Dental Unscripted | Getting into Ownership and Practice Management Insights

Welcome to Dental Unscripted.

Where Mike Dinsio and Paula Quinn break

down the practice ownership journey,

one episode at a time.

Starting up, buying,

and running a successful dental practice.

Hello, hello.

Welcome,

welcome back to another episode of Dental

Unscripted.

My name is Michael D'Incio and of course

I have my co-pilot Paula Quinn.

We are doing another podcast today and I'm

very excited about today's speaker or

expert.

I'm going to clear my throat all of

a sudden.

And so I know exactly.

It's like, yeah,

I don't know what happened there,

but

We're breaking all things down today on

personal insurance.

And this is like a very big topic

for our clients that are doing startups

acquisitions.

And I just think it needs a little

bit of a hard press because the

environment where lenders used to require

this stuff,

they're starting to get more and more

relaxed about their requirements for the

loan.

But the truth is,

is you need this stuff,

whether the bank's requiring it or not.

And so I think that today's topic is

fitting.

And we have the pleasure of interviewing

and talking to Stephanie Pearson,

the co-founder of

of this group, Pearson Rabbits,

which is part of Earned Wealth Group.

And she is all things life,

business overhead,

and personal disability.

And I know you guys hear about this

stuff in college and all the things,

but like,

it becomes way more important as we

approach a dental acquisition.

So Stephanie, welcome to the show.

How you doing?

Hi, nice to meet you.

Thanks for having me.

yeah of course of course so um give

us like just this quick little what you

know your story and uh the company and

you know how you guys got to where

you're at today i we just look hear

a little bit more about you before we

get into the nerdy the nerdy details of

disability insurance

Listen,

if you would have told me ten years

ago this is where I'd be,

I would have thought you were nuts.

I am actually an OBGYN by training,

and unfortunately,

I was kicked in the shoulder during a

difficult patient delivery,

and she destroyed my shoulder and my

career.

I had a torn labrum.

It didn't heal.

I developed a frozen shoulder.

I had surgery.

It did not go as well as planned

and I have considerable range of motion

deficits and nerve damage in my left arm.

And I was never cleared to operate or

do obstetrics.

And I actually got terminated the day that

my FMLA was up because my contract said

I needed to be able to do a

hundred percent of my job duties.

And I learned a lot the hard way

about disability and life insurance.

And I became very passionate about the

topic

Because quite honestly,

I didn't want what happened to me to

happen to any of my colleagues.

And so I started really just sharing my

story and the mistakes that I made and

folks started asking for my help.

And so I figured maybe this is what

I'm supposed to be doing next.

And so really started focusing on

disability insurance in which business

overhead fits into that category.

and realizing that a lot of dentists and

physicians that I was speaking to,

while they not only didn't have disability

insurance,

they also didn't have life insurance.

And so it became kind of a package

deal that if I'm speaking to you about

one,

I might as well be speaking to you

about both.

Yeah, I think that's perfect.

And your story is super impactful and I

think is really cool.

I know Paula just had a friend who

went through a short-term situation.

And my goodness,

if he had not had insurance,

who knows where his company would be right

now.

And Stephanie, I've heard a statistic,

a percentage

of folks that actually apply for

disability insurance, and it's quite high.

Have you heard of any statistics out there

where it's a pretty common one to press

on, right?

The numbers that get thrown around a lot,

and they may be a little bit misleading

because it's looking at all.

It's not breaking out dentist, physician,

but the comment that you'll hear over and

over again

is that one in four twenty-year-olds will

apply for disability insurance at some

point during their career.

I think that might be a little high

for kind of the doctor space,

and I'm including all docs,

but there's also interesting data that

shows that we essentially have the same

risks as your typical

construction worker.

People don't think about it,

but think about how many weird body

positions dentists put themselves in.

They're bent over,

they're fine motor skills,

and it's not uncommon for dentists to go

out on claim.

Wow.

Well, Paula's a hygienist,

so she can talk about all those weird

angles for sure.

You know, your neck, your shoulders,

your back.

Oh, I have it.

I have it.

Right.

Yeah.

So but but it is a pretty high

percentage of of claims.

Right.

Like like is that just short term

disability that I'm speaking about or am I

talking about long term?

You're talking about all.

