What you need to know about: 

Disability Insurance

Disability insurance is essential for most physicians.  It is, in our opinion, one of the best things you can do to protect your ability to support yourself and your family after working so hard to get to this point, and will protect against financial catastrophe in the unfortunate case that you are not able to practice medicine anymore due to disability.  Imagine something were to happen to preclude you from being able to practice at this stage - injury, freak accident, long term illness, pregnancy complication - what’s your backup plan for income?  This page is intended to give you resources to buy disability insurance, as well as answer FAQs we often see on the groups.  

Where/How to Buy Disability Insurance: 

Use an independent agent that will run quotes across the 6 major companies that offer true "own occupation insurance." These are our sponsors/advertising affiliates, who 1000s of members of our groups have used and said positive things about. It doesn't cost you anything to use them, as they are paid by the insurance company you ultimately choose. This is one of the few cases where having a middle person is beneficial, as they will often have access to discounts you may not be able to get on your own, and can guide you through the various options and riders, as well as be your advocate in the process.  You may be comfortable just talking to one company, or you may want to run a few quotes to feel confident in your decision.  Generally, the only difference in prices will be which discounts each company has access to.  

Patternhttp://www.patternlife.com/partner/psg.  This convenient option will allow you to enter your information and immediately begin generating quotes from the major disability companies, as well as schedule a meeting with the Pattern team to discuss the options and figure out which plan is best for you.  Many in the group have had a great experience with this process.

Physician Financial Services : Lawrence Keller and his team are wonderful, and have a lot of experience in this space.  They will run quotes across the major disability companies and guide you through the process.  Contact them here.  Special thanks to Lawrence Keller for helping to provide context to the information below.

PolicyGenius: This is not a physician specific company, but well known in the insurance space.  They may be a helpful resource if you are looking for another place for quotes.  Make sure that you're comparing apples to apples in terms of true own occupation insurance, as not all fields emphasize the need for this equally.  Contact them here.

 

 
Frequently Asked Questions

 

Do I need a Policy?

Do I need disability insurance and when should I buy it?

  • You most likely need it unless you have achieved true financial independence that would allow you to both live the life you would want and to pay your bills indefinitely without the help of others (i.e. not your spouse or family).

  • You should buy it AS EARLY AS POSSIBLE AFTER GRADUATING MEDICAL SCHOOL: It is cheapest in training and when you're younger.  Many people choose to wait until the end of training to save money, but unfortunately we as physicians know that life can change in an instant, and a sporting accident, pregnancy complication, or new medical problem could preclude your ability to qualify.

My employer offers disability insurance as one of my benefits.  Do I need my own?

For multiple reasons, you want your own policy.

  • You could change jobs (and statistically, you likely will).  You don't want to take a chance you won't qualify for an individual policy at that time (or that it is much more expensive because you're older) or that the new job's policy is not good.

  • Group long term disability plans are typically not "own occupation."  They may not cover bonus income or may have a maximum monthly benefit associated.  They may also have offsets for Social Security Disability, or Workers comp.  They can also be harder to claim. 

  • You usually pay taxes on the benefit you receive from work policy because they are paid by the company in pre-tax dollars.  You pay your premium for your individual policy in post tax dollars so then if you need to use your benefit, your benefit will be in post tax dollars.  If you are disabled, having that extra money every month could make a huge difference.

I have family backup (working spouse, wealthy parents, pending inheritance).  Can they be my backup?

Unfortunately betting on someone else to support you is statistically speaking, not a great idea.  Divorce and death happen, and you want to make sure you are able to have the life that you worked so hard to build without needing to ask someone else for support.  Also, while your parents may be happy to make sure you have a home over your head, they may not want to pay for your vacation or your child's piano lesson.  

 

Terminology

"Own Occupation"
Disability Insurance

  • This will ensure the policy will pay out as long as you can’t do the job that you were doing prior to disability.  

  • Policies that are not true 'own occupation' may decrease your benefit if you're still able to make money doing something else, and may dis-incentivize you from finding other work or income streams.

  • The major 6 companies offering true own occupation policies are Principal, Mass Mutual, Ameritas, Standard, Guardian, and Ohio National - the physician companies above will generally run quotes with all 6.

  • Several other popular insurance companies are NOT true own occupation.

  • Example: You’re an interventional cardiologist and develop a back issue that prevents you from doing procedures and have to stop practicing and claim disability. You then take a position as a Medical Director for an insurance company.  If you don't have an own occupation insurance, the money you get from this could decrease your benefit.

Guaranteed Renewable and 
Non-cancellable

  • Guaranteed Renewable:

    • Company can't cancel the policy, but could raise the price​

  • Non-cancellable:

    • Company can't cancel, raise the price on, or reduce the ben​efits as long as the customer pays the premiums

  • If a policy can cancel or raise prices, it may seem like a great deal initially but then rise quickly as you get older/higher risk (and at that point it'll be harder for you to qualify for a reasonably priced policy or you may not be eligible secondary to new medical problems)

    • This is a flaw in several medical society plans​ as well as some other policies that bring you in at a cheap rate.

'Graded' versus 'level' premium

  • Level premium - premium doesn't change

    • Best for those people who intend to carry their policies over the long run​

  • Graded premium - premium changes over time

    • Could make sense for a physician who anticipates hitting financial independence early in their career and doesn't want their pricing to factor in risk factors later in life

    • Be careful in assuming you will drop your policy in a certain amount of time (you may choose to deploy money into illiquid assets, there could be an economic downturn or personal event that changes your numbers).

