By Sergio Ortiz
Recently, my wife and I went out to dinner with a group of friends. She’s a nurse practitioner, and before long the conversation turned to the practice where she works. Someone asked a question that immediately shifted the tone of the table: what happens if the doctor in the office suddenly can’t practice?
Who owns the practice? Who runs payroll? What happens to patients? Does a spouse suddenly become involved in the business? Is there an agreement in place, or insurance, or any kind of plan that guides what comes next?
As an advisor, I had instincts and general answers. But without knowing the structure of that specific practice, there was no way to respond with certainty. Everyone at the table assumed and hoped something had been put in place. The reality is that’s not always the case.
That conversation stuck with me because the same questions surface when I begin planning conversations with the dentists I work with. Most have taken steps to protect themselves and their practices. Many have coverage in place. Yet even then, gaps often exist because their practice, income and responsibilities have evolved faster than their insurance protection has.
Building Protection Around the Practice You Built
When I review a dentist’s insurance coverage, I’m evaluating whether the protections supporting the practice still reflect its current size, structure and financial reality.
Dentists should have some combination of life insurance, disability coverage, umbrella liability protection and a buy-sell agreement. The question isn’t if these are in place, but whether they’ve kept pace with income growth, practice value, debt and ownership changes.
In my experience, protection decisions rarely happen all at once. They’re made over time, often for the right reasons in the moment. Yet when they aren’t revisited periodically, gaps can form even when coverage appears comprehensive on paper.
When Life Insurance Protects More Than Income
For dentists I work with, life insurance isn’t solely about replacing household income. It often supports acquisition loans, personally guaranteed debt and ownership obligations that don’t disappear if something happens unexpectedly.
When Clinical Production Is the Asset at Risk
Practice income depends on clinical production. The key question isn’t simply whether disability coverage exists, but how it responds if hands-on dentistry is no longer possible while other work still is.
As Net Worth Grows, So Does Liability Exposure
As assets and practice equity grow, liability exposure should grow with them. Umbrella limits often remain unchanged even as net worth and ownership complexity increase.
An Agreement Is Only as Strong as Its Funding
Many partnerships that I’ve seen have agreements outlining what happens if an owner dies, becomes disabled or exits. Funding those agreements is what makes them executable. Without updated valuations and sufficient liquidity, even strong agreements can create strain during a transition.
Over time, life and practice evolve. Income grows, clinical ability shifts, practice value changes and personal wealth expands. These don’t sit in separate buckets; they influence one another. When one changes, the others follow. Without stepping back and viewing protection through that broader lens, gaps form and risk increases.
The Tradeoffs: Premiums Today vs. Risk Tomorrow
Let’s address something critical: proper insurance coverage can be expensive. This expense may compete directly with other priorities inside the practice and at home. Premiums can reduce flexibility, and they can mean less reinvestment in equipment, slower debt repayment or smaller contributions toward short-term savings.
Equally, there can be risk in avoiding proper coverage or leaving outdated coverage in place. The exposure created by being under-insured may not show up day-to-day, but it becomes real during a health event, a liability claim or an unexpected ownership transition. For example:
- A disability doesn’t just interrupt earnings; it affects the stability of the practice.
- A liability claim doesn’t just impact a balance sheet; it can threaten accumulated personal assets.
- An unexpected death doesn’t just affect a family; it can force an immediate ownership transition.
This is what makes insurance coverage for your dental practice a planning decision. I believe it is not a binary choice between being responsible or careless; it is about evaluating a risk. What are the risk tradeoffs you’re making by not being protected as income grows, debt changes and the structure of the practice becomes more complex?
Ownership Transitions Don’t Wait for Perfect Timing
One of the areas where these tradeoffs become most visible is in partnership and continuity planning. Dental practices frequently rely on a small number of key producers. When one of those individuals is suddenly no longer able to practice due to death, disability or even a disagreement that leads to separation, the impact is immediate and financial.
Many partnerships have buy-sell agreements in place, which is a meaningful step. Yet agreements alone don’t create continuity. They need to be funded, they need to reflect current realities and they need to be revisited. Valuations change. Roles evolve. A document signed years ago may not hold up under present conditions.
From a planning lens, it’s my duty to address practical questions that have a meaningful impact on your future.
- If a partner passes away, is there liquidity to execute the buyout without straining the business?
- If someone becomes disabled, is there a defined path forward for ownership and income
- If a key associate leaves, how does that affect the value and stability of the practice?
Key person insurance can help address the financial shock tied to the loss of a partner, but it is only one piece of the conversation. The broader issue is understanding how ownership, leadership and revenue transition under stress.
Stabilizing the Practice When Disruption Hits
Once the core personal and ownership risks are addressed, operational coverage becomes the next layer of protection. This is where many dentists already have policies in place, but they are worth reviewing periodically through a broader financial planning lens.
Key areas include:
- Professional liability (malpractice): understanding consent-to-settle provisions and the differences between occurrence and claims-made coverage.
- Cyber liability and HIPAA exposure: preparing for data breaches, ransomware and the operational disruption that can follow.
- Business overhead expense coverage: maintaining payroll, leases and fixed costs if clinical production pauses temporarily.
These protections aim to help stabilize the practice in the short term, but they are most effective when aligned with the broader personal and ownership planning already in place.
Turning Policies Into a Coordinated Strategy
Most dentists I work with are not ignoring risk. They’ve made responsible decisions over time. But protection that once made sense can quietly fall out of alignment as income grows, partnerships evolve and the structure of the practice becomes more complex. Revisiting those decisions every few years is what turns a collection of policies into a coherent strategy. That process, more than any single form of coverage, is what ultimately strengthens both the practice and the life built around it.
Advisory services offered through Meridian Wealth Management, LLC, a Registered Investment Advisor. Insurance offered through Meridian Wealth, LLC. Seek tax, legal, insurance, and
Investment advice from a licensed professional relative to your situation. The information and opinions voiced in this material are strictly for general information only and are not intended to provide any security recommendations, specific advice, or recommendations. All investing involves risk, including loss of principal. Past performance does not guarantee future results.
