Individual Disability Insurance is the basis of personal income protection. While many physicians have secured discounted policies during residency, many have not increased their coverages as income has jumped OR they simply put of securing policies altogether. When leaving larger employers who typically provide group Long Term Disability insurance without employee cost, the solo practitioner is now on their own to insure all income that is relied upon for family needs such as mortgage, medical school debt, family needs, and college tuitions. Individual Disability Insurance can be designed to insure a percentage of income and certain discounts can be included when 3+ lives apply together in the same company.
Business Overhead Expense Insurance is Disability Insurance that a business owns on the life of the partner/key employee. This policy is designed to insure expenses attributable to the partner and pays a benefit to business in case the partner is disabled and can’t work and produce revenue. The premiums are TAX DEDUCTIBLE by the business and typically are paid for 12, 18 or 24 months to provide the partner time to return to work or determine that they might not come back and perhaps a new partner is to be brought in to produce. These individual policies can be list billed to the practice with discounts at 3+ lives.
If the new practice as more than 1 employee, it is customary to provide a Group Long Term Disability policy that can help protect income for the partner and any employees. Considering a “staple” benefit, this coverage is traditionally less expensive than individually owned policies and can serve as a good base for the partners to stack more benefit on top of existing individually owned coverage. Typically, when premiums are paid by a business for Group Long Term Disability Insurance, the benefits become taxable if on claim for the employees BUT, for a partner in an LLC or Sub S corporation, the premiums flow through to the owner and are taxed as ordinary income, thus allowing for tax free benefits. Finally, this is the most cost effective way to provide income protection for employees of a practice and one of the first things that must be evaluated when creating a new business.
If the new practice has more than one owner there are two additional topics that MUST be discussed and reviewed; Business Buy Sell Life AND Disability Insurance. Often this need is recognized by attorneys during the creation of the entity and amounts are established in legal documents for future payouts down the road. These are critical pieces to ownership and provide clearly documented financial solutions should any practice partner die prematurely OR become disabled, leaving him/her unable to produce. Mistakes are often made by companies addressing the death benefit risk but leaving the disability chances uncovered…Statistically, the odds are far greater that a disability occur than death but far too many people assume the “superman complex” and decide that “nothing will happen to them” and leave the disability risk uncovered.
These policies are owned by the business and when death or disability occurs, the benefit is paid to the business to “buy” back the shares of the disabled or deceased partner from the spouse or estate. This leaves the surviving/ongoing partners with ample cash to compensate the former owner/owner’s estate while maintaining the financial strength and integrity of the practice.
Buy Sell Life Insurance can be constructed using Term or Permanent Life policies OR a combination of the two. When we use permanent life insurance as part or all of a Buy-Sell arrangement we use Corporate dollars via IRS Section 162 to allow a business to pay premiums for the policy but then report the premium as income to the owner. This reduces the out-of-pocket cost for the cash accumulation permanent life policy for the insured while keeping ownership and beneficiary designations with the business. At a later date, the business can assign, without penalty, the ownership of the policy and all accumulated tax deferred cash within…however, all during the accumulation phase, the death benefit would have paid the business to fulfill the buy sell needs. This strategy is a win-win for the business and the physician owner who benefits from the corporate funding over time and supplemental retirement plan upon exit from the business. Lastly, in cases where larger Buy Sell Life Insurance amounts are needed beyond the death benefit of the permanent policy, we add Term Life for 10/15/20 year to make up the difference at lower annual cost. This policy can also be assigned to the insured upon retirement and converted to permanent coverage if there is a personal need or desire. which can then grow cash for future asset growth Business Buy-Sell Life AND Disability Insurance.
Buy Sell Disability Insurance is a predetermined amount at the formation of a partnership that establishes a policy to pay the business in the event the owner/partner becomes disabled. This benefit is most often paid to the business after 1 year and the determination that the owner is NOT returning to work as a result of a disabling condition. The premiums are paid by the business but generally NOT deductible.
Other Insurance Products Worth Exploring include Long Term Care Insurance with some premiums being Tax Deductible when paid by the practice. LTC Insurance OR Key Person Life Insurance with cash accumulation and/or LTC riders can also be excellent perks for the practice to provide for NON Owners as a way to show appreciation without creating more taxable income. Also, as competition increases for talented staff, PA’s, Nurses, evaluation of these types of asset growth/protection vehicles can be appealing.
Mensh Insurance has been an independent insurance agency specializing in the individual needs of medical professionals of all specialties since 1979. President Emeritus, Jeffrey Mensh, started the company having been trained in income protection by the industry leader, Berkshire Life. Very quickly throughout the DC area, the company established a reputation for designing and implementing all necessary forms of protection for the rising number of medical corporations in the region.
The son of a Gastroenterologist and attending professor at George Washington University Medical Center (and brother to a PENN/UNC/Yale trained Gastroenterologist) Jeff Mensh was counted on by hundreds to assist in guiding all key members of medical practices from the physicians to Chief Financial Officers, Chief Executives, Practice Managers, and Human Resources Chiefs in solidifying the true needs of the owners and all critical contributors to the success of these businesses. Jeffrey Mensh was in the top 3 of all individual disability insurance producers nationally for Unum throughout the 1980’s and 90’s, became the Chairman of Manulife’s (now John Hancock) National Agent Advisory Council, and one of Underwriters Service Agency and Capitol Metro Insurance Services very top producers for over 25 years. Jeff Mensh was uniquely adept at identifying the areas of need and ensuring that what might appear to be complicated becomes simplified and custom fit to the needs of each client.
