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Disability Insurance as a Resident

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  • Avatar Sarcoidologist 
    Participant
    Status: Student
    Posts: 5
    Joined: 07/02/2018

    Residency will be covering 100% of premium for long-term group disability. Maximum benefit 4k/month. Own occupation to age 65. COL increase 3%/year.

    I’m a 26yo w/o PMH. While I would certainly be disappointed if I were disabled during residency and only received 4k/month, I understand that most residents can only get ~5k/month in disability insurance.

    Would it be worth it to try and get an individual policy for 5k/mo to get my total benefit up to 9k/mo? That’s still short of what I would expect to earn once I’m out in practice (anesthesiology), but if I were disabled from ages 26 to 65, 9k/mo would certainly be preferable to 4k/mo. In a lower cost of living area so should be able to afford the ~$130/mo that a 5k benefit plan would cost.

    #212855 Reply
    Avatar jacoavlu 
    Moderator
    Status: Physician, Small Business Owner
    Posts: 1848
    Joined: 03/01/2018

    One of the main benefits of getting your own plan as a resident is also getting the ability to increase the monthly benefit amount once you’re out in practice, without having to go through underwriting again. Future income benefit rider I think they might call it.

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #212856 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 2123
    Joined: 09/18/2018

    Just a caution, Some of the group policies will deduct other sources of benefits. So face amount may not be the sum total. You really need your policy and quotes through one of the vendors. The $5k with increase option to $15k seems to be your target. You really need to review the riders and understand exactly what you are getting. Own occ and the difference between graduated payments and flat payments.
    1) Read the writeup here.
    2) Use one of the DI vendors here to get you quotes and walk you through the details. The devil is in the details.
    Past the initial guaranteed amount, benefit is what you actually earn and the own occ in practice. Larry Keller is one we used. Graduated payments is tempting, but flat payments have long term benefits.

    What You Need to Know About Disability Insurance

    #212860 Reply
    Liked by jfoxcpacfp
    Avatar Peds 
    Participant
    Status: Physician
    Posts: 3614
    Joined: 01/08/2016

    We didn’t get ours until our last few months of residency.

    #212868 Reply
    Avatar fasteddie911 
    Participant
    Status: Physician
    Posts: 282
    Joined: 05/31/2016

    DI in residency is also to protect insurability, beyond just the 3+yrs of residency.  Especially while you’re young, healthy and may have hospital discounts too. I’ve known a few people who got injured in residency, one of which required months of therapy.  While he was able to go back to work, that injury could worsen over time to the point he can’t work.  If he waited until after residency to get a DI, they may exclude coverage for disability related to that accident.  Likewise, I had a friend in surgical residency complaining about shoulder pain from operating.  I told him to not see a doctor yet and consider getting DI first.

    #212874 Reply
    Liked by jfoxcpacfp
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 2123
    Joined: 09/18/2018

    Keep in mind your primary goal is to lock in a contract that has the DI coverage you will want when you begin practicing your own occupation and income. You will have a questionnaire and it goes through underwriting.
    Guaranteed renewable and noncancelable favor sooner than later.
    If your strategy is “buy cheap” to get a higher amount during residency and replace it later, that is a suspect strategy from a cost/benefit.

    #212885 Reply
    IntensiveCareBear IntensiveCareBear 
    Participant
    Status: Physician
    Posts: 137
    Joined: 12/22/2018

    …I’m a 26yo w/o PMH. While I would certainly be disappointed if I were disabled during residency and only received 4k/month, I understand that most residents can only get ~5k/month in disability insurance.

    Would it be worth it to try and get an individual policy for 5k/mo to get my total benefit up to 9k/mo? …

    Click to expand…

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    #212960 Reply
    Avatar pierre 
    Participant
    Status: Resident
    Posts: 121
    Joined: 02/01/2016

    If your income is not currently $9k/month, will anyone actually give you policy for that amount?

    #213032 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 2123
    Joined: 09/18/2018

    A personal DI policy for $5k can be stacked on the residency group policy. The payout terms should exclude other payments. That’s why he needs to go through an agent.

    #213081 Reply
    Scott at MD Financial Services Scott at MD Financial Services 
    Participant
    Status: Website Sponsor, Insurance Agent, Small Business Owner
    Posts: 399
    Joined: 01/14/2016

    You can buy the individual policy and have it pay in addition to your group policy. Be mindful if you look at association policies (like AMA) that your group policy may offset for the benefits paid by an association plan so you should check the terms of the group employer provided policy so you know.

