Why True “Own Occupation” Disability Insurance Matters

Most Dental Professionals are approached by insurance agents and financial advisors to purchase individual disability income insurance early on in their careers, and rightfully so. This product purchase is the cornerstone of a financial plan because it protects the most valuable asset the professional owns ­the ability to work and earn a living in a specific occupation. Our financial lives revolve around our ability to earn a living, so no other insurance product could be considered more important to a professional and their family. The decision to purchase this coverage is a relatively simple one, but comparing contract language and sales jargon is anything but simple when the term “Own Occupation” is thrown around as loosely as it is today. Many agents go as far as to deceptively describe plans as “Occupationally Specific” to make their clients think they’re purchasing true “Own Occupation” coverage, when in fact they’re not.

Technically speaking, most disability insurers in the market today offer “Own Occupation” coverage, but the contract language from one plan to the other is really very different. I wrote a detailed article in 2002 that details virtually every nuance in the definitions of “Total Disability” in today’ s product offerings where this all important language resides in a policy. The purpose of this article is to compare the significant difference that owning a true “Own occupation” plan vs. a modified “Own Occupation” plan can make during a real claim.

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True “Own Occupation” definitions of “Total Disability” say that the insured will be considered totally disabled if, due to sickness or injury, they cannot perform the material and substantial duties of their regular occupation. This means that the General Dentist or Dental Specialist will be deemed totally disabled if they cannot work in their regular occupation, regardless of whether or not they choose to move on after the disability and work in another gainful occupation. This simply means that they can work elsewhere if they become totally disabled in their regular occupation and keep the new income in addition to their full disability income benefits.

Modified “Own Occupation” definitions say that the insured will be considered totally disabled, if due to sickness or injury, they cannot perform the material and substantial duties of their regular occupation and are not engaged in another gainful occupation. Under the terms of this type of contract, the General Dentist or Specialist who chooses to work elsewhere after suffering the disability could stand to lose all of their disability insurance benefits depending on the income they develop in the new occupation. In my opinion, this is a dangerous proposition because of a simple fact: Dentists and Dental Specialists are much more prone to suffering a “Total Disability” in their “Own Occupation” because of the physical
nature of their jobs.

Like most ambitious people, these professionals would likely pursue some sort of alternative career if they lost the ability to practice. They could teach at a University program, open a consulting practice for Dentists and Specialists, open a practice acquisition firm, or even learn to tell their own story and market disability insurance to their colleagues. Many disabled dental professionals have pursued these verycareers – and many have been very successful.

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Because the Modified definitions in disability contracts that are widely offered today for Dentists and Dental Specialists (ADA plan, Mass Mutual, Met Life, Pan American, Provident/Unum, Principal, Ohio National, and others) will reduce benefits and pay based on “earnings loss” rather than total disability when a disabled professional moves on to a new career, they can cause significant financial hardship at claim time. These contracts will commonly measure “pre disability” income and compare it to “post disability” income and pay a percentage of the maximum monthly indemnity in the contract based on the percentage loss of earned income. As the new income grows, the disability benefit shrinks, and can
eventually disappear completely.

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Assume we have a General Dentist earning $150,000 of net taxable income “pre disability” annually. Let’s also assume he carries a disability policy with a maximum monthly indemnity of $6700 per month ­tax free. This is the maximum amount he/she would be allowed to carry from virtually any company today assuming that level of income

After he suffers a back injury and is forced to retire from Dentistry, he pursues a career in consulting and earns an annual taxable income of $80,000 (approximately $5300 net after taxes). In this example, the Dentist is now suffering an earnings loss of $70,000 or 47%. To calculate the benefit payable, take the maximum monthly benefit in the policy and multiply it by 470/0. This would calculate to $3150 per month. So the disabled Dentist is now taking home about $8,450 per month in total income even though they’re working full time ($5300 in earned after tax income plus the $3150 in disability benefits). Before they became disabled, they were taking home about $10,000 per month after taxes.

In this example, the true “Own Occupation” plan would not offset against the new income and would pay the full $6700 monthly benefit. The disabled Dentist would now be taking home about $12,000 in income to support his or her family. That’s an extra $3550 per month – tax free!

What’s worse is that as the disabled dentist becomes more successful and grows their new business, the income from the disability policy will completely disappear. Once the earnings from the new occupation reach 80% of the pre-disability level, benefits stop all together. So, a totally disabled Dentist or Specialist could be forced to endure a full 20% drop in income and receive no benefits from the company at all.

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In my opinion, the point in owning a true “Own Occupation” plan is not to be “greedy” as some agents suggest, but rather to compensate the disabled Dentist or Specialist for losing their ability to work in a very specialized occupation. Think about it for a minute: How much money and time did you invest in preparing for your career as a Dentist or Specialist? How much future income growth would you give up if you became totally disabled as a Dental professional? Shouldn’t you be entitled to a full disability insurance benefit if you’re sick or injured to the point where you have to quit the profession you love and sell your business, regardless of what other occupation you decide to pursue?

In my opinion, many insurance agents forget the most important part of the equation when pushing the “modified” plans: Policies only replace 50% to 60% of gross taxable income to begin with. The likelihood of success in a new career for any ambitious person is high, but definitely not guaranteed. Dentists and Specialists make very nice incomes, and in order to “make yourself whole” for your family’s sake, you need to be able to find a way to replace 100% of your pre-disability earnings. Modified “Own Occupation” contracts make that difficult to accomplish. You and your family deserve better, and you can still find the “real deal” in disability insurance as a Dental professional.

By David M. Richards – Financial Advisor

David Richards is a financial advisor and has specialized in disability insurance for Dental professionals since 1993.

