If you’ve been on the physician communities for a while, you likely know that we are big believers that (almost) all physicians need disability insurance. That said, there are always situations that come up where people question the need for disability insurance in their particular situation. In this article on our series on frequently asked questions about physician disability insurance, we discuss the common reasons why physicians think they don’t need disability insurance, why a lot of them are inaccurate, and then the few cases when doctors may be correct that they don’t need disability insurance.
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Take a deeper dive into disability insurance in our guide to disability insurance for physicians primer.
If you need to shop quotes for true own occupation disability insurance, our partners below can help.
Pattern: http://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.
Moment Insurance: Complete your quote inquiry information in less than five minutes and easily schedule an appointment to speak with a dedicated, experienced disability insurance expert who will walk you through the process from start to finish and help you compare different options. Many in the group have worked with their experts previously, and had a great experience! Contact them here.
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.
Most common reasons why physicians mistakenly think they don’t need disability insurance
Disability insurance isn’t cheap (though essential for most physicians). Not surprisingly, many physicians, especially physicians in training like residents and fellows, hope that they’re the exception to the rule and don’t need to have this annual expense, and ask if they can get away with not having disability insurance. Most of the time, our physician members will quickly debunk that assertion, although there are some occasions where we agree that a physician doesn’t need insurance.
There are some scenarios we see often where people think they don’t need disability insurance, such as:
I have disability insurance through my training program or my job
I’m in a non-procedural specialty and the list of things that could make me disabled is pretty short
I’m married to another high income professional that could support me
I’m getting a big inheritance
My parents say they would help me out
Nobody else I know has it and they’ve been fine
I can’t afford it
Let’s go into each of these.
Do I need my own disability insurance if I have disability insurance through my job?
In one word, yes.
Longer answer - there are several reasons why having your own disability insurance policy is better than having an employer policy, although if your employer is giving you a disability insurance policy for free, there’s no reason not to carry that as well.
First - if you leave your job (which is becoming statistically more and more likely, your policy won’t come with you, and you could be stuck in a situation where you have to purchase your own at that time. You may think that’s not a problem, but:
If you have developed any interim medical issues or have anything more on your medical record (even as benign as ‘I have back pain’), you may have a problem qualifying for a policy and get denied outright, have them put exclusions on your policy, they may limit your total benefit, or your policy may be much more expensive.
Disability insurance is always more expensive when you’re older, and if you’re now out of training, you won’t qualify for trainee discounts for disability insurance, which can be significant, or GSI plans, which can help if you have medical issues that would lead to denials with conventional policies.
Second, disability insurance premiums paid by an employer are paid with pretax dollars. This means that if you become disabled and have to claim the benefit, you will be taxed on the benefit. This could be the difference between $10,000 in spending money per month and $6,000 in spending money per month at a time where you don’t have other income sources, so it is much better that the taxes on these policies are paid upfront and then the benefits are untaxed, like with your personal disability insurance policy.
Third, depending on the plan your employer picks, it may not be true own occupation disability insurance, making it harder to get significant benefits when you need to claim disability insurance benefits because you could still do some work, even though it’s not working as a physician.
Do I need my own disability insurance if I am not in a procedural specialty? What are the chances of me becoming disabled?
Non-procedural specialists still need disability insurance. We often have radiologists say things like, “Well, it’s very unlikely that I’ll go blind.” Unfortunately, there are still many reasons why you may not be able to practice. You could still have a stroke, get hit by a car, or get diagnosed with a malignancy.
As we all know too well as physicians, life can change overnight due to circumstances beyond our control. If you don’t have a plan for how you’d have the life and financial stability you have worked so hard to achieve if you couldn’t perform your job as a physician, you want disability insurance, regardless of your specialty or likelihood of disability.
Do I need my own disability insurance if my spouse or significant other can support me?
If a friend told you they were completely dependent on their spouse for their well-being, you’d probably worry. This is another case of, “It would never happen to me.” While we all like to think we’ll be in happy marriages forever, unfortunately, death, disability, and divorce do happen, and in the case of divorce, not infrequently. Not to mention unhappy relationships when there two parties don’t feel equal.
