[Editor's Note: I don't recall ever receiving a guest post about Guaranteed Standard Issue Disability Insurance (GSI) but this quarter we received two! They both took a different angle on GSI so we decided to run both. Our first submission is from Todd Talbot, CFP®, ChFC®, CLU®, an Advisor for Easy-DI servicing the University of Alabama at Birmingham GSI program. We have no financial relationship with Easy-DI. Our second is from Andy Borgia, CLU of DI4MDs.com. DI4MDs has been a long-time advertiser on WCI and Andy has helped hundreds of White Coat Investors find the best disability insurance for their needs. If you're a resident or fellow, it's important for you to see if your hospital offers a GSI program and establish GSI coverage BEFORE you apply for a standard disability insurance policy. Insurance companies consider conditions preexisting that you probably don’t. Remember this applies for avocations as well. You will not be eligible for the guarantee issue policy if you've previously been declined DI coverage (or given exclusions, limitations to coverage).]
Guaranteed Standard Issue Disability Insurance: Understanding Your Options
By Todd Talbot
What Is Guaranteed Standard Issue Disability Insurance (GSI)?
Insurance companies occasionally make their most robust disability insurance policy available to larger residency/fellowship programs or employers. Three characteristics often define Guaranteed Standard Issue Disability Insurance (GSI):
- Typically, the policy has discounted unisex rates which is generally a net small savings for males and a substantial savings for females.
- Additionally, the policy is offered without any medical underwriting.
- Only one agency or firm generally has access to a GSI offer for a residency program at a time. (See Pro-Tip at the end of my article).
GSI programs are often, but not always, the easiest way to get a top-quality contract with deep discounts without any medical underwriting.
What Is the Difference Between GSI, Individual and Group Disability Coverage?
Individual coverage almost always offers better policy definitions, coverage continues as long as you pay premiums, and guaranteed rates compared to group coverage. However, it’s generally more expensive.
GSI coverage is individual coverage, so GSI includes all the same advantages as traditional individual insurance.
Group insurance is typically inexpensive or even employer-paid. Often there is little to no medical underwriting. However, the coverage may not be “own-occupation”, rates may increase over time, the employer rather than the employee owns the policy, and you may not be able to keep the policy if you change jobs.
What Are the Advantages of GSI Coverage?
There are several advantages to GSI coverage:
- GSI coverage is typically the most robust disability policy with the most favorable definitions.
- Most if not all of the company’s riders are included or at least available.
- There is no medical underwriting. Regardless of prior injuries, medical conditions, or prescriptions, you’re able to get the most robust policy.
- It’s easy. Simply fill out the application, and you have coverage.
- It’s often less expensive than any alternative. GSI policies are generally deeply discounted so that males pay less and females pay substantially less than traditional individual coverage.
What Are the Disadvantages of GSI Coverage?
Nothing is perfect in life, and there are some disadvantages to GSI coverage:
- Pre-existing conditions will be covered under a GSI policy. However, some GSI offers will only honor pre-existing conditions after you’ve owned the policy at least one year. These policies should pay claims during the first year for any accidents and any new medical conditions. (A GSI policy which honors pre-existing conditions after a year still provides coverage where a traditional individual policy may not.)
- GSI rates are almost always less expensive, but this isn’t always the case. Males in some specialties may pay less buying a traditionally underwritten policy. You should compare terms and rates with your local agent to find the best fit for you.
- Pro Tip: Each company’s definitions of when you’re disabled are slightly different. You should read each carefully. Sometimes, it’s worth paying a little more to get the definition that’s right for you.
Who Offers GSI Coverage?
There are six major own-occupation disability companies: Ameritas, Guardian/Berkshire, Mass Mutual, Ohio National, Principal, and Standard.
One of these generally has an offer available to major residency or fellowship programs. Your GME administration is often the best contact to learn more about your GSI program.
Pro-Tip: However, some residency administrators are prohibited by university policy from promoting/sharing these programs for fear of providing an endorsement. It’s worth your time searching the internet and asking attendings/coordinators if they know of any special disability offers you should consider.
Employers with at least 10-25 physicians may also be eligible for a GSI program. Your local independent insurance agent can work with the companies to find a program for your business.
