Risk Management: Not Managing Your Risk is a Risky Business
Your risk management program will be the most dynamic foundational planning area. As circumstances change in your life, your risk management program should be one of the first things updated.
Insurance protections are the first step towards proper risk management. While it is not recommended that you spend any more on your insurance protections than absolutely necessary, it’s very important to make sure you’re paying for the right coverage.
Helpful Hint: To control the cost of all insurance, make sure your deductibles are set properly for the amount of cash you have on hand to deal with that emergency. Confirm waiting periods for disability insurance and liability limits for home and auto coverage. Take advantage of discounts provided through your local veterinary association.
The most common types of insurance you will encounter include: health, disability, life, home and auto, and professional liability. Remember when applying for individual health, disability or life insurance, proof of health and a medical exam may be required. Common health issues that can preclude you from coverage include history of depression/anxiety, recent surgeries, auto-immune diseases, and the current medications that you take. All insurance companies view these conditions differently. However, a decline by one company may not result in a decline by another company. Working with an insurance agent as your health advocate can help make sure you get the right plan.
Never be without health insurance. Medical expenses are the number one cause of personal bankruptcy. Typically, health insurance is an employee benefit provided by your employer and they will often pay for, or partially pay for, this benefit for you depending on the size of the practice. Be very careful in not allowing a temporary lapse in coverage between graduation and your first job or when you change jobs.
Disability insurance is intended to protect individual income in the event that you suffer a disabling accident or illness. There is both long-term and short-term disability coverage. Work with your insurance agent to decide what combination you need. Most people think about getting disability insurance after it’s too late. Think it can’t happen to you? During your working career, you are four times more likely to become disabled than to die.
Helpful Hint: Make sure you understand the definition of disability in your policy. Do you have to be fully disabled to receive benefits, or can you receive partial benefits if you can only work part time due to a disability? Does it cover your occupation specifically as a veterinarian?
Life insurance is a coverage that will pay a stated death benefit to your beneficiaries in case you die. While you may not feel the need for this coverage if you don’t have dependents, a mortgage, or a business loan to repay, you will have future obligations. Securing a small policy while you are young and healthy is typically recommended. Securing life insurance can take awhile. If you plan to seek a business loan in the immediate future you should apply for coverage before you apply for the loan.
Helpful Hint: Term insurance is the most affordable style of life insurance. This type of policy comes in 5, 10, 15, 20 and 30 year increments.
Property and Casualty Insurance
Property and casualty insurance is a blanket term for those insurances protecting things instead of people. Homeowners, renters, auto, personal umbrella liability, professional liability and business insurance all fall in this category. Be sure to check your personal liability limits on your auto coverage when you graduate.
Helpful Hint: State minimum guidelines are very low, and while they make for affordable premiums while in school, they can leave you exposed to a personal lawsuit if you’re ever involved in an accident where you are found at fault.
Professional Liability Insurance
This is your most important type of professional insurance coverage. Typically, it is provided by your employer and covers you from liability while practicing medicine. If your employer does not provide this coverage, you can seek it out privately. Contact your state veterinary medical association for more information.
Things such as basic estate planning and drafting a will, employment contracts, or business buy/sell documents for a practice purchase are all part of your legal planning needs. At the onset of your career and before you have any business concerns, it is recommended to have your basic estate documents in place. The following documents are commonly overlooked:
- Will – states where your possessions will go and guardianship for your children.
- Power of Attorney – appoints someone to make financial decisions on your behalf if you’re incapacitated.
- Medical Directive – your wishes to your doctor for medical care.
Unfortunately, since a death or accident can happen at any time, you never truly know when you may need these documents.
If your employer has an employment contract, you are encouraged to have an attorney review it before signing. Remember, an employment contract is a binding legal document. Some areas that need careful consideration include:
- Terms of employment
- Salary and/or production calculations
- Non-compete provisions
- Employer benefits
- Vacation/sick days
- Work schedule
Helpful Hint: It’s tempting to save initial costs by not hiring an attorney. Failure to do so could result in much greater liability and additional cost. It’s recommended that all legal concerns should be handled by a qualified attorney.
© 2012 WSVMA