So the one in four is looking at

all claims over employment time.

Wow.

That's crazy.

It's hard for insurance companies to give

you real data because they'll say it's

proprietary.

But most of the actuarial data coming out

will say that there are more short-term

claims than long-term claims.

A lot of that really has to do

with women making babies,

normal pregnancy leave.

is typically not covered by long-term

disabilities.

It's not really a disability,

but a lot of short-term disability

policies will cover normal maternity

leave.

Got it.

So tell me a little bit about,

because one of the things my friend did

run across is,

And it's probably the type you pick or

maybe he had long term and not short

term.

But there's like a you know,

you have to be out for like ninety

days before it will even kick in.

Is that normal or do you just have

to add something to protect yourself

quicker?

So ninety days is the most commonly used

waiting period for long term disability

insurance because most short term will

cover you.

Before that,

ninety days and most people will have one

or more of the following in place to

kind of safeguard.

They'll either have a short term benefit

through work.

They'll have an accrual of PTO.

and or they'll have an emergency fund and

i'm a big fan of emergency funds i

think everyone should have money working

for themselves not for an insurance

company yeah so you're saying like if i'm

an owner and i have long-term disability

the best safeguard is just have some

savings to protect myself that's the best

way but the second way would be get

a short term in addition to my long

term so that

Okay.

You wanna look at what the cost,

I will tell you that a lot of

private short-term disability policies are

really expensive,

and I actually don't recommend them

regularly.

I really do recommend having that savings.

And truthfully,

all high earners should really have more

than three months saved.

I tell people to try to go for

six to twelve.

realizing early,

early in your career that may not seem

doable, but over time it will.

Now,

if I'm speaking to a woman who knows

that she's about to family plan,

different story.

The one thing that I always say about

disability insurance,

it is not a one size fits all.

That's interesting.

I think it's good to

bank in my head because I'm having

financial plans with all of our clients.

And I usually kind of like coach them

towards two months of like an emergency

fund.

But it sounds like I need to bump

that to three months minimum.

I would.

Yeah.

Yeah.

I mean,

it's hard to hold on to so much

cash, but in a situation.

Yeah,

it doesn't have to be immediately liquid.

It just has to be somewhat.

easily accessible.

I mean, most people,

even if it's in a mutual fund or

a brokerage account,

you can get access to your money in

a short order.

So I would agree with you.

I don't necessarily think you need to have

a ton sitting in a bank account that's

not making you any money.

Yeah, exactly.

Well,

we don't wanna step on the financial

advisor's toes with that conversation.

So we'll pivot back to insurance.

Okay,

so like I'm always talking to our clients

about like, okay, man,

like you're buying a practice.

now you have bigger responsibilities.

Your family, of course,

has always depended on you,

but now you've got employees that are

depending on you,

patients depending on you,

loans that need to be debt serviced,

all the things.

And so let's just start with disability in

general and kind of work our way down

to business overhead and how those

kind of play with each other to cover

you in the different scenarios.

I'd say it the way I would say

it,

but I'd rather you say it how you'd

say it.

But I did hear a third and that's

short term.

So it's almost like a short term,

long term and a business overhead makes

sense for disability

Am I hearing that right?

No, you're hearing it right.

Again,

I don't typically recommend buying a

private short-term policy.

Now,

there's an element with a practice owner

if they have enough employees that they

could create a group product.

that would cover them and their employees,

which is a little bit different,

group benefits and private benefits.

Some of the language is a little bit

different.

Somebody's getting fancy now.

Right, sorry.

No, I love that.

I'm kidding, I'm kidding.

And so sometimes we will talk about group

policies.

When we're looking at if we're really

focusing on the owner,

personal disability insurance is going to

cover their income.

Right.

And truthfully,

their biggest asset is their ability to

make money over the course of their

career.

Yes.

So that's going to cover them.

And they want to make sure that it

has the right language,

that it's truly specialty specific,

that they're covered for what they do day

in and day out.

And if they can't do that,

they would be considered disabled

regardless if they're employed in another

occupation.

And so they'll also see that if they're

a general dentist,

it's a little bit different than if

they're a specialist.

So pricing changes.

With business overhead,

you're actually protecting your business.

It doesn't cover your income because

that's what private individual disability

is going to do,

but it's going to cover those costs to

keep the doors open.