    S. Scott Nelson-Archer, CLU, ChFC with M. D. Financial Services, Inc.
    Direct Phone 713-966-3932, Email [email protected]

    #213209 Reply
    Avatar Sarcoidologist 
    Participant
    Status: Student
    Posts: 5
    Joined: 07/02/2018

    If your income is not currently $9k/month, will anyone actually give you policy for that amount?

    Click to expand…

    I wondered about this as well. Seems residents are in a unique position in that they we see such a drastic increase upon graduation. It would truly be a catastrophe if someone was 1 year away from making 350k+/yr and got disabled with only 5k/mo benefit.

    The policy overview for the group policy says that it doesn’t integrate or interfere with an individual policy (I take that to mean they can be stacked). I planned on reaching out to the NWM agents that administer the group policy to inquire about an additional individual policy. I’ll report back with my findings.

    Keep in mind your primary goal is to lock in a contract that has the DI coverage you will want when you begin practicing your own occupation and income. You will have a questionnaire and it goes through underwriting.
    Guaranteed renewable and noncancelable favor sooner than later.
    If your strategy is “buy cheap” to get a higher amount during residency and replace it later, that is a suspect strategy from a cost/benefit.

    Click to expand…

    Point taken. Perhaps I’ll look into a smaller plan (1-2k benefit?) so that I can increase the benefit upon graduation without having to pay for too much disability while in residency.

    #213537 Reply
    Liked by Tim
    Dreamgiver Dreamgiver 
    Participant
    Status: Physician
    Posts: 733
    Joined: 03/09/2017

    If your income is not currently $9k/month, will anyone actually give you policy for that amount?

    Click to expand…

    I wondered about this as well. Seems residents are in a unique position in that they we see such a drastic increase upon graduation. It would truly be a catastrophe if someone was 1 year away from making 350k+/yr and got disabled with only 5k/mo benefit.

    The policy overview for the group policy says that it doesn’t integrate or interfere with an individual policy (I take that to mean they can be stacked). I planned on reaching out to the NWM agents that administer the group policy to inquire about an additional individual policy. I’ll report back with my findings.

    Keep in mind your primary goal is to lock in a contract that has the DI coverage you will want when you begin practicing your own occupation and income. You will have a questionnaire and it goes through underwriting.
    Guaranteed renewable and noncancelable favor sooner than later.
    If your strategy is “buy cheap” to get a higher amount during residency and replace it later, that is a suspect strategy from a cost/benefit.

    Click to expand…

    Point taken. Perhaps I’ll look into a smaller plan (1-2k benefit?) so that I can increase the benefit upon graduation without having to pay for too much disability while in residency.

    Click to expand…

    Also reach out to the people recommended on this forum regarding stacking a policy on top of your group policy, don’t buy an extra NWM policy. Group policies generally are not worth much so having and individual policy that you can max out once your salary increases is highly advisable.

    #213539 Reply
    Avatar octopus85 
    Participant
    Status: Resident
    Posts: 170
    Joined: 08/13/2017

    Also be careful – if you have access to a guaranteed issue policy, if you apply for individual coverage through the same company and are denied, you may lose access to the guaranteed issue policy.

    #213584 Reply
    Liked by jfoxcpacfp, Tim
    Scott at MD Financial Services Scott at MD Financial Services 
    Participant
    Status: Website Sponsor, Insurance Agent, Small Business Owner
    Posts: 399
    Joined: 01/14/2016

    Yes it can happen, the individual policy will essentially over insure you as a resident because they know you will soon be out and the coverage then be proportional. In addition, while in training the carriers will ignore all group coverage in place since they know that benefit will eventually disappear when your training is done.

    S. Scott Nelson-Archer, CLU, ChFC with M. D. Financial Services, Inc.
    Direct Phone 713-966-3932, Email [email protected]

    #213586 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 2123
    Joined: 09/18/2018

    The problem is getting from resident pay to attending pay with an own occ policy.
    Let’s assume your target is $15k per month.
    Base seems to be $5k with guaranteed increase rider for increments to $15k. That has a cost to the insurance company and to the policy holder. Standard minimum s and increases. Limit 3x original and $1k increases
    tied to actual earnings. Flat payments or graduated payments. Scott or Larry Keller or any of the DI vendors
    can get you quotes. I doubt you will get own occ coverage for $1k per month base. Why would you need it? For the future? This isn’t a negotiation, it’s shopping the DI policies available for terms, options and price.
    Cheaper sooner than later with less risk. No big deal.

    #213627 Reply

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