Using Your Insurance: Young Dentist Builds Web of Protection
During Joseph Matrullo’s years at Tufts University, he had more than clinical dentistry on his mind. He also took several business courses. “I was thinking ahead to the day when I would join my dad’s practice, and I wanted to be prepared for the business side of dentistry,” Dr. Matrullo, age 28, recalls.
After graduation, Dr. Matrullo continued his financial education with courses that are part of the Certified Financial Planner™ (Certified Financial Planner Board of Standards, Inc, Denver, CO) curriculum. “I learned that an important goal of financial planning is asset protection, which involves building an interlocking web of tax planning, estate planning, and insurance planning,” he says.
INSURANCE IS TIER 1
As Dr. Matrullo explains it, one aspect of protecting assets is to keep tax liability to a minimum. Careful estate planning, including the possible use of trusts and family limited partnerships, is a second way to preserve assets. “But Tier 1 of the process is having adequate insurance protection,” he says. “Insurance is the first stop in putting together a total financial plan.”
As a student, for example, Dr. Matrullo took advantage of $50,000 in free life insurance available to student members of the American Dental Association (ADA), which automatically in-creased to $100,000 around the time he graduated. He also signed up for the ADA’s student disability insurance, which would have paid him a monthly benefit if he had become disabled during dental school.
“I thought it was a smart move to get my insurance portfolio started while I was young and the cost was so low,” he says. “I knew that when I got out of school, I would need to borrow money to buy a house and possibly new equipment for the practice. The fact that I had insurance would show creditors that I was financially responsible.
“I also recognized the incredible amount of debt I had going to dental school, and if I died, I wanted my parents to have the insurance money to pay off my student loans,” he continues. “Similarly, if I was disabled for a few months, I wanted a source of income to keep me in my apartment.”
When he graduated in 2004 and joined his father’s practice in Cranston, Rhode Island, Dr. Matrullo kept his coverage going under the ADA Term Life and ADA Income Protection Plans. He also applied for an additional $250,000 in life insurance. “All it took was a quick appointment for a physical,” he says.
Currently, Dr. Matrullo is in the process of increasing his disability coverage so that it equals approximately 60% of his current income, because he knows that is roughly the amount he takes home after taxes. “As my assets and income increase, I want my insurance coverage to keep pace so I remain adequately protected,” he says. Now married, he’s also thinking about his wife Melissa’s financial security if something were to happen to him.
In addition to personal insurance, Dr. Matrullo and his dad own business overhead insurance. A type of disability insurance, it will reimburse the practice for covered business expenses, such as rent and payroll, if either dentist is disabled and cannot work for several months. “That way, the cost of operating the practice wouldn’t financially burden my dad or me,” Dr. Matrullo says.
Based on his experience, Dr. Matrullo offers the following suggestions to new dentists getting started in their careers:
? Learn. Educate yourself about business and financial matters so that when you sit down with your attorney, accountant, and financial planner, you can talk knowledgeably with them.
? Take action. Buy as much insurance as you can while you are young and healthy.
? Review and adjust. Have 5-, 10-, and 15-year financial plans, review them regularly, and make sure your insurance stays current with them.
Editor’s note: Dr. Matrullo’s statements were obtained by Great-West Life & Annuity Insurance Company, underwriter and administrator of the ADA Insurance Plans, relative to his coverage under Group Policy #104TLP and #1105GDH-IPP, and reprinted with permission. For more information, visit www.insurance.ada.org or call 888-463-4545. This article does not constitute legal, tax, or financial advice; please seek professional input as appropriate to your situation.