Now,

if you're a single practitioner and if

something happened to you,

you would walk away.

you might not need it, right?

I'm a big reliever of just because we

can do something doesn't mean it's always

the right thing to do.

But if you're responsible for a five or

ten year lease,

if you're going to hire people to cover

for you,

if you have other dentists in the practice

that are going to protect keeping the

doors open,

you have equipment that you may have

leased, right?

There are all these other costs

that go into running a business.

And that's what the business overhead is

in place to do.

And so it allows you to keep your

doors open.

So the business overhead will cover

everybody else's salary or hourly wage.

It's just not yours.

Now,

is there typically a waiting period on

that as well?

Yes.

And that can be anywhere from a month

to a couple of months.

So that is a little bit different.

Because a month can I mean,

ninety days can really mess somebody up if

they don't.

That's a lot of money.

It's a lot of overhead.

Yes.

Usually for business overhead,

we'll recommend thirty days.

yeah they don't really go much shorter

than that okay so back to that cash

savings of two months of overhead you know

um but but i heard you say that

it does cover the associate doctor dentist

it'll cover associate incomes it'll cover

equipment it'll cover leases and then they

have a line by line item like utilities

like right expenses what about loan

payments

So it'll cover certain loan payments.

Typically for business overhead,

you can get up to three loans covered.

There is a maximum amount.

And of course,

right now my menopausal brain is kicking

in and I can't think of what the

cap is.

But there is a cap.

It's not like we can cover people for

unlimited amounts.

And then you're also for leases.

It covers that.

But that's another place where you were

bringing up bank issues.

Most bank loans,

you do need a life insurance piece to

cover.

It's interesting.

Over a million dollars,

banks are absolutely requiring that.

It seems like they've been a little

less...

aggressive, I suppose,

or less needy on loans,

less than a million dollars.

And it just depends on which bank you're

talking about too.

So I've seen it,

I've seen it kind of have some thresholds

of when they would need certain things and

not so, but I,

but I do want to make sure that

we're pinning this in our, in our mind.

So, so the normal, the big practice loan,

the big one,

the one that they're buying the practice

or that could be covered under business

overhead insurance.

Yes.

And

personal disability,

although that loan is technically a

personal loan, technically,

it can be covered under business overhead.

That's great because I do know that

personal disability is much more expensive

than business overhead.

Is that true?

Yes.

Okay.

Can you walk us through kind of pricing

on, not like what's it going to cost,

but just like,

just the fact that I know that,

I know that,

but are we talking about a third,

a half or

dramatically more.

So that's really hard to pinpoint,

and I'll tell you why.

Okay.

There are so many factors that go into

the pricing of a private individual

policy.

Are you a boy?

Are you a girl?

How old are you?

What kind of dentist are you?

What state do you practice in?

Right.

So it's so hard to be able to

do that.

I will say that women are paying about

twice as much as men are for disability

insurance.

Interesting.

The business overhead,

I'd like to say it's about half of

a private disability, but I don't want to,

you know,

set myself up to the stakes on that

one it's a dramatically less it is a

dramatically lower cost and and personal

disability is the most expensive policy

that you're probably going to be looking

at as a new practice owner now another

question about disability and that's um

This is the one that takes the longest,

too, right?

Or is it the life insurance policy that

takes the longest?

And we're going to get to life,

I know, here in a second.

But, like,

if we're going to be late on closing,

isn't it usually disability insurance?

Yeah,

because I had something that held my –

like, I was applying for everything,

and I remember I was about to close,

and it was like we were still waiting

on a particular policy.

Like, come on, let's – Yeah.

I could be wrong,

but I've never heard of a disability

insurance policy holding up a closing.

I have heard of life holding up a

closing because of the bank notes.

Which one's the blood sample?

It depends.

So both now,

because a lot of companies in the

insurance space are trying to go to a

bloodless

and fluidless underwriting,

they will often depend on how much you're

asking for.

And so a lot of the disability insurance

companies now,

if your ask is for less than ten

thousand dollars a month,

you usually can forgo any fluids.

A lot of life insurance companies now will

get you up to three to five million.

There's a couple that'll go higher than

that.

without fluids.

Okay.

So that's a pretty big policy for no

fluids.