What Might You Want in a Policy?
There are a few essential components to a disability policy:
Definition of Disability
The company’s definition of disability determines when you’re considered disabled and would collect benefits.
Most physicians demand “own-occupation” coverage which will consider you disabled if you’re unable to perform the material and substantial duties of your occupation or specialty even if you’re working in a different occupation.
“Any occupation” policies consider you disabled only if you’re unable to perform the material and substantial duties of any occupation for which you’re reasonably trained.
Ability to Increase Benefits
Ability to increase benefits later without medical underwriting. Your income should increase throughout your career, and it's important that your disability policy be able to increase as well without medical underwriting. This benefit is inexpensive and valuable.
Disability policies have an elimination period just like your health insurance has a deductible. This means you have to be disabled for typically 90 days before the policy would pay benefits.
Once receiving benefits, you’ll continue to receive benefits for as long as you’re disabled up to the benefit period. Often, benefits are payable to age 65 or 67.
Mental/Nervous or Substance Abuse
Mental/Nervous or Substance Abuse provisions will often limit benefits to two years if the claim is mental/nervous or substance abuse related. Claims resulting from anxiety, depression, alcohol, or drugs fall into this category.
Cost of Living Adjustments (COLA)
Cost of Living Adjustments (COLA) will increase the benefits you’re receiving if you’re disabled for more than a year. These benefits are typically expensive. If you’re disabled early in your career, they can be very meaningful years into your disability.
Pro-Tip: consider adding COLA when you purchase your policy and then dropping the COLA rider after you’ve worked for several years. This rider is less beneficial to you as you get closer to the end of the benefit period.
Non-Cancellable and Guaranteed Renewable
Non-cancellable and guaranteed renewable policies are almost always shown to physicians because the rates are fully guaranteed, and the company cannot change anything about the policy prior to the end of the benefit period.
The insurance company’s financials are important because you want the company to be able to pay any claims you may have. Each of the companies listed above are financially strong.
Pro-Tip: When companies do have financial instability, a larger company often buys the company and assumes all their contracts. Your contract remains the same and cannot change (if it’s non-cancellable/guaranteed renewable); any benefits payable would be paid by the new company.
How Do I Compare Policies?
While the six major own-occupation companies each offer excellent policies, there are some differences between contracts.
Obviously, you should compare the top companies to see which has the definitions and rates that make the most sense for you.
Pro-Tip: Career/Captive and independent agents who do not have access to a GSI program will not (and often cannot) show the GSI program.
Pro-Tip: Be careful when talking with agents who do not have access to GSI plans. Many will tell you incorrect information. For example, you may be told that pre-existing conditions are never covered, that rates will increase over time, or that it doesn’t offer own-occupation coverage.
As with anything, you must do your due diligence. Compare policies from the six major own-occupation companies and search for a Guaranteed Standard Issue Disability Insurance program for your residency group.
By way of perspective, as a local advisor servicing the University of Alabama at Birmingham (UAB) GSI program, we provide our customers with all seven quotes (six traditionally underwritten policies and the GSI offered exclusively through us) to compare and contrast.
The Importance of Resident/Fellow Pre-Approved Disability Insurance
By Andy Borgia
Fortunately, Residents/Fellows at many training programs nationwide are eligible for disability coverage on a guaranteed approval basis. For example, DI 4 MDs has programs at UCSD, Rady’s Children’s and Scripps Hospitals in San Diego. The individual policies offered are the exact same specialty-specific own-occupation policies available on a non-guaranteed basis, with only some minor restrictions such as set monthly benefit amount, elimination period, and benefit period.
In addition, the policies are offered on a discounted gender-neutral basis. In 2021, this will be the only way to obtain gender neutral rates for females, which is extremely cost-effective. To protect against adverse selection, insurance companies with guaranteed approval programs usually limit representation of these policies to only one insurance agent or office per training institution. This creates a problem for the under-informed resident/fellow seeking to establish disability coverage with a pre-existing condition. The guaranteed approved policies are only guaranteed if you have NOT applied for disability insurance previously and been declined coverage or issued a policy with a modification.
