[Editor's Note: Today is the last of our five 2019 WCI Scholarship sponsored posts. It comes to us from long-time scholarship supporter Lawrence B. Keller, CFP®, CLU®, ChFC®, RHU®, LUTCF of Physician Financial Services. I recently had the opportunity to chat on the phone again with Larry and am always impressed with his desire to serve you and make sure you get the best policy for you even if it doesn't result in a commission for him. Thank you for supporting those who support this scholarship.]
Lawrence Keller
Purchasing an individual disability insurance policy is often one of the first steps in creating a financial plan. After all, your ability to work and earn an income is what allows you to pay down debt, build wealth and create a lifestyle for you and/or your family.
Disability insurance is something that anyone who is working but has not yet achieved financial independence needs. While you might love what you do, if you are working because you need to generate an income, you need to protect that income, and the only effective way to do that is to purchase disability insurance. This article will help you understand which features should be included in your disability insurance policy and why.
What to Look for in a Disability Insurance Policy
At its very core, disability insurance is akin to an Automated Teller Machine (ATM) Card. The more hours you have access to a cash machine, the easier it is to withdraw funds from your account. You can think of it this way, the more restrictive your policy is in terms of its features – the definition of total disability, the trigger for Residual/Partial Disability, and how claims related to mental/nervous and/or substance abuse disorders and foreign residence will be handled, all of which will ultimately determine your ability to receive benefits from your policy. As such, each additional restriction or limitation that is part of it, means that you will have less access to the cash machine in order to withdraw funds. In short, the fewer limitations associated with your policy, the easier it will be to receive benefits, from a contractual standpoint, in the event of a claim.
What Provisions Should Be Included in Your Disability Insurance Policy?
#1 Non-Cancellable and Guaranteed Renewable
A policy that is Non-Cancelable and Guaranteed Renewable provides you with the greatest degree of protection as a consumer. As long as required premiums are paid, the policy cannot be canceled, the premium rates cannot be changed, and the policy provisions will remain the same until the policy’s expiration date (typically age 65).
Certain insurance companies may also offer a Guaranteed Renewable (not Non-Cancellable AND Guaranteed Renewable) policy. However, this allows the insurance company to change the premium rates by class of policyholder with state insurance department approval. While this can provide you with premium savings, in my opinion, in most cases, it is not worth the risk. After all, we don’t know where financial markets are headed, where medicine is headed and what claims experience might represent over your career. Insurance is about transferring risk away from you to a third party (the insurance company) until you have either gained the ability to self insure or have reached financial independence.
#2 “Own-Occupation” Definition of Total Disability
Ideally, you want to purchase a policy with a true “Own-Occupation” definition of total disability. Typically, “total disability” or “totally disabled” means that due to an accident or illness, you are not able to perform the “material and substantial” duties of your occupation.
Some companies will even go so far as to state that if you have limited your practice to a single medical specialty, that specialty will be deemed to be your occupation. This definition of total disability makes it possible for you to work in another occupation or medical specialty and still receive your full disability benefits – even if you are earning the same or more income than you were prior to your disability. There is no black letter law that states exactly when one will be considered totally disabled, residually (partially) disabled or not disabled at all.
Generally, for surgeons, as long as the occupational analysis showed that just prior to disability his/her main duties were performing surgery and the majority of his/her office based practice was pre-operative consultations and post-operative follow-up, they would be considered totally disabled. Their new income is not taken into consideration and their full disability insurance benefits continue to be paid as he/she remains unable to perform the material and substantial duties of their occupation.
In their most recent offering, Berkshire’s policy starts with a true “Own-Occupation” definition of total disability and then adds a second way to qualify for benefits with a threshold that can be used in order to receive full disability insurance benefits if you are a surgeon or invasive practitioner by stating that “If your occupation is limited to a Medical Doctor or Doctor of Osteopathic Medicine and more than 50% of income is earned from performing surgical procedures, we will consider you to be totally disabled even if you are gainfully employed in your practice or another occupation so long as, solely due to injury or sickness, you are not able to perform surgical procedures. This language changes the focus from solely your duties to your source of earnings and provides more ways to qualify for total disability benefits.