Now I was,

this is probably the last question just

for time purposes.

Well,

I have one and you just not let

me ask any.

Well, no, on, on disability specifically,

it's like, how much do you ask for?

What's your general role?

So again, unfortunately, it depends.

There's five traditional carriers that'll

give us the language that we really want.

Most of them, if you're a dental resident,

you can qualify for four thousand dollars

a month in benefit.

If you are new to practice,

we can usually get you five to six

thousand.

both of all of those are without the

carrier looking at how much money you make

okay so you can watch so in theory

what i heard you say is somewhere around

five grand you could kind of lay up

into um fairly easily correct and then

outside of that time zone the way that

the carriers will dictate how much you get

so this is for owners and their dentist

employees

It looks at how much money do you

make?

What group benefits, if any, do you have?

Because some of these bigger dental

practices will also create group

disability policies for their employees.

And then the carriers spit out a number.

It's all based on internal algorithms.

So it's not like you can say to

me, Steph,

I want fifteen thousand dollars a month in

benefit.

I'm willing to pay for it.

If the math doesn't work,

the math doesn't work.

The carriers dictate all of that.

Got it.

And like, okay, so like philosophically,

I have now a practice loan and a

business and a personal life.

and and hopefully a person a life outside

of my business and so something happens to

me i got to pay my mortgage and

all my personal stuff and i also need

to um pay my obligations at work uh

all that so like that's why you need

both i was just gonna say so like

the personal disability policy cover,

you should think of it as covering your

family, your family,

your personal personal situation.

I got that.

I got that.

But like some people, ladies,

some people use it to cover their business

loan if they don't have business overhead

insurance.

So there is.

And then they have less for their family,

for their family.

So now we see where you're going.

So you guys didn't let me get it

out before you started making fun of me.

So what is the most appropriate structure

then?

I mean, personal disability,

business overhead,

and then you're covered in all ways?

Yes.

That's the right way to do it?

That's the right way to do it.

Okay.

And then from a business overhead

perspective,

you guys are looking probably at the

profit and loss so that the client would

need that.

Correct.

The carriers will ask for your profit and

loss statements usually for two years.

And then again,

they're going to tell us what you qualify

for or not.

Those participation limits are much

higher.

We can get much more coverage and business

overhead than we can for a personal

policy.

Got it.

Paula, what was that question?

That's been, did you forget about it?

Yeah.

Okay.

So like the more money you make,

the more you're going to want to be

covered for, but at the same time,

you can't always get that much.

Do you run into that conversation a lot

with your clients?

We do.

Thankfully not.

too,

too much just because of the way the

algorithms work out.

But every carrier does have a maximum what

they call participation limit.

And so you can only get X dollars

from one policy.

And there's a misconception kind of

floating around that I hear a lot that

we should be able to get of our

incomes covered.

The goal is to try to get to

that sixty, seventy percent mark.

But interestingly enough,

the super high earners actually get

penalized because as I mentioned,

they'll only gonna give you up to a

certain amount.

So if the more you make,

it turns out kind of the less we

can actually get covered,

but then you're looking into what we call

the non-traditional carriers.

So like the Lloyd's of London and other

carriers like that,

where they cover the very wealthy and the

hard to insure.

So that's kind of how they risk mitigate.

so it's not that i've ever i shouldn't

speak in definitives i don't think that i

have ever had somebody that i couldn't

adequately cover it just may be in

different buckets with different designs

got it that makes total sense okay um

perfect i think unless there's anything

else uh disability yeah

Oh, you're going on to life.

What else?

Yeah.

No, are you going on to life?

Is that where you're going?

Yeah, I was going to pivot to life.

I was going to say just one quick,

make sure that when you're looking at your

private individual policies that they have

all of

the riders that you need so it's not

just the base benefit you're also looking

for inflation protection catastrophic can

protection words are hard sometimes um and

if something happens to you where you have

to go part-time they do have coverage

options for that as well so there are

a lot of pieces that go into a

proper plan and you want to make sure

that you're speaking to somebody who's

going to take you through all of those

pieces

speaking of which this is why it makes

sense to talk to a group like yours

that has multiple choices and yes is a

broker yes um not just one carrier and

uh any anything that you want to add

to that comment other than that itself

brokers have more options right brokers

have more options

Yeah.

