Reduce your risks
Insurance protects you and your practice
By Stanley B. Greenfield

Graduation is over, and it is time to get things in motion to open an office and see paying patients.

Before you see your first patient, however, you have some essential business issues to attend to — one being insurance to protect you and your practice.

You can, of course, forego any insurance and assume the entire risk. You can do this as long as you can be assured you will not suffer a major loss. However, since risk is impossible to predict, a better option is to pass any risks you feel would be detrimental to you and your family to an insurance carrier.

You can also “co-insure” a risk by having deductibles in the coverage, which will keep costs down, but will also make you responsible for a portion of the risk. This can be increased as your financial situation improves.

What types of insurance do you need? Most new practitioners need the following:

• Life insurance. If you are just starting your practice, you probably still have some student loans to pay. If something happens to you, the last thing you want is to pass this liability on to your family.

Purchase enough life insurance protection to eliminate this debt. If you have a family, have enough additional protection to make sure your family can survive for at least a few years. 

In the beginning, a term insurance policy would be your best buy to give you the amount of coverage needed with an affordable premium. Buy one that can be converted and also make sure the policy is with a company with good ratings.

Remember, though, term insurance is described by its name. It is designed for a specific period of time — a term. It is not cost-effective to maintain a term policy for your entire life.

For example: If you bought $1 million of term insurance at age 30 and kept it until age 80, your total premium outlay would exceed $3 million. 

Term insurance is just one type of life insurance. Once you get established, you can look at other available types.

• Health insurance. You should have health insurance for you and your family. A comprehensive policy with a large front-end deductible is one to consider. (The larger the deductible, the lower the premium, but make sure you can afford the deductible.)  

The cost of the policy can be tax-deductible. Ask your accountant for advice on how to buy your health insurance for tax savings. 

• Disability insurance. Disability insurance is also something to consider, but when you first start out, it may be difficult to obtain. 

Before you purchase a disability policy, consider all of the definitions carefully. Similar to other policies, the longer the elimination period before benefits begin (your deductible), the lower your premiums will be. 

• Overhead coverage. This is disability coverage for your office expenses. You need this, too. Consider a 30-day elimination period with coverage to run for just 12 months.

Note: If you are borrowing money to purchase a practice or to start your own, many lenders require life insurance to cover the amount you borrow and disability coverage to cover the payments in case you become disabled.

• Auto insurance. Car insurance can be expensive. Most people know that discounts are available for young drivers who take driver’s training and maintain good grades. The discount can be up to 25 percent, depending upon the company.

What people don’t realize is the discounts are not automatic — you must ask for them.

You may be able to save more money by asking for higher deductibles. Although, if you incur a loss, you pay more out of pocket, keep in mind you probably would never submit a claim for a small loss for fear your premiums would go up or your coverage would be canceled.

And, if at all possible, insure all of your family’s cars with the same company to qualify for a multicar discount.

• Homeowner’s insurance. Your homeowners policy should be an “all risk, replacement cost contract,” with a rider to protect against inflation. 

You can cover most small pieces of jewelry under a basic policy, but expensive pieces should be scheduled on a special endorsement to obtain full coverage. You will need a current appraisal and a photograph of all items. Include a theft-extension rider to cover items lost away from your home. 

Coordinate your liability limits with a personal umbrella liability policy that should cover you for at least $2 million.  

• Malpractice insurance. Practitioners need malpractice insurance. But before you buy, ask questions; get straight answers; and compare rates. Make sure the company has a strong rating.

• Liability insurance. If you are renting space, your landlord will require liability coverage to protect against risk of someone falling or getting injured on the property.

Stanley B. Greenfield is a registered financial consultant and a registered professional disability and health insurance underwriter (RHU). He is president of Greenfield’s Financial Power Program and offers financial and practice management to the chiropractic community. He can be reached at stan@stanleygreenfield.com or by phone at 800-585-1555.