Financial Planning

Keeping the Lights on at the Office

02 Jun 2015

Medical professionals face unique financial planning issues. From managing cash flow and educational debt during training years, to investing wisely and planning for the future once established in your practice, it’s a challenge to understand not only what your goals and priorities should be, but more importantly, how you will achieve them.

Planning gets even more complicated if you’re an owner-practitioner. Throughout your many years of medical school and residency, did you ever realize as a doctor you would need the skills to manage your practice as a business?

The reality is the success of your practice – like any business – revolves around you.

Your occupation as a business owner goes hand-in-hand with your career as a physician. You drive your practice forward – through business planning, marketing, generating revenue, taking care of necessary business expenses such as payroll, utilities and rent. Regardless of what your tax return says, you are your business’s most important asset. Your patients and your employees all depend on you to keep your practice thriving.

But – here’s the critical question – what if you had an accident or an illness and couldn’t work? What would happen to your practice if you weren’t there to run it?

Some facts about disability

Disability can happen to anyone, anytime, anywhere. What would happen if you couldn’t work and earn an income? A work-ending disability can have an enormous impact on both your current lifestyle and your financial future. Consider these facts:

  • Just over 1 in 4 of today’s 20 year-olds will become disabled before they retire.
  • 68% of American employees live from paycheck to paycheck, without enough savings to cushion the financial impact a disability may cause.
  • Only a small fraction – 5% – of disabling accidents and illnesses are work related. The other 95% are not, meaning Workers Compensation doesn’t cover them.
  • The average monthly benefit paid by Social Security Disability Insurance (SSDI) for 2012 was $1,130.

Many people assume that most disabilities are caused by a catastrophic event such as a disabling accident. However, according to The Council for Disability Awareness 2013 Long-Term Disability Claims Review, approximately 90% of all disabilities are caused by illnesses rather than accidents.

Yes, it could happen to you.

Managing the risks of “what if”

No one plans to become disabled. If the unforeseeable happens, only proper planning with individual and business disability income insurance will protect a portion of your income and help keep your practice operating if you become sick or hurt and unable to work.

The business solution

After many years spent in training for a career with high income potential, medical professionals are generally aware of their need for individual disability income insurance.

Now think again about what would happen to your practice if you suffered a work-ending disability. Your business expenses – including your employee’s salaries – could go unpaid. How long could your practice last without you? How do you prepare for the unexpected?

Just as individual disability income insurance helps protect an individual’s income, Business Overhead Expense (BOE) disability insurance helps cover the day-to-day business expenses that help keep the company’s doors open – for up to two years – should you become totally disabled. Employee salaries, rent, leases, interest on debt and insurance premiums can all be covered by the policy – even your temporary replacement’s salary.

BOE is specially designed for companies like medical practices with a maximum of five owners and eight employees. BOE covers owners and professionals who are actively involved in the business on a full-time basis and whose presence is critical to its ongoing operation.

Even more importantly, BOE can provide your employees with some assurance that you’ve taken the precautions to help keep your practice, and their source of income, viable in the event you become disabled. That’s good for employee retention.

BOE can provide coverage for both total disability and partial disability. This important coverage is non-cancelable and provides protection up to age 65.

Financial services professional

You can benefit from working with a financial planner who has knowledge, experience, insight and an active interest in your financial success. A skilled financial planner can not only advise you on the type and amount of protection that is right for you, he or she can coordinate both your personal and your business plans with your attorney, your accountant, and any other professional advisors with whom you work to help you achieve what is most important to you.

Your financial services professional can help you be prepared for whatever tomorrow may bring, so your practice can stay healthy even when you’re not.


Bruce D. Smith, CFA® Estate & Business Advisor Center for Wealth Preservation   6800 Jericho Tpke., Suite 202W Syosset, NY 11791 Office: 516-682-3347 brucedsmith2@financialguide.com www.cwpmetro.com

This article was also featured in our newsletter Best Practices Vol. 10