Okay.

Okay.

Pivoting to life.

So life insurance, again,

sometimes a condition of the loan,

sometimes not, but like,

I always question why my clients question

getting another life insurance policy.

And for me, it's interesting.

You've got to protect your family,

of course, with a life insurance policy.

But then now you have this business.

And I usually run them through the

scenario of, God forbid,

something happens.

And Paul and I had to deal with

this.

And immediately it's a fire sale on the

practice and the practice is depreciating

very quickly.

And when a buyer hears it's a death,

they love to try to work the price

down and say that there's no goodwill and

employees might be leaving and it's just a

hot mess.

And so sure professionals like us and

brokers can get that thing up and sell

it quickly and all the things.

Um, but having a life insurance policy,

um,

covers you from probably the worst case

scenario.

So that's kind of my pitch.

Stephanie,

do you have a better one or like

our strategy?

That's pretty much mine.

I mean, look,

the bank is going to get their money

back and they don't care who they're

getting it from.

And if you have a personal loan,

it's your estate.

it's not even protecting necessarily the

business,

that's also protecting your family, right?

If you're saying, why get that extra one?

Well, if you don't get that extra one,

the bank's gonna come after your estate.

So you think you're taking care of your

partner and your children,

and they could lose a big chunk of

what you had intended on being there for

them to cover that loan.

I mean, to me, it's a no brainer.

And that's not just me because I can

sell it.

I mean, that just makes sense.

Yeah, it does.

And the fact that life insurance is,

by and large, a pretty economical term.

it does feel like a no brainer.

So strategies on life insurance,

is that like a situation where you would

do it for the term of the loan

or would you do it longer?

Like what are your strategies as you

approach life insurance specifically?

So again,

it's going to depend on whether it's

personal or for the business.

I mean, the business is real easy.

It's,

the term of the loan, right?

Most bank notes are five to ten years.

So you want to get a policy that's

going to cover the bank note, right?

Like that again,

there's no special sauce to that one.

When we're talking about personal,

it gets a little messier.

There are super complicated calculators

out there that take into account

everything from income to the average cost

of a funeral where you live.

I'm kind of a keep it simple,

stupid person, right?

You've heard of that.

And if you talk to a bunch of

financial people,

I have found

that you hear two paradigms kind of over

and over and over again for high earners

is you should either have a million

dollars a child or ten to fifteen times

your income and then roll in debt that

wouldn't die with you.

So mortgages, small business loans,

uh educational private debt that somebody

had to co-sign and I will often tell

people check with your lender a lot of

educational loans are forgiven upon death

but some of them aren't and you don't

want to have that sneak up on you

and then I talk in ranges and I

say to people there really is no right

number it's what you and your partner

discuss on sexy Friday night dinner talk

about how comfortable are you going to bed

at night,

getting behind the wheel of your car,

and your sweet spot's usually somewhere in

the middle.

And then it also depends.

Is it a dual income household?

Is it a one income household, right?

What are their plans for the future,

right?

We might be able to talk, oh,

I have one child now.

But I then say,

if life were fair and you got everything

you wanted, how many kids do you want,

right?

And kind of plan that way.

So again, you know,

it- Because insurance is more expensive as

you get older.

Correct.

Yeah.

Correct.

What about whole versus term when it comes

to just individual?

I know I'm probably opening up a can

of worms,

but now we're not talking-

you know,

do you still look at it as like,

you know, for instance, my kids are older,

you know,

Michael and I have talked about this

before.

He's like,

we don't have to worry about them,

but I do, you know, like,

I don't like number one, I'll,

I'll be leaving some debt behind.

I'm sure.

Number two, you want to, you know, if,

if you want to leave something, um,

So what do you usually recommend?

I mean,

it's probably different as you're younger,

like you said, in your family planning,

and it looks a little bit different versus

as you get older,

but just kind of rule of thumb on

term versus whole.

So again,

this is my humble opinion because I'm

going to piss off a lot of people.

Okay.

We do that on here.

It's called unscripted for a reason.

When I talk to young people having...

early family planning, early career.

Personally, I think term is all you need.

If you think about why do you want

your life insurance?

What's the purpose of your life insurance,

right?

For most young people,

it's raising our kids,

getting them out of the house and getting

them educated.