Coverage specifics

 

How much coverage do I qualify for and how much should I get?

  • In training, many just buy as much as they can initially ($5000/month pretty standard).

    • If affordability is an issue, lock in on a cheaper policy as a trainee and get a future benefit increase rider that will allow you to increase the policy later without having to re-qualify ​based on health.

  • Determine:

    • How much money you think you and your family need to cover expenses 

    • Account for lifestyle inflation and potential increase in expenses if significantly disabled (caretaker)

    • Enough to save for retirement (disability will stop paying at 65-67)

    •  If you have employer or social security benefits, factor this in

  • Can generally only qualify for 60% of your gross income as a benefit - they don't want to incentivize you to not work.

    • However, this $​ won't be taxed so will go further.

    • Work policies or other benefits (military, etc) may reduce eligibility, so try to lock policy prior to contract

    • Can at times get more through a 2nd policy with a different company

How much will it cost?

  • Will depend on many factors:

    • Gender (women pay more unless unisex policy, which can be hard to find)

    • Age

    • Specialty

    • Amount of Coverage

    • Health Status

    • Availability of discounts at your institution or insurance agent

    • Riders applied to policy

  • General Rules of thumb (will vary):

    • Annual cost may be 2-6% of the annual benefit

    • Unisex - around $500 annually per $1000/month of benefit

    • Non-unisex and without discounts - can be $1000 annually per $1000/month of benefit

    • Shop around!

Some common riders

  • Own occupation rider: if your policy doesn’t include it, get it as a rider

  • Residual disability rider - can be essential - protects against partial disability and while recovering from disability

  • Cost of Living Adjustment (COLA) rider -

    • Inflation adjustment which increases the monthly benefit after disability has lasted for 12 months.

    • More beneficial early in your career as it doesn’t start adjusting until you’re disabled.  Policies only pay until you’re 65-67, so the closer you get to that age the less that inflation matters

  • Future purchase option rider

    • Gives you the ability to increase your benefit later based on salary, without having to re-apply

    • Important in residency or if you can’t currently afford the policy that you need (military, part time)

  • Student loan rider - makes your student loan payment if you get disabled (or you can just buy a larger policy)

  • Catastrophic rider - pays more if you can’t do multiple activities of daily living (or you can just buy a larger policy)

Special Circumstances

Pre-existing conditions, mental health, self-prescribing, pregnancy

  • Disclose everything you can to your insurance agent prior to application.

    • They will be able to help determine whether it's better that you apply for a Guaranteed Standard Issue (GSI) plan if available to you.  Once you have been declined for a standard disability policy, it will preclude you from qualifying for the GSI policy.  Some insurance is better than no insurance, so it's important to know what things will lead to a denial.

  • Some companies are friendlier to mental health than others.  ​Your agent will able to guide you through this.

  • Policies may exclude disability claims related to your past medical history.  If this resolves, they may be able to remove those exclusions later.

  • The insurance companies will check your prescription history and prior medical records during the underwriting.  Even if you've never been given a diagnosis related to a condition, they may exclude or deny you based on prescriptions you have filled.

Visas

  • Several special circumstances to keep in mind; you will want to work with an agent to ensure you are getting the coverage you need.

  • ​If possible, your policy should continue to pay you overseas if you are disabled in the United States OR even overseas during incidental travel (31 days or less)

  • You may not get paid or for only a short amount of time, depending on your situation and policy.

Military

  • Only certain companies are able to issue policies.  In some cases you can buy coverage while not in active duty (HPSP, not active duty), but not during active duty.

  • Your disability benefits may only be associated with your base pay but not specialty pay or moonlighting income.

  • You may not be able to receive benefits for claims as a result of an act of war, declared or undeclared (but may be covered for accidents during training exercises).

 

Canceling Your Policy

When should I cancel my policy?

  • You've reached financial independence to the point where having the extra 'x' dollars in tax free income every month if disabled wouldn't make a difference (account for potential increased expenses due to disability)

  • Most policies only pay out until 65-67, so if you're approaching this age, consider if it still makes sense to pay your premium amount when considering the total amount of benefit you'd potentially get.

  • It is not complicated to cancel - you can literally just stop paying at the time of annual renewal.

 

Disclaimers:

We are not in the business of providing formal individualized personal, financial, tax, legal or investment advice and specifically disclaim any liability, loss or risk, which is incurred as a consequence, either directly or indirectly, by the use of any of the information contained on this website, in emails, events, the online communities, or other interactions. We do NOT provide any legal, accounting, securities, investment, tax or other professional services advice and are not intended to be a substitute for meeting with professional advisors. If legal advice or other expert assistance is required, the services of competent, licensed and certified professionals should be sought, who can help assess the appropriateness of any decisions in light of each individual’s specific goals, experiences, circumstances, and financial status. This page contains information about our sponsors, as well as affiliate links, which support the group at no cost to you. While we do our best to vet these companies, we do not endorse ANY specific investments, investment strategies, advisors, or financial service firms, nor the advice that they give to you, which we do not possess the ability to review or the expertise to confirm or deny.  Any references to these should be viewed as introductions to look into rather than formal recommendations or endorsements.  Please do your own research and due diligence prior to making any decisions on the basis of anything you learn from our interactions or platforms.