Property Claim Gets Dentist Fired Up

About CNA’s Dental  Recovery Program

After successfully practicing dentistry for 28 years, the last thing Dr. Barry Saltz, D.D.S., P.A.,
expected was a midnight call about a fire. But, when he and his wife arrived at the building his
father built in 1974, a two-alarm blaze rocked him to the core. “We could not believe what had
happened,” recalled Dr. Saltz. “Thus began an odyssey of trying to make order from chaos on
almost every level of complexity … a true nightmare.”

Fortunately, CNA’s property general claim adjuster, and the RMC Group LLC, a restoration
management and reconstruction company, quickly responded to implement CNA’s Dental
Recovery Program. According to Dr. Saltz, “They stepped up to the plate and helped me put
my life back together. Although there is still a long way to go, I feel we are definitely on the
right track.”

But that’s not what Dr. Saltz heard from colleagues and friends immediately after the fire. The
directive was to get a public adjuster to help navigate dealing with his carrier. Dr. Saltz said he
was ready to “deal with the big, bad insurance companies my peers told me about, but none
of these friends had CNA coverage.”

“Then the CNA adjuster called, and I told him I had tentatively signed paperwork with a public
adjuster. I also shared my history of having a CNA policy through the Professional Protector
Plan® for Dentists since my practice inception in 1984; that as a past president of the Maine
Dental Association (MDA) we endorsed the Professional Protector Plan program as long as I
could remember; and the MDA Council on Insurance recommended re-endorsement of the
policy for association members to the MDA Executive Board, which was then approved. CNA’s
adjuster calmly asked that I give him a chance, adding that CNA didn’t work the way other
carriers did. His kind, sincere demeanor resulted in my canceling the other agreement, and I
never looked back.”

Since then, Dr. Saltz, the CNA adjuster, and Bill Sutter, President and CEO of the RMC Group
LLC, and his team, have been in constant communication. According to Dr. Saltz, “CNA’s
adjuster has been especially calming and reassuring. As I have told the group, I feel as though
I have the A team, and I have made life-long friends.”

“CNA’s dental recovery program is unique to the competition in many ways,” explained Dr.
Satlz. “Since the fire, I have discussed the policy value with colleagues nationwide, and many
of them have already changed carriers to CNA. Frankly, CNA is probably known more for
its malpractice coverage because there is a greater likelihood for that type of claim than a
disaster occurring. However, after going through my experience and listening to the poor
treatment of colleagues by other carriers, I believe CNA has a marketplace for dentists. It
wasn’t until after the fire that I recognized what sets CNA apart from other insurers. You have a
gem of a policy.”

Bill Sutter has stated the RMC Group LLC is proud to partner with CNA on this progressive
approach to dental claims. According to Bill, “We believe this is the only program of its kind
specifically designed to respond to dental policyholders and provide a full-service, one-stop
approach that brings value and professional service to both the insurer and the insured.”

“CNA has a gem of a policy.”
Dr. Barry Saltz, D.D.S., P.A. CNA’s insured, Dr. Saltz, sums it up this way, “Thank you for the wonderful service I am getting
from CNA. My goal is to leverage my dental organizational history and insights to help bring
more dentists to your company.”

CNA’s dental program is administered nationally by the Professional Protector Plan® for
Dentists®. By taking a team approach and listening to agents, partners and dentists, CNA and
the Professional Protector Plan® for Dentists acknowledged the need for a program to assist
insureds at a time of crisis. That’s when Todd Klingaman, Director of General Adjusters for
CNA’s Property Large Loss Organization, began work on the dental recovery program.
Dr. Saltz is one example of the positive results of the partnership between CNA and the
Professional Protector Plan® for Dentists.

Temporary Dental Facilities

Temporary dental facilities and services provided by CNA HealthPro and Professional Protector Plan® for dentists may help restore dental offices within 30 days following a disaster.

Every year, dental facilities experience natural disasters or manmade catastrophes that render them unable to provide services to patients. The Temporary Dental Services Program, provided through CNA HealthPro and the Professional Protection Plan® (PPP) for Dentists, assists dental offices in restoring and reopening for business within approximately 30 days following an incident.

Once an incident is reported, CNA begins the process of quickly restoring dental office operations. This process includes:

  •     Immediate search to confirm the location of a temporary facility;
  •     Modifications to the temporary location implemented on an expedited basis;
  •     Provisions for temporary usage of all dental equipment;
  •     Full-service dental facility operational within approximately 30 days of securing the lease; and
  •     Inventory of all damaged equipment and records, including an assessment and evaluation.


“In most cases, a disaster does not eliminate the patient’s need for dental attention or pre-arranged dental services. We are pleased to offer the Temporary Dental Services Program that minimizes the interruption of services for dentists and enables them to continue to put smiles on the faces of their clients,” said D. Todd Klingaman, Director – Large Loss Property, CNA.

About the Professional Protector Plan® for Dentists
Through their network of specialized agents, the PPP has been serving dentists nationwide since 1969. This comprehensive program was developed specifically for the dental practice by providing insurance protection through professional liability, general liability, employment practice liability, workers’ compensation, and property insurance products. Underwritten by CNA, rated “A” (excellent) by AM Best for financial stability, the PPP has proven to be a stable force in the dental professional liability marketplace. The plan is offered in all states. For more information about the PPP online.

About CNA
Serving businesses and professionals since 1897, CNA is the country’s seventh largest commercial insurance writer and the 13th largest property and casualty company. CNA’s insurance products include standard commercial lines, specialty lines, surety, marine and other property and casualty coverages. CNA’s services include risk management, information services, underwriting, risk control and claims administration. Please remember that only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions for an insured. All products may not be available in all states. CNA is registered trademark of CNA Financial Corporation. For more information, please visit CNA online.