So that's a finite period of time.

And term is so much less expensive that

to me,

it makes sense that that's all I talk

about.

For me,

and I will tell you a lot of

dentists and physicians are kind of

hardwired.

We're indoctrinated from an early time

that permanent life insurance is the

devil.

I don't think it's the devil.

I think that there's a time and a

place.

I think it is incredibly useful for super

high earners who may need the estate tax

help.

It may be useful.

when the kids are out of the house

because you shouldn't need as much right

like if i'm telling you you should have

and i'm pulling a number out of the

sky right you should have five million

dollars in life insurance while your kids

are at home well once they're out of

the house you're not really going to need

five million dollars in coverage but at

that point you might want a definitive

death benefit as long as i pay my

premium that death benefit's going to be

there the day i die

That's when I start talking to people.

The other thing is I really like

convertible term.

So there's term life insurance that will

give you the opportunity before the end of

the term to take a piece of it

and convert it to a permanent product.

And they have to give it to you

at the health class you got the term

at.

So for folks, right,

we're not getting healthier.

We're just not.

We're getting older.

We're getting sicker.

you,

and this is like the salesiest thing I

ever say,

and I just can't think of a better

way to say it,

but it guarantees your future

insurability.

So God forbid something horrible happens

to you in that twenty year term,

in that thirty year term,

you're you might find me amazing,

going to skyrocket or worse.

You're not going to be denied.

Correct.

So I'm a big fan of convertible term.

It's only a little bit more expensive than

the straight term.

And you lose I lose much of the

value on that conversion like.

How do they do that?

You know,

like if I'm covered for two million

dollars and it's got a convertible part to

it.

It's a completely separate entity because

you're most people aren't going to convert

the whole thing.

They may just pull out two fifty or

five hundred.

Right.

And then they'll base it on how old

are you now?

How much do you want?

But it's at the health class you got.

And ten years ago.

Yeah.

Right.

As opposed to what would it be now?

Fifteen, twenty, twenty five years.

And you're saying they utilize that more

of like the the death kind of pain.

It'll pay for all that stuff.

Right.

Yeah.

Because then you have your definitive

death benefit.

If you want to leave, you know, look,

the hope is that people become

self-insured.

right?

That you've created enough wealth that you

don't need insurance.

That if God forbid you pass away,

you have enough in your estate to do

what you want for your children or

charities or whatever it is you want to

leave money to, right?

That's the hope.

It's kind of like the,

you talking earlier,

have three to six months savings.

Right.

Right.

You're just giving it away just in case

rather than.

Right.

And so,

You know,

it all comes down to what is the

purpose of the insurance that you're

buying.

And there's always going to be somebody

out there who's willing to sell you more

than you need or more than you want

or something you shouldn't really think

about.

Yeah.

You know, I love that.

I'm just not like that.

Yeah.

Yeah.

I like that, Stephanie.

Thank you.

Thanks.

I try.

Okay.

I was a little selfish.

I was awesome.

I love it.

No,

I really appreciate you breaking down

those three policies.

Those are the most important.

Those are all you do.

That's enough.

And you are the expert on those three.

And so I appreciate you being on.

Any final kind of comments, last things?

I mean,

just any little tidbits that we can close

on?

If you are doing a dental residency,

some of the carriers offer discounts.

that if you capitalize on and secure a

discount early,

it stays on your policy forever.

And so every dollar of insurance that you

purchase becomes discounted.

So I always urge folks to do this

stuff before they finish training.

And for women,

you want to get it in place before

you try to get pregnant the first time.

These disability insurance carriers look

for very many reasons not to cover

pregnancy.

And as a former OBGYN,

that stuff's very important to me.

So those would be my two big final

words.

I love that.

That's perfect.

Thank you.

Well, folks,

if you had any questions about those three

policies, answered, done,

we're good to go.

We can move on to the next topic.

So thank you so much, Stephanie.

Thank you.

Appreciate you.

Your story's cool.

And I think we understand.

kind of person and salesperson

quote-unquote uh we've got on the other

side so folks if you need anything and

that those three departments stephanie's

your go-to her her description and

resources will be uh below so thank you

so much and as always folks please

subscribe like do all the things review we

we appreciate it and um we'll see on

the next pod all right bye thank you

guys bye

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