Surgical procedures means the medical interventions involving an incision with instruments performed by you in a clinical or hospital setting normally involving anesthesia and/or respiratory assistance, that you regularly perform, during the 12 months prior to your disability. These procedures can be performed on either an inpatient or outpatient basis. Providing hypodermic injections, in itself, is not a surgical procedure.”
If you have a mixed practice or your income comes from several sources, this can be an advantage as it stipulates that percentage of income that must be met in order to qualify for total disability benefits. Otherwise, as long as a policy contains an “Own-Occupation” definition of total disability, the carriers will all evaluate a claim in a similar fashion. Keep in mind, an individual’s eligibility for benefits is determined on a case-by-case basis, taking into consideration the factual circumstances presented as well as the terms and conditions of his/her policy(ies).
One carrier introduced a “Medical” Own-Occupation definition (MOOD) definition of total disability not long ago. However, despite how this might seem to read on the surface, the bottom line is that if you go back to work in another occupation, any earnings are taken into consideration in a calculation to determine the benefit that may be payable, which could result in a reduction or elimination of your policy’s monthly benefit.
If you have the desire and ability to work in another occupation or medical specialty, if your policy includes a (true) “Own-Occupation” definition of total disability, any earnings do not impact the total disability benefit payable.
Would you rather choose not to work in any capacity and receive the full total disability benefit under the “Medical” Own-Occupation definition of total disability or receive the full total disability benefit and still have the ability to earn income regardless?
At the time of this writing, depending upon your state of residence and medical specialty, there are only six companies that potentially offer true “Own-Occupation” coverage to physicians – Berkshire Life (a Guardian Company), Standard, MassMutual, Principal, Ameritas, and Ohio National.
The coverage provided under your policy, including the “Own-Occupation” definition of total disability, is portable from one job or occupation to the next. It is important to remember that your occupation at the time of claim is based on the main activities of your work immediately prior to the start of your disability. In the event you have an occupational change, it is always a good idea to review your insurance coverage with your agent to make certain that your policy continues to meet your needs, even though you do not need to notify the insurance company of this change.
#3 Residual or Partial Disability Benefit
While a policy with an “Own-Occupation” definition of total disability is the “best”, it does not adequately protect your income as it pays benefits solely based upon your ability (or inability) to perform the duties of your occupation or medical specialty. For example, if you are an Emergency Medicine Physician and develop a medical condition that still allows you to practice emergency medicine but you must reduce the number of shifts you work per month and/or the number of hours you work per shift, causing a loss of income, without a “loss of earning” component in your policy, no benefits would be payable – even if your loss of income was substantial.
Therefore, your policy should contain a Residual/Partial Disability Rider. This takes away the “all or nothing” associated with “Own-Occupation” and generally, pays benefits proportionate to your loss of income. Typically, a loss of 15-20% or more compared to your pre-disability income is required. Additionally, some companies state that they will not pay less than 50% of your policy’s monthly benefit for the first 6-12 months of a Residual/Partial Disability claim and, finally, if your loss of income exceeds 75-80% compared to your pre-disability income, full benefits would be payable for that particular month.
#4 Recovery Benefit
A Recovery Benefit is designed to do more to assist with your financial recovery following a total disability. This provision can be invaluable – especially if your practice has been built on referrals from existing patients and/or other healthcare professionals or you are compensated in whole or in part on an “incentive” or “eat what you kill” basis – and is typically built into the Residual/Partial Disability Benefit Rider (this is not the case for Principal in California). Should you continue to suffer a loss of income of 15-20 percent or more, compared to your pre-disability income, and there’s a demonstrable relationship between your current loss of income and your prior disability, benefits would continue to be payable. This provides significant benefits if you are no longer sick but your current income loss was caused or contributed to by your prior disability.
#5 Cost of Living Adjustment (COLA) Rider
A Cost Of Living Adjustment Rider is designed to help your benefits keep pace with inflation after your disability has lasted for 12 months. This adjustment can be a flat percentage or tied to the Consumer Price Index. Although costly, this rider can provide significant increases to your monthly benefit if you are disabled early in your career. That being said, if cutting the cost of coverage is an issue, this might be the first optional rider to consider excluding from your policy especially if you are not purchasing the largest monthly benefit for which you qualify.
