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Disability Insurance confusion – hospital GSI vs individual policy(s)

Home Insurance Disability Insurance confusion – hospital GSI vs individual policy(s)

  • Avatar Wempty 
    Participant
    Status: Resident
    Posts: 2
    Joined: 08/12/2019

    I’m new to WCI and the forums, but disability insurance has been stressing me out and I thought maybe I could find some guidance here. I’ve been poring through the forums and using the search function, but I still can’t make a decision.

    I have 3 years left in residency, and my hospital offers a true own occupation GSI policy from Ohio National with extremely favorable rates for benefits of 1.5k, 2.5k, 4k, and 5k, with true own occupation definition, residual benefits, and optional COLA and catastrophic riders. I’m told there is a future increase option at the exit interview, on residency graduation, that can be added and benefits up to $15k/month are possible with income verification.

    Is it worth getting very favorable GSI policy with lesser rated company like Ohio National, or should I pay a modestly bigger premium for one of the bigger DI players?

    As a separate question, what about combining two DI policies for more future coverage options and getting ahead of medical underwriting now? One agent is recommending a $1,500 benefit policy with Principal and a $6,000 benefit policy with Mass Mutual at favorable rates, and states that this sort of thing is common among residents and future high earners.

    #238175 Reply
    Liked by Tim
    Scott at MD Financial Services Scott at MD Financial Services 
    Participant
    Status: Website Sponsor, Insurance Agent, Small Business Owner
    Posts: 429
    Joined: 01/14/2016

    I’m new to WCI and the forums, but disability insurance has been stressing me out and I thought maybe I could find some guidance here. I’ve been poring through the forums and using the search function, but I still can’t make a decision.

    I have 3 years left in residency, and my hospital offers a true own occupation GSI policy from Ohio National with extremely favorable rates for benefits of 1.5k, 2.5k, 4k, and 5k, with true own occupation definition, residual benefits, and optional COLA and catastrophic riders. I’m told there is a future increase option at the exit interview, on residency graduation, that can be added and benefits up to $15k/month are possible with income verification.

    Is it worth getting very favorable GSI policy with lesser rated company like Ohio National, or should I pay a modestly bigger premium for one of the bigger DI players?

    As a separate question, what about combining two DI policies for more future coverage options and getting ahead of medical underwriting now? One agent is recommending a $1,500 benefit policy with Principal and a $6,000 benefit policy with Mass Mutual at favorable rates, and states that this sort of thing is common among residents and future high earners.

    Click to expand…

    I am pretty sure as a resident with 3 years left that the agent is wrong about you being able to obtain $6k and $1500 of benefit.  Most carriers limit you to a total of $5-6k if you are more than 6 months out from finishing your residency.  In addition, I would look at how much each contract can increase to (that is determined by them using either the FPO process or BU process) and be realizing how much income you need to earn to qualify for that amount.  It always amazes me when I see folks who have multiple contracts allowing for increases to $30k or $35k which takes about $1 million of income to qualify for but they are in primary care making $200k +/-.

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

    #238263 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 2857
    Joined: 09/18/2018
    $1,500 benefit policy with Principal and a $6,000 benefit policy with Mass Mutual at favorable rates, and states that this sort of thing is common among residents and future high earners.

    Click to expand…

    What you define as high earners is the key and understanding that the % of income DI insurers will cover decrease with higher compensations.

    How much you “qualify” for is a decreasing percentage the higher one earns. As Scott indicated, you need to ask specific questions.

    For example, $450k at 53% would have a monthly benefit of $19,875. Compare that to your coverage of the residents salary.

    Additionally, the GSI policy may have standard offsets.

     

    #238274 Reply
    Avatar Wempty 
    Participant
    Status: Resident
    Posts: 2
    Joined: 08/12/2019
    medical school scholarship sponsor

    -I’m not particularly concerned with trying to “max out” my future disability coverage, regardless of my future income, but I’m wondering if there are any benefits to having two policies in general? When I graduate and am ready to increase coverage, I could see which carrier has the best rate at that time, and not have to go through further medical underwriting with either carrier, for example. Maybe it’s not worth the hassle of having two policies, though?

    -How seriously should I consider Ohio National versus the other, bigger DI players?

    -I couldn’t find the definition for ‘standard offsets’ on Google or this forum’s search. Could you elaborate on what you mean by that?

    Thank you

    #238378 Reply

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