Dentist Disability Insurance Premium Question

We are considering adding a disability insurance policy for the doctor and practice. Do you have a company that you have had a positive experience with? Thanks for the help!

It is a crap shoot. If the average premium was $5k/yr over the 40 years, $200k in deductions, therefore, at 40% saved $80k in taxes vs. getting disabled, receiving $140k PER YEAR generating $42k in tax (assuming 30%) and you’d eat into your $80k savings in 2 years.

Personally, if I become disabled, the $2,000 per year tax savings isn’t worth the annual tax cost of $42k if I become disabled…..that’s just me.

I have a client who’s been collecting $140k disability per year, tax free, since 1986…I can’t remember how many times he’s thanked me for advising him NOT to deduct those premiums.

On the strategy of reimbursing after the years premiums are paid, I also believe that’s a crap shoot. It may not have been challenged yet under audit (I’ve not heard of any cases), maybe because it hasn’t been found (after all you have personal checks to vouch you paid personally, right?) If it gets caught AFTER one becomes disabled….that annual benefit will be a HUGE incentive for the IRS to attack that strategy. That’s a headache I don’t want if my family is relying on ALL that tax free income.

This first appeared on Dentaltown.

Send your questions to Tim Lott, CPA, CVA at

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