Some commercial banks will
require that they are named as the
beneficiary of a life insurance
policy in an amount sufficient to
pay off loans for commercial real
estate or practice acquisitions. By
doing so, the bank is assured it will
recover its investment in the event
of the debtor’s untimely demise.
Alternatively, banks may require
disability insurance policies in an
amount sufficient to make the
monthly loan payment if the
borrower is injured or too ill to work.
A bank loan is not the only instance when life insurance has a role in
your professional life. If you are in a partnership with another dentist, or
are considering creating a partnership, be certain to formalize a buy-sell
agreement. Such an agreement is helpful if one of the partners dies, or is
unable to continue practicing dentistry, as it provides a structure and
valuation method for the other partner to purchase the business. Consult
with legal representation to create a buy-sell agreement, and have an existing
agreement reviewed periodically to determine the sufficiency of the terms.
One of the chief ways to fund a buy-sell agreement is through a life
insurance policy. By having life insurance, funds should become available
quickly to close out the financial interest of the deceased party in the
business partnership. There are several types of life insurance available.
Your MDA Insurance account executive can assist you with selecting the
right policy for your needs. For more information, please call 877-906-9924
and speak with a life insurance agent.