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Your overhead: Is it protected?

Feb. 1, 2011
As part of your 2011 business planning, have you considered how long you could keep your office open and your employees paid if a disabling illness or injury suddenly sidelined you from practicing?

by Jim Biesterfelt

For more on this topic, go to and search using the following key words: disabling illness, disability insurance, coverage calculator, Jim Biesterfelt.

As part of your 2011 business planning, have you considered how long you could keep your office open and your employees paid if a disabling illness or injury suddenly sidelined you from practicing? In an ADA Insurance Plans survey of dentists last year, 71% said they could keep their practices open no more than six months or less without financial hardship.

To help protect against this risk, many financial experts recommend that dentists have an insurance product called office overhead expense. It's a type of disability insurance designed specifically to cover most of a practice's overhead costs, such as employee salaries, rent, practice and/or student loans, a replacement dentist, and more. The benefits for reimbursed covered expenses can be used however the practice deems fit.

Premiums for office overhead expense insurance are relatively inexpensive, and when paid by the practice are typically tax deductible as a business expense. The product also can be put to work in more than one way. For example, dentists can assign office overhead expense insurance as collateral for a practice loan or to help fund a buy-sell agreement.

Comparing plans

When comparing office overhead expense insurance policies, keep the following guidelines in mind:

  • True own occupation. Insist on an "own occupation" definition of disability that allows you to collect benefits even if you become gainfully employed in a different occupation.
  • Partial benefit. Look for coverage that pays benefits whether you are partially or totally disabled.
  • Benefit period. Typically, you can choose to receive benefits for either one or two years. This gives you the wherewithal to keep the practice viable until you recover or decide to sell. The policy should pay benefits retroactively to the first day of disability after a 30- to 60-day waiting period.
  • Covered expenses. Make sure that student and practice loans are covered as eligible expenses; not all office overhead expense insurance policies cover professional or practice-related debt.

Consider this: Dentists face a one in three chance of experiencing temporary or permanent disability at some point in their careers. With a relatively small outlay of premium dollars, office overhead expense insurance can protect the major investment a dentist has in his or her practice.

Editor's Note: This article does not constitute legal, tax, or financial advice. Please seek professional input as appropriate to your situation.

Jim Biesterfelt is vice president of Group Special Accounts at Great-West Life & Annuity Insurance Company, which insures the ADA Insurance Plans and is the sole provider of ADA-sponsored life and disability insurance to ADA members. For more information, call (866) 607-5330, send an e-mail to [email protected], or go to

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