By Bob Bhayani, MBA, LUTCF, Managing Partner of Protuity, formerly DrDisabilityQuotes.com, Scholarship SponsorIf you wonder why doctors should get insurance, ask yourself this: what is your greatest asset? Your ability to earn. It takes an intelligent, highly motivated, and committed individual to invest over a decade in education and training combined with a mortgage-sized student loan debt to become a physician.
The investment made by a doctor in becoming an attending is unrivaled by any other profession.
Many physicians perform procedures, interventions, and surgeries using fine motor skills. It takes very little to compromise that skill set. It might be a tremor in the hand, where you can no longer perform procedures or surgeries, or it may be chronic arthritis in the right ankle, where you can no longer stand and perform interventions or attend to your patients. Any such disability can put an end to your career.
A True Own Occupation disability insurance policy can protect you against such uncertainty. For example, a surgeon who develops a tremor in their hand can no longer perform surgery, but they can still do pre-operation and post-operation consults, teach medicine, do research, or work as a clinician while still collecting benefits.
An Own Occupation disability policy ensures that the income and lifestyle expected will be protected in case of an accident or illness.
Which Disability Insurance Companies Are the Best?
An independent broker will never predetermine your disability insurance company or policy without consulting with you first. Their job is to educate you on all the definitions, riders, and options to help you determine which company or policy is the best fit for your needs.
The top disability insurance carriers include Principal, Ameritas, Guardian, Standard, and MassMutual. These carriers will offer the best options for physicians, including True Own Occupation. The decision on which will work best for you will be dependent on your opinion surrounding the various rider options and, of course, the premium comparisons.
More information here:
Design the Best Disability Insurance Policy for Physicians
What Mistakes Do Doctors Make When Buying Disability Insurance?
#1 Buying a Plan Through an Agent
Agents are subsidized and incentivized by insurance companies. In return, agents are obligated to sell products for that insurance company, irrespective of the client’s best interest. An independent broker serves their clients’ best interests, not the best interest of the insurance companies.
#2 Focusing Too Much on Cost
Many physicians shopping for coverage focus too much on low cost instead of attaining comprehensive coverage. Removing the Own Occupation Rider or the Partial/Residual Disability Rider is not worth the cheaper premium, because the conditions to file a claim are so much more limited that they end up paying for coverage they will never qualify for.
#3 Waiting Too Long to Apply
Don't wait until you graduate residency/fellowship to apply just so you can save money. Many individual disability carriers offer deep discounts for residents and fellows. These discounts often lock in for any increases in the future. In addition, residents and fellows are offered coverage without a physical exam or blood testing. As an attending physician, depending on the amount of the policy, it can trigger blood, urine, and a paramedic exam.
But also note this: if you have finished residency or fellowship this year, almost all insurance carriers will allow you to apply for training discounts within 180 days after the last day of your training.
#4 Waiting Until Something Happens to Buy a Plan
Policies are issued based on medical underwriting. Once you are issued a policy, it cannot be taken away or repriced, even if your health changes. If you wait to buy a policy after you are symptomatic, chances are you will likely end up with one or more exclusions, along with modifications of benefits.
Can I Get Disability Insurance If I'm Not Perfectly Healthy?
The first step in this process is to engage an independent broker who specializes in disability insurance. An independent broker will have the skill set, experience, and relationships with insurance companies to shop your coverage and negotiate the best outcome for you. This process may involve having you evaluated by several insurance companies. For example, if you have a history of back injury or disc disease, most companies tend to give you a full spine exclusion. But an experienced broker can advocate on your behalf and get the insurance company to exclude the specific area of your spine (i.e., lumbar spine) but get it to cover your cervical and thoracic spine.
Another reason to engage an independent broker is to find available options for you based on your situation and medical history. For example, there are exclusive Guaranteed Standard Issue policies (Guaranteed Approvals) for select residency and fellowship programs, which require no medical underwriting.
More information here:
When to Drop, Replace, Modify, or Decrease Your Disability Insurance Coverage
GSI – Guaranteed Standard Issue Policies
Every resident/fellow shopping for disability insurance should inquire with their broker to see if there is a GSI plan available at their institution. A Guaranteed Standard Issue (GSI) disability insurance policy is easy to qualify for since the application does not go through the normal underwriting process that can take up to 2-3 months.