Putting your financial wellbeing in the hands of a spouse after working so hard to have the ability to provide for yourself leaves you vulnerable. If you get divorced in the future, you will have no backup plan, and as discussed in the employer section above, may be in the position of trying to get disability insurance under suboptimal conditions. And even if they are around when you get disabled, we’ve all seen plenty of interesting relationship dynamics with our patients and their families when one person is more vulnerable. Again, we hope that this is not your relationship, but no physician who is used to having their own source of income wants to be in this position.
Ask yourself:
What happens if I get divorced?
What happens if my spouse passes away, becomes disabled themselves, or loses their job?
Do I want to rely on someone else’s generosity to support me if something goes wrong? If they give me a budget for how much money I can spend, will I be okay with that?
If I’m unhappy with how my marriage changes in the future, do I want to lose the power to walk away because I’m dependent on my spouse financially?
Do I need my own disability insurance if my parents say they’ll support me, or if I’m supposed to get a large inheritance in the future?
The answer to this one is very similar to the question about relying on your spouse. Ultimately, you want to be financially secure yourself, without worrying about family dynamics or whether or not your parents actually can afford to support you. Most people don’t know their parents’ true financial situation, and if they’ve saved appropriately for retirement or planned appropriately for their own unexpected needs.
Ask yourself:
What happens if there’s a fight within the family and the decision is made not to support you or give you an inheritance?
What happens if my parents run into financial difficulties themselves, or have their own long term care needs arise because of health care issues?
What happens if my parents encounter issues such as dementia and it’s not easy to discuss monetary needs with them?
What happens if my parents spend down their savings, decide to donate to charity, or otherwise allocate their money and there isn’t as much inheritance money as I think? After all, it’s their money and they can spend it how they want.
What happens if I become disabled before an inheritance has been inherited?
Again, you’ve worked too hard to rely on someone else’s life choices to support you.
Do I need my own disability insurance if nobody I know has ever had to use it?
If you’re asking yourself this question, please search our physician Facebook groups for ‘disability’. Unfortunately, you’ll find hundreds of comments and posts from physicians who have had to use their disability insurance or for whom their DI was a lifeline, as well as many physicians regretting their decision to put off getting disability insurance or not buy disability insurance. It’s estimated that a pretty high percentage of physicians use their disability insurance policy at some point during their careers. If you don’t, count yourself lucky just as you would if you never have to use some of the benefits of your life insurance, health insurance, auto insurance, or home insurance.
Please do not fall under the fallacy of believing it can’t happen to you. It can, and it does, and you don’t want to rely on the generosity of GoFundMes to help you and your dependents out while others wonder why you as a physician can’t pay your bills.
Do I need my own disability insurance if I can’t afford it?
Yes, you are exactly who needs it. If you can’t afford to pay for disability insurance, what is your plan to support yourself if you can’t practice medicine?
If you’re in training, lock in a baseline policy, with an option to increase the disability insurance as your income goes up (the future benefit rider). This policy will be cheaper than what you ultimately pay when you can afford it with your attending salary, but will allow you to secure a policy before something happens to disqualify you or make it more expensive, such as not having access to the very significant trainee discounts.
When CAN I get away with not having disability insurance?
Ultimately, when it comes to insurance, you have to ask yourself what the worst case scenario is and what your plan would be to support yourself financially if you didn’t have disability insurance.
Really, one of the only good reasons to not have DI is if you are well off enough financially that you can pay your expenses without having to make significant lifestyle changes.
That could be because you’ve saved up enough money that you’ve achieved financial independence as a physician, because you received a large inheritance, or because you have enough other alternative revenue streams (for example, cashflowing real estate that you own, steady trust fund income) that generate enough income that you can survive off of it The other scenario where it really makes sense to consider not having a policy is when you are nearing retirement age. These policies usually only pay out until 65 or 67, so if you are paying a lot in premium for minimal potential benefit (let's say you're 64 and you only qualify for one more year of benefit, it probably doesn't make sense to pay a few thousand dollars in premium for the slim chance that you become disabled that year and get a max payout of a few months of benefit.
Conclusion
As we all know, death, divorce, health issues, family conflicts, and poor financial decisions happen, and though we’d all like to think the unlikely won’t happen to us, disability insurance is all about protecting from the unexpected. You don’t buy home insurance thinking your house is going to burn down, or medical insurance thinking you’re going to need a liver transplant. But it’s there if you need it.Disability insurance is a cornerstone of physician financial security, and for the most part, you should have it.
If you need a place to buy it and help navigating your options, check out our resources for disability insurance agents for physicians.