Hello WCI community. I'm thinking of cancelling my practice overhead insurance and I want a sanity check.
My background finacial info: I am a family doc new in practice. My overall financial situation is good, with non-mortgage debt sitting at $40k (2.85%, interest only currently) and about $45K currently invested (ETF portfolio). I owe $480K (2.4%, 5 yr fixed, 25 yr amortization) on a home valued at approx $650K. This is my first year out (therefore figures are very ballpark) but it look like I am billing 20-27.5K monthly, of which $5K goes to professional expenses, leaving $15K+, after putting money aside for taxes. From this amount about 7K goes to our household budget and the remainder (always at least $3K) to retirement savings. My spouse brings in 5K/month after taxes. We're having some lifestyle inflation post-residency (new house, some new clothes, might even replace a 13 yo vehicle). It's great and I'm gonna roll with it as long as our savings rate can stay >30%.
My practice info: I signed on with a group of doctors at a clinic where we have a cost sharing agreement. I pay percentage of our total office expenses that is re-negotiated annually or more frequently if the number of doctors in our group changes. This amount is currently $3500 monthly. My contract states that if I were to leave (which I certainly don't plan to do) I would need to give notice of 4 months, and in case of disability or prolonged absence I would be responsible for my share of expenses for up to 12 months. There is a risk of my share increasing over time due to staff raises or if anyone leaves our group.
I am currently paying $27.55 monthly for practice overhead insurance that would provide up to $5000 per month of coverage.
My thinking is that I am better off self-insuring for this risk that could run me at the highest end $42K. I could maintain an emergency fund of 4-6 months office expenses in a HISA, and use the $27.55 a month saved to increase my disability insurance (I am currently under-insured with $5K/month coverage). For the subsequent months not covered by the EF I would be drawing down from other savings.
So I'm good to cancel this, right?
Please feel free to use this thread to discuss your own situations or thoughts on when practice overhead insurance does or does not make sense.
My background finacial info: I am a family doc new in practice. My overall financial situation is good, with non-mortgage debt sitting at $40k (2.85%, interest only currently) and about $45K currently invested (ETF portfolio). I owe $480K (2.4%, 5 yr fixed, 25 yr amortization) on a home valued at approx $650K. This is my first year out (therefore figures are very ballpark) but it look like I am billing 20-27.5K monthly, of which $5K goes to professional expenses, leaving $15K+, after putting money aside for taxes. From this amount about 7K goes to our household budget and the remainder (always at least $3K) to retirement savings. My spouse brings in 5K/month after taxes. We're having some lifestyle inflation post-residency (new house, some new clothes, might even replace a 13 yo vehicle). It's great and I'm gonna roll with it as long as our savings rate can stay >30%.
My practice info: I signed on with a group of doctors at a clinic where we have a cost sharing agreement. I pay percentage of our total office expenses that is re-negotiated annually or more frequently if the number of doctors in our group changes. This amount is currently $3500 monthly. My contract states that if I were to leave (which I certainly don't plan to do) I would need to give notice of 4 months, and in case of disability or prolonged absence I would be responsible for my share of expenses for up to 12 months. There is a risk of my share increasing over time due to staff raises or if anyone leaves our group.
I am currently paying $27.55 monthly for practice overhead insurance that would provide up to $5000 per month of coverage.
My thinking is that I am better off self-insuring for this risk that could run me at the highest end $42K. I could maintain an emergency fund of 4-6 months office expenses in a HISA, and use the $27.55 a month saved to increase my disability insurance (I am currently under-insured with $5K/month coverage). For the subsequent months not covered by the EF I would be drawing down from other savings.
So I'm good to cancel this, right?
Please feel free to use this thread to discuss your own situations or thoughts on when practice overhead insurance does or does not make sense.
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