What makes this coverage unique is that you will get a guaranteed approval regardless of any preexisting medical history as long as you have not been declined by an insurance company already. Most GSI policies will cover preexisting conditions after a one-year wait. GSI policies are not very common—only a handful of institutions nationally have them. The primary drawback of GSI is that it cannot be customized. However, a GSI policy is portable if you were to leave the institution. For most applicants, a GSI policy (if available at your institution) should be the first consideration as it eliminates any possibility of exclusions, modifications, surcharges, postponements, or declines.
What If I Engage in Dangerous Hobbies?
Typically, an insurance company will require a completed questionnaire to acquire additional details regarding the activities you engage in. Each case is determined by the specifics of the hobby, activity, frequency, level of danger, etc.
Something moderate will not need to be excluded. Someone who goes scuba diving on vacation once or twice a year in non-dangerous waters and shallow depths would not need a scuba diving exclusion. Situations where the underwriter would use an exclusion include if someone frequently engages in diving, if diving is the focus of their vacations, or if they have advanced certifications and are diving to deeper depths.
Similarly, a person who hikes in the mountains with a backpack and water bottle or day hikes—even to elevations of over 4,000 feet—would likely not need an exclusion. However, once someone uses equipment, ropes, harnesses, carabiners, and/or oxygen, then they would be considered a rock climber and would need to have an exclusion.
What Are the Shortcomings of My Employer's Group Disability Policy?
#1 Taxability
Group long-term disability is often paid for by the employer, who is deducting the premium as a business expense. This makes the benefit paid to the employee taxable. For a typical policy that covers 60% of your salary, the actual income replacement would be significantly lower with taxes deducted.
#2 Group Maximums
Group long-term disability has a monthly maximum of typically $5,000-$10,000 per month. What good is that when you are used to earning $25,000-$40,000 a month?
#3 Covered Earnings
What earnings are covered by group disability? A physician’s income can come from salary, bonuses, incentives, 1099, etc. Common group long-term disability covers base salary only. If you earn $150,000 in salary and $250,000 in bonus incentives that are tied to RVUs and procedures, then there would be a huge shortfall at the point of claim. Private policies look at total compensation, not just your salary or compensation tied to one employer.
#4 Ownership and Portability
Group long-term disability is a certificate issued to an employee with no rights of ownership; that's unlike a private policy, which is a guaranteed renewable non-cancelable contract between you and the insurance company. Your group long-term disability is tied to your employment and it's not portable. That leaves you uninsured when you leave that job. The group long-term disability plan coverage or cost can be modified or can even be canceled by the employer or insurance carrier.
#5 Offsets and Restrictions
The majority of group policies offer a 24-month Own Occupation period, which means that if you can rehab in a new occupation, the insurance company will require you to do so. Any new earned income, Social Security, benefits, settlement proceeds, or judgment awards will offset your group long-term disability benefit payouts.
More information here:
People Aren’t Buying Disability Insurance, But They Should
What About Disability Insurance Claims?
Which Companies Seem to Be the Best at Paying Claims?
If you stick to the Big Five, you should not have too many concerns about getting your claim paid, as long as it is a bonafide claim. An insurance company’s rating (which is its claim-paying ability) and reputation are very important factors to consider when choosing a policy. Most companies do a good job with claims. More often, it is a lack of understanding of what the policy does or does not cover that can lead to claims denial. For example, I often get inquiries from female physicians who are pregnant to see if they can file a claim. Pregnancy is not a disability and, thus, is not a covered claim. But complications of pregnancy are covered.
Is It Hard to Get a Company to Pay a Claim?
If you have a fully underwritten guaranteed renewable non-cancelable policy and have a bonafide claim that is well documented, the odds of a denial are low. The best way to ensure against claim denials is to engage an independent broker who knows the marketplace and who can recommend a comprehensive policy without loopholes. In addition, if there is a problem or a question at point of claim, having a broker can be a great asset since they know what the plan covers.
What Types of Claims Are There?
There are two types of claims: ERISA-based policies vs. non-ERISA policies. ERISA disability plans lead to claims being denied far more often. Depending on the type of policy you have, the legal remediation process can be very different. Typically, ERISA claims are adjudicated in federal courts with a judge vs. non-ERISA claims, which can get jury trials. ERISA only allows back benefits (no pain and suffering) and usually doesn’t pay your court costs either. In most fully underwritten policies, at point of claim, the company will request full financial documentation (i.e., tax returns, W-2s, pay stubs, and employment contracts). It will also look at your CPT billing codes 12 months rolling to determine if your specialty Own Occupation is supported by your attending physicians' and specialists’ records.