Every year, hundreds of uninformed residents/fellows are ill-advised by agents who are either unaware or do not reveal that a guarantee program exists at their training hospital. As a result, numerous young physicians with pre-existing conditions are forced to go without coverage for what they need covered the most. We see a few in our programs each year that are now paying the penalty of acting on ill advice.
BEFORE ANY RESIDENT/FELLOW BEGINS THEIR RESEARCH FOR DISABILITY INSURANCE, FIND OUT IF YOUR HOSPITAL HAS A GUARANTEED APPROVAL PROGRAM! Do not rely on agents who are not authorized to offer such programs for advice; the risk is too great. With Covid limiting in-person and local insurance agent access to Hospital training programs, the likelihood of a resident/fellow being declined coverage, having to accept an exclusion rider for a pre-existing condition, or accepting a policy with limited provisions when a guaranteed policy is available to them has increased dramatically.
The Disability Underwriting Process
To elaborate, all physicians should protect their medical careers with adequate disability insurance. Most realize the advantages of this protection and take the advice of their colleagues by trying to establish coverage while they are young and presumably healthy. This usually occurs during training. As mentioned previously, this is when many learn a critical lesson about disability insurance underwriting.
Disability insurance underwriting is extensive. Underwriters will review your prescription history, driving record, avocations and will typically obtain and review your medical records. An issue in any one of these categories can pose a problem.
Disability insurance medical underwriting is not like the clinical medicine you are practicing. The insurance companies must group you together with similar risks, consider the risk that the condition(s) will impair your ability to practice your specialty, and consider the likelihood for future recurrence/relapse. They do not know who will have a problem in the future, only that someone or many will. This means that many conditions that you have recovered from can and probably will, particularly if within the last five years, be excluded from coverage or result in limited provisions or benefits.
For example, if you have had knee surgery, then that knee will be excluded from coverage. Remember that this type of policy modification occurs approximately 40% of the time with disability insurance applications. These policy modifications can be either the exclusion of a pre-existing medical condition either temporarily or permanently, reduction of the desired benefit period, removal of critical riders such as the Future Insurance Option, or, the worst-case scenario, a complete declination of coverage, depending on the medical history.
A common example is medication use or therapy for anxiety or depression. In that example, at best, a policy will not cover disabilities due to mental/nervous disorders and substance abuse (think conditions listed in the latest DSM, not dementia). If the diagnosis is recent and/or severe, it is more likely that you will be declined for coverage entirely.
Another example is a spine exclusion due to regular or even past chiropractor visits even without any underlying pathology. Another red flag for insurance companies is when you have been advised to complete a test/study that has not yet been completed. One common example of this is a sleep study. Another problem is having a colleague prescribe a medication for which there is no medical record and later is discovered on a script check. Insurance companies are naturally suspicious and wonder what else you are not revealing.
All the previously mentioned will cause a problem either at policy underwriting or at time of claim. This can all be avoided by taking the extra time to determine if your training program has a guaranteed approval disability insurance policy available. Ask your colleagues, especially those ahead of you, your professors, GME Coordinators, or experienced disability insurance agents.
[Editor's Note: Ideally, there would be a list online of institutions/programs/hospitals/employers along with the approved GSI agent for that institution. Unfortunately, the business world being what it is, that does not exist, although in this post at least you learned who it would be at UAB and UCSD. The consumer is therefore on their own to somehow discover this provider. For most docs, it doesn't matter because they qualify to get a typical individual policy (which may even be cheaper than a GSI policy they qualify for). For anyone with a medical problem or dangerous hobby, it's critical information to know. We keep a list of recommended disability insurance agents who are sponsors of the site. These agents are excellent, however, that list does not contain the agent for every GSI program in the country. They tell me they do their best to refer you to the appropriate person when you are in need of a GSI policy, but there is no way for WCI to guarantee that actually happens every time. In addition, some of the agents out there who hold the GSI “contract” at an institution are NOT agents I would recommend to anyone but someone needing that particular policy. Caveat Emptor!]
Were you aware of Guaranteed Standard Issue Disability Insurance policies when looking for disability insurance? Does your hospital have a GSI program? Did you take advantage of a GSI policy? Why or why not? Comment below!