From what little I know of disability insurance is that getting your private, own occupation (as specific to your field as possible, e.g. neuro-interventional radiology, infectious disease etc.) disability insurance PRIOR to taking on your first attending job is absolutely necessary.
As much as I like to divert disability insurance premium towards Mini Wise Money’s 529 tax-advantaged college fund, I will likely start a disability insurance in PGY3 or PGY4 rather than waiting till end of PGY6 because:
- I’m not getting any younger; in fact, I will be 36 when I start my attending job. The sooner I get disability insurance, the lower rate I could lock in for life.
- As meager as my PGY2 income seems compared to attending income, my family & I can NOT live without it. So I need to insure this my current income so our family can weather unexpected downturns in life.
This is a guest post from veteran insurance expert, Bob Bhayani, MBA at DrDisabilityQuotes.com. We have no financial relationship.
Protect your Greatest Asset: Your ability to earn.
It takes years of education, training and commitment to practice medicine. If you became too sick or hurt to work, what would happen? Would your patients have to go elsewhere? How would you earn an income? Would your lifestyle have to change?
Currently, the major players with the high quality disability insurance products for physicians are, Guardian, Mass Mutual, The Standard, Ameritas, MetLife, and Principal. At any given time, any one of these top quality companies may offer the best disability insurance for physicians at their current place in life, from medical school, to residency to fellowship and beyond. The specialty that a physician is trained in also comes into play with determining the strength of the policies that are available. Where does a physician start in identifying the company that best matches his or her needs, priorities and preferences when looking to purchase disability insurance for physicians? The best place to start is by understanding how to differentiate between disability insurance provisions, riders and definitions.
- Elimination Periods and Waiting Periods. This is the amount of time you have to wait for your first disability check and the maximum length of benefits is extremely important to know. The elimination and waiting periods can also dictate your price for the disability insurance policy. Typical waiting periods are 30, 60, 90 & 180 days. The most common waiting period that is chosen is 90 days.
- Non-Cancelable and Guaranteed Renewable Policy. This is an option on an individual disability plan that prevents your insurance carrier from cancelling the plan or changing the definitions for the length of the benefit period. The policy is also automatically renewed as long as the premium is paid on time.
- Definition of Total Disability. When you are unable to perform all the material and substantial duties of the policy’s definition of total disability, then you would fall into a total disability claim resulting in fullmonthly benefits.
- Residual Disability Rider. This rider is used when you have some loss of time or duties and loss of income, usually at least 20%, but some insurance carriers will go down to 15%. This is a more liberal definition than partial disability since you usually don’t have to be totally disabled during the elimination period to qualify. This rider is available on al quality disability insurance plans and should always be considered.
- Future Increase Option Rider (FIO). This rider allows you to increase your disability policy by the stated monthly maximum amount purchased without having your health re-examined by an insurance company on the anniversary date. This is an extremely important rider to those wanting to protect a projected higher income since their health status could change, making them ineligible for increased coverage without this rider. You would still be required to provide proof of the larger income through W-2s and/or tax returns to qualify for the increased coverage.
- Cost of Living Adjustment Rider (COLA).This would increase the monthly benefit by the CPI not to exceed a ceiling of typically 3% or 6% compounded or simple interest per year during a claim. If you’re disabled for 5 years or more, it may be difficult to keep up with the bills if your expenses keep on rising but your payout is fixed.
- True Own-Occupation Coverage. Own-Occupation applies to your current occupation and the ability to perform it. This is extremely important because cheaper forms of disability insurance may require you to take any job you are physically able to perform, even if it pays a fraction of what your former employer paid. Own-Occupation would allow you to receive a monthly benefit regardless if you were working in another occupation.
- Business Overhead Expense Coverage. If you own your own business and/or incur business expenses that don’t come out of your regular paycheck, you may want to insure against overhead charges as well as lost income. Without Business Overhead Expense Coverage you may see your paycheck protected but lose your business because the expenses will pile up.
- Disability Buy-Out Insurance. Buy-Out Insurance would fund the sale of a disabled partner’s portion of the business if he/she is disabled, preventing him/her from returning to work.
A disability could strike at any time – now, or 20 years from now – so it is important that your disability insurer have the financial strength and stability to weather the worst of economic storms. A good way to do this is to see how various rating agencies rate a particular company. Using A.M. Best Company for example, a company rate ‘A=’ or better demonstrate the greatest financial strength to withstand bad economic conditions.
Any Medical Students, Residents, or Fellows that apply will be eligible for 10 to 30% Discounts with Unisex pricing, Application Process, Insurance Medical Waiver and a Financial documentation waiver. This streamlines the process greatly.
- Do you have a disability insurance?
- How and where did you purchase your disability insurance?
- If you currently don’t have an own-occupation disability insurance, when do you plan to purchase one?