A majority of the delays that occur are in securing all detailed medical records and transcripts, as you are relying on your doctor’s office (and a third party like copying services) to get all the records. The more thorough the documentation you provide, the quicker your claim will be approved.
What About Mental Disability Claims?
Many individual disability policies will limit mental nervous claims to two years of benefits only. In many cases, if a person has a physically disabling condition, then they should attempt to prove that the depression or anxiety is secondary to the physical condition. This argument can allow a disability claim to extend beyond two years.
Do You Usually Have to Hire an Attorney to Get Claims Paid?
In most cases, you do not need to hire an attorney for individual disability income claims.
What do you think? What other questions do you have about disability insurance?
[EDITOR'S NOTE: Many thanks to Protuity and Bob Bhayani, one of our Platinum Level (contributing $8,000+) Sponsors for the WCI Medical School Scholarship, for helping physicians secure the best DI policies. This is the first of our three scholarship-sponsored posts for 2024. Thank you for supporting those who support this site and especially the scholarship. All proceeds go to the scholarship winners.]
How long should someone keep their disability insurance? I have had mine for 11 years since the end of residency. As I am in my mid to late 40s I notice injuries are much easier to occur, which lead me to want to keep the disability insurance just a little longer. However, I have also saved well and could be FIRE-ready within 5 years. On the third hand, I have 4 little kids and could potentially have a couple more before all is said and done.
This is a common question and one that can have some nuances to it which I mention below, but at its core, it is a very simple answer.
Keep your disability insurance until you are financially independent. In other words, if you are still reliant on your income to meet your goals, you need disability insurance.
Someone who “could be FIRE-ready within 5 years” is just another way of saying “I am not yet financially independent”. Therefore, you need disability insurance.
Having said that, the definition of “financially independent” can be a bit squishy. The math, the assumptions, the variables can all be interpreted differently by reasonable minds. The moment to drop insurance is ultimately a peace of mind decision more than a mathematical one.
The most common situations in which I understand people dropping long term disability insurance perhaps “a little too soon” are when their occupation has changed and/or they are getting close to the age when the policy would stop paying.
For example, someone who started their career as a surgeon but now works primarily in an administrative role. Getting disabled as a vascular surgeon is “easy” i.e. hand tremor, getting disabled as a hospital medical officer is “hard” i.e. as long as you can think and talk you are likely not disabled from that occupation.
Also, someone who is 62 and has a policy that pays until 65 could reasonably do the math on the chances of being disabled prior to the policy expiring and what the total payout would be during that limited window versus the premiums during that window and opt to stop the policy a few years “early”.
Again, the decision to keep or drop insurance is more about having peace of mind than it is about math.
I disagree that it’s dramatically easier to be disabled as a proceduralist. Most disabilities are from medical issues that would affect all docs. People think it’s traumatic accidents but it is really medical issues–cancers, heart disease, spinal stenosis, depression etc.
If you have an active disability policy, and you later take up a dangerous hobby, do you have to update the policy? Does skiing count as a dangerous hobby? If so, does it matter if it’s resort vs backcountry vs heli etc? Thanks
No.
No.
Nobody asks about backcountry skiing in my experience. And as long as you’re not flying the chopper, nobody cares about heli. But if you’ve got the money for heli…how far away are you from not needing disability insurance at all?
I am in my early 40s, about 11 years out from fellowship (when I got my same occupation DI policy with principal thru an investment broker)
and just reviewed my policy recently and found I didn’t get a cola rider. Is it possible to and/or cost prohibitive to add one now?
Great question. I’m not sure. You’d think it costs less now given fewer years to age 65, but it wouldn’t surprise me if it cost more, assuming you can get it at all. If you’re still totally healthy you can likely get it, although it might require the purchase of a whole new policy, which may not make financial sense.
If you own two long term disability policies (one purchased privately as a resident and one through employer) are you required to tell each company about the other. Both ask on forms and interviews, but when questioned as to why they are asking this neither insisted on knowing.
You have to tell them when applying but I think that’s it. Keep in mind with some policies you may get paid less if you have another policy paying you.