By Travis Christy, White Coat Insurance
Guaranteed Standard Issue disability insurance (GSI) might sound like a mouthful, but it's actually a pretty neat type of disability insurance.
GSI policies are specifically designed to protect your most valuable asset: your ability to earn a paycheck in the event of sickness or injury. They’re also easy to qualify for, requiring little to no underwriting. You’ll find these plans in many resident physician programs across the country, and when purchasing disability insurance, they should be considered. Even if you've battled things like cancer, heart issues, or past injuries that could usually put you in the “disability insurance declined” category, GSI has your back. Even if no prior health conditions exist, GSI should be looked at as an option because of how easy it is to qualify for.
What Is Covered By Disability Insurance?
Disability insurance—including GSI, individual disability, and group disability—is all about making sure you've got cash coming in if you can't work due to sickness or injury. Even if you still can work but see a drop in income—or you become partially disabled—your disability policy can kick in. It usually covers around 60% of your income, but in some cases, when combined with group disability, that percentage can go up.
Why Is Disability Insurance So Important?
There are several important reasons to consider disability income protection as a physician in practice or training. An essential question to ponder is whether you could comfortably retire tomorrow if circumstances demanded it. If the answer is “no,” then disability insurance becomes a necessity rather than a mere luxury. Becoming disabled is really a type of “forced retirement.” This holds true even if your annual income reaches the mid- to high-six figures, as disability income protection remains crucial.
The statistics are worth noting: according to the Council for Disability Awareness, there's a 1 in 4 chance of experiencing a disability during your working years, making it more common than you might expect (other statistics say that 1 in 7 doctors actually become disabled during their career). This is why disability insurance has higher premiums compared to life insurance; it's because it's more likely to be used. As a result, insurance companies typically review your medical history carefully when deciding whether to offer coverage.
What Is the Difference Between GSI, Individual, and Group Disability Coverage?
One may ask what the differences are between group disability insurance, individual disability, and Guaranteed Standard Issue disability insurance. In essence, group disability insurance is for employees or members of organizations with limited customization. It is guaranteed coverage generally paid for by the employer and doesn’t offer the ability to take the coverage with you if leaving for other employment opportunities. On the other hand, individual fully underwritten disability insurance is highly customizable, and it offers portability and individual ownership. Fully underwritten disability insurance requires medical and financial review, and it may come at a higher premium.
GSI disability insurance aims to bridge the gap, offering accessibility to those with pre-existing conditions while providing some customization (though not to the extent of individual insurance). It is also portable, which means it can be moved from one employer to another. Each type of disability coverage has its advantages and should be selected based on individual needs and circumstances.
GSI Options Available for Practicing Physicians
Under specific circumstances, practicing physicians can access Guaranteed Standard Issue (GSI) disability insurance. It is also referred to as Multi-Life Guaranteed Issue disability insurance. This form of coverage typically requires the participation of a group of physicians, often affiliated with the same medical practice or institution. Usually, having group disability insurance already in place is a prerequisite for GSI consideration for practicing physicians. Insurance providers are more likely to support a GSI plan when there is a substantial number of eligible participants representing a diverse array of medical specialties, helping to distribute the risk.
For medical groups with more than 20 but fewer than 75 eligible participants, insurers may require full participation, which is often covered financially by the company or employer. Conversely, for larger groups with over 75 members, carriers may allow voluntary coverage, contingent on a minimum percentage of eligible individuals enrolling.
What's so great about GSI? Let's break it down:
- No medical underwriting: With GSI, there's no need for a medical exam. It's a breeze for those with a history of medical conditions, and it may be a smart option for those without medical conditions to consider.
- Group pricing perks: GSI usually comes with group pricing, which can mean cheaper premiums. In many instances, GSI policies cost less than fully underwritten policies.
- Full package: GSI plans often offer almost all the features you'd find in traditional plans with medical underwriting—with just a few differences and limitations.
- It goes where you go: GSI plans are like a trusty sidekick. You can take them with you even if you switch jobs.
GSI has its drawbacks too:
- Less customization: You might not have as many choices with GSI disability insurance compared to individual fully underwritten disability insurance. Some features available through traditional underwriting may not be available under a Guaranteed Issue plan. Examples of features not available would include retirement protection, higher cost of living riders, and catastrophic disability coverage.
- Group risks: Your rates and coverage depend on the group's health/occupational profile. GSI can make coverage more accessible and cost-effective, but it may come with standard terms and limitations for the entire group.
- Some limits: GSI policies could have limitations, especially when it comes to mental health and substance abuse risk.
How Much Does GSI Disability Insurance Cost?
The cost of GSI depends on various factors like the provider, policy, and your group's health profile. While it's usually cheaper, the exact price varies based on your situation and the coverage you pick. Generally, GSI plans will be less expensive than fully underwritten options. You’ll want to check with one of our trusted advisors to find out what’s available.
Does GSI Disability Insurance Have Riders?
You can customize your GSI policy with different disability insurance riders. These are important additional features for your policy. One example is a cost-of-living rider, which adjusts monthly benefits to keep up with inflation. Partial disability coverage is another rider that protects someone in the event that it is possible to still work but only on a part-time basis or if that person experiences a drop in income due to sickness or injury. In addition, other riders—such as student loan protection and future insurability options—can be added to a GSI plan. The availability of these extras depends on your provider and policy.
Where to Buy Guaranteed Standard Issue Disability Insurance
You’ll find GSI disability insurance programs in many resident physician programs across the country. While not all resident programs may have a GSI disability plan available, it’s worth checking with an advisor to see. To see what is available, reach out to one of our disability insurance partners.
Some practices may offer GSI disability. If your employer doesn’t have an existing GSI plan, check with one of our recommended partners to see about setting one up.
Who Should Buy Guaranteed Standard Issue Disability Insurance?
GSI is something every eligible person should consider when purchasing disability insurance. For those in residency—whether you've got a pre-existing condition, a risky job, or a clean bill of health—GSI disability insurance can be a lifeline to keep your finances afloat during a rough patch.
Do You Need to Buy GSI and Traditional Disability Insurance?
It really depends on your specific situation and financial goals. GSI disability insurance and traditional disability insurance serve the same purpose: to protect income in the event of sickness or injury. GSI insurance is typically easier to qualify for, making it a good option for individuals with pre-existing health conditions and those who want to get coverage quickly. On the other hand, traditional disability insurance may offer more flexibility and customizable coverage, but it will require a more thorough underwriting process. If you have a stable health history and want tailored protection, traditional insurance might be the way to go. You can even consider doing both GSI and a traditionally underwritten plan. Ultimately, it's about assessing your needs, budget, and personal circumstances to decide which type of disability insurance suits you best. The most important consideration is to get something in place before a disability occurs.
Disability insurance, including GSI, is your trusty sidekick in the insurance world, ready to back you up. It's like a financial safety net that's there when you need it most. GSI may be the right choice for you if you're dealing with health hurdles or just want an easier underwriting process.
Have you used or do you currently use GSI disability insurance? Have you been satisfied with that plan? What else should people know about GSI disability insurance? Comment below!