation.” You need to confirm whether you can work in another occupation without losing or reducing your benefits. You should also make sure your dental specialty and actual clinical duties are properly recognized.
Life Insurance
The final type of insurance a new dentist should consider is life insurance.
Like disability insurance, life insurance protects the people who depend on your income. If you were to pass away unexpectedly, the death benefit could help your family pay ongoing living expenses, replace your future income, pay debts, and continue working toward important financial goals.
Let’s review the main types of life insurance you may encounter after dental school.
Group Life Insurance
Group life insurance is typically offered through your employer. The employer may provide a small amount of coverage at no cost and allow you to purchase additional coverage.
This can be a helpful benefit, but it should not necessarily be your entire life insurance plan. The amount may be limited, and you may lose the coverage when you change jobs.
Term Life Insurance
Term life insurance provides coverage for a specific period, commonly 10, 20, or 30 years. If you pass away during that period, the policy pays a death benefit to your beneficiaries.
Term insurance does not build cash value. As a result, it is generally the simplest and most affordable way to purchase a meaningful amount of protection.
For many new dentists, an individual term life insurance policy is the most practical place to start.
Whole Life Insurance
Whole life insurance is designed to remain in force for your lifetime, provided the required premiums are paid. It typically includes fixed premiums, a guaranteed death benefit, and cash value that grows over time.
Because it provides permanent coverage and includes a cash-value component, whole life insurance is generally much more expensive than term insurance.
Universal Life Insurance
Universal life insurance is another form of permanent coverage. It may provide flexibility in the premium and death benefit. Its cash value is affected by interest credits, policy expenses, and the cost of insurance.
These policies require ongoing monitoring. Paying the originally planned premium does not always guarantee that coverage will remain in force unless the policy includes specific guarantees.
Indexed Universal Life Insurance
Indexed universal life insurance credits interest based partly on the performance of a market index. The amount credited is subject to the policy’s caps, participation rates, floors, expenses, and other limitations.
You are not directly investing in the market index. These policies can be complicated, so you should understand both the guaranteed and nonguaranteed values before purchasing one.
Variable Universal Life Insurance
Variable universal life insurance allows the policy’s cash value to be allocated among different investment options.
The value can rise or fall based on market performance. Poor performance may increase the amount you need to contribute to keep the policy active.
This type of policy involves more investment risk and requires careful, ongoing management.
Where Should a New Dentist Start?
For most new dentists, the starting point is relatively simple:
- Confirm that you have dental malpractice insurance and understand who is paying for it.
- Review your employment agreement to determine who will be responsible for tail coverage.
- Purchase an individual disability policy with a strong true own-occupation definition while you are young and healthy.
- Consider an individual term life insurance policy if someone depends on your income or would be financially affected by your death.
Employer-provided benefits can supplement your personal coverage, but they should not always be the foundation of your insurance plan. You may lose those benefits when you change employers, and the coverage may not be designed specifically for dentists.
The right amount of coverage will depend on your income, debts, family responsibilities, career plans, and future goals. Your insurance needs will also change as you get married, have children, buy a home, purchase a practice, or take on additional debt.
Getting the right policies early can protect your income, your career, and the people who depend on you. It can also help you avoid more expensive or limited options later.
You have invested years of your life in becoming a dentist. Make sure you also take the time to protect what you have built.