Mensh Insurance transitioned in 1996 as Jeff Mensh’s son, Danny Mensh entered the business and ultimately took over the daily operation in 2001. After attending Landon School in Bethesda, MD, Danny was recruited by Duke University to play golf but after numerous wrist injuries, Danny focused his attention on the insurance business and spent his early years focused entirely on long term care planning after considerable study at Duke’s Long Term Care Resource Center…the oldest of it’s kind nationwide. With many Mensh Insurance medical practice clients established as C Corporations and tax legislation in 1996 that allowed Corporations to fully deduct LTC Insurance for employees and spouses, Mensh Insurance became a regional and national leader in the design and implementation of traditional Long Term Care Insurance programs both individually and for company identified groups of “carved out” executives.
After some changes in the LTC Insurance industry and Jeffrey Mensh’s retirement to Florida, Danny Mensh moved the business to Winston Salem in 2004 and has focused on Resident and Fellow Individual Disability insurance programs as the primary focus of Mensh Insurance. For over a decade, Danny has provided GUARANTEED ISSUE DISABILITY INSURANCE for Graduate Medical Education programs at Wake Forest University and UNC Chapel Hill. Recently, Mensh Insurance was selected to also provide Guaranteed Issue coverage to Mayo Clinic and has firmly established relationships with several departments spread over the Harvard GME programs at Brigham & Women’s/Mass General, Mclean, Beth Israel Deaconess, and Dana Farber. Mensh Insurance now has over 1000 former resident/fellow clients spread across the country with discounted disability insurance, Term, and Permanent Life Insurance plans in force.
As an independent agency with access to every major carrier for Disability and all forms of Life Insurance, decades of experience working directly with physicians as they train, complete training, establish careers, AND form then grow medical practices, Mensh Insurance has the unique knowledge, understanding and skillset to specifically care for all ownership needs and risks.
Mensh Insurance has trusted direct relationships to provide access to all disability, life, and long-term care insurance products as well as case design, product selection, administration, and underwriting with the following renowned wholesale/General Agencies:
Capitol Metro Financial Services, Columbia, MD; Guardian Disability Quotes, Rockville, MD; The Plus Group/Bloch Agency, Charlotte, NC; The Cason Group, Raleigh, NC
Mensh Insurance has been an independent insurance agency specializing in the individual needs of medical professionals of all specialties since 1979. President Emeritus, Jeffrey Mensh, started the company having been trained in income protection by the industry leader, Berkshire Life. Very quickly throughout the DC area, the company established a reputation for designing and implementing all necessary forms of protection for the rising number of medical corporations in the region.
The son of a Gastroenterologist and attending professor at George Washington University Medical Center (and brother to a PENN/UNC/Yale trained Gastroenterologist) Jeff Mensh was counted on by hundreds to assist in guiding all key members of medical practices from the physicians to Chief Financial Officers, Chief Executives, Practice Managers, and Human Resources Chiefs in solidifying the true needs of the owners and all critical contributors to the success of these businesses. Jeffrey Mensh was in the top 3 of all individual disability insurance producers nationally for Unum throughout the 1980’s and 90’s, became the Chairman of Manulife’s (now John Hancock) National Agent Advisory Council, and one of Underwriters Service Agency and Capitol Metro Insurance Services very top producers for over 25 years. Jeff Mensh was uniquely adept at identifying the areas of need and ensuring that what might appear to be complicated becomes simplified and custom fit to the needs of each client.
Mensh Insurance transitioned in 1996 as Jeff Mensh’s son, Danny Mensh entered the business and ultimately took over the daily operation in 2001. After attending Landon School in Bethesda, MD, Danny was recruited by Duke University to play golf but after numerous wrist injuries, Danny focused his attention on the insurance business and spent his early years focused entirely on long term care planning after considerable study at Duke’s Long Term Care Resource Center…the oldest of it’s kind nationwide. With many Mensh Insurance medical practice clients established as C Corporations and tax legislation in 1996 that allowed Corporations to fully deduct LTC Insurance for employees and spouses, Mensh Insurance became a regional and national leader in the design and implementation of traditional Long Term Care Insurance programs both individually and for company identified groups of “carved out” executives.
After some changes in the LTC Insurance industry and Jeffrey Mensh’s retirement to Florida, Danny Mensh moved the business to Winston Salem in 2004 and has focused on Resident and Fellow Individual Disability insurance programs as the primary focus of Mensh Insurance. For over a decade, Danny has provided GUARANTEED ISSUE DISABILITY INSURANCE for Graduate Medical Education programs at Wake Forest University and UNC Chapel Hill. Recently, Mensh Insurance was selected to also provide Guaranteed Issue coverage to Mayo Clinic and has firmly established relationships with several departments spread over the Harvard GME programs at Brigham & Women’s/Mass General, Mclean, Beth Israel Deaconess, and Dana Farber. Mensh Insurance now has over 1000 former resident/fellow clients spread across the country with discounted disability insurance, Term, and Permanent Life Insurance plans in force.
As an independent agency with access to every major carrier for Disability and all forms of Life Insurance, decades of experience working directly with physicians as they train, complete training, establish careers, AND form then grow medical practices, Mensh Insurance has the unique knowledge, understanding and skillset to specifically care for all ownership needs and risks.
Mensh Insurance has trusted direct relationships to provide access to all disability, life, and long-term care insurance products as well as case design, product selection, administration, and underwriting with the following renowned wholesale/General Agencies:
Capitol Metro Financial Services, Columbia, MD; Guardian Disability Quotes, Rockville, MD; The Plus Group/Bloch Agency, Charlotte, NC; The Cason Group, Raleigh, NC
1102 Reynolda Road
Winston Salem, NC 27104
336-631-5503
danny@menshinsure.com
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