For example, I recently worked with a 35 year old female Internal Medicine Physician that qualified for a monthly benefit of $12,475, payable after 90 days with a Residual Disability and Recovery Benefit Rider, a 3% COLA Rider, a Future Benefit Increase (FBI) Rider and a Benefit Update (BU) Rider. Her monthly premium with a unisex rate and 20% discount was $325.85. Removing the COLA Rider reduced her monthly premium to $281.34. For approximately the same monthly premium ($287.32), she would have only been able to purchase $11,000/month with the COLA Rider.
Using a 3% assumed inflation rate, we calculated that she would need to be disabled for approximately 5.5 years (1 year of disability plus 4.5 years of indexing), before the smaller benefit with the 3% COLA Rider would exceed the larger initial monthly benefit without it.
Finally, keep in mind, that even if your policy includes a COLA Rider, this benefit is not necessarily guaranteed protection against increases in the cost of living.
#6 Future Increase Option (FIO) Rider or Benefit Update/Benefit Purchase/Benefit Increase Rider
When it comes to increase options, there is the “traditional” increase option where you pay a premium in order to have the ability to increase your monthly benefit, up to a predetermined maximum, regardless of your health, as your income rises.
Berkshire, MassMutual, Ohio National and Ameritas all offer this type of increase option. You pay a premium for this and, as such, you have the ability to increase your coverage annually, subject to your income and other disability insurance in force. If you want to exercise it, you can. If not, there is no requirement that you do so and this option will continue to be available annually until the rider expires and is removed from the policy.
In many cases, another type of increase option is included in the policy, at no cost, if certain criteria are met. While this is Principal and Standard’s only increase option (except for Standard in the State of California), MassMutual (with the exception of California and Connecticut) and Berkshire makes this available as an alternative increase option on their ProVider Choice Select policy.
Under these riders, every three years you would have the ability to increase your coverage. However, you must “check-in” in order to keep the Benefit Update Rider (Principal), Benefit Increase Rider (MassMutual or Standard) or Benefit Purchase Rider (Berkshire) on the policy.
If you do not send in the application to increase your coverage, after multiple attempts, it will be removed from your policy permanently. If you do send the form back (as you should) and do not qualify for additional coverage, you will be declined from a financial underwriting perspective and you will go through the same process three years later.
If, however, you do qualify for additional coverage, you must purchase at least 50% of the eligible amount or, again, this increase option rider will be removed from your policy permanently.
I believe that, generally, this rider is extremely important for young physicians – especially those that expect a substantial increase in income. It allows you to apply for additional disability insurance coverage, regardless of your health, as your income rises, without undergoing another exam, blood test, urine test, or answering any medical questions. This guarantees that any medical conditions that develop after your original policy’s purchase would not be subject to new medical underwriting.
It’s important to know if, when exercised, the additional coverage will be in the form of an increase to an existing policy or in the form of a new policy. An increase to an existing policy is best as it guarantees that all policy provisions remain the same and are issued using the same rate book as the original policy. You will also want to know if the occupation class (a factor that helps determine the premium associated with your policy) is guaranteed and if any discounts applied to your policy are permanent.
Unisex (Gender Neutral) Premium Rates for Females – Going, Going…Gone?
Due to a higher morbidity rate, premium rates for females are substantially higher compared to their male counterparts. The solution is for female physicians to purchase a policy that includes a unisex (gender neutral) rate structure and a discount. This is a blended rate that greatly favors females and can, generally, provide them with a savings of 40-50% off the normal female premium rates.
To qualify, one would normally purchase their policy as part of a Multi-Life Discount program through one's employer or as part of a Guaranteed Standard Issue (GSI) program, except in Montana where all policies have unisex rates.
For example, let’s assume that we have a 30-year old female Emergency Medicine Resident in New York State purchasing a policy from MassMutual with a monthly benefit of $5,000, payable after 90 days, to age 65. Also included is an Extended Partial Disability Benefit Rider, a 3% Cost Of Living Adjustment (COLA) Rider and a $10,000 Future Insurability Option (FIO) Rider. The level (fixed) monthly, non-discounted, gender distinct (female) premium is $331.65. However, the same policy with a unisex rate and 25% discount is $182.15 month or approximately 45% less.
Assuming the monthly benefit was never increased, if she kept her policy until age 65, the cumulative savings would be $62,790! Of course, if she increased her monthly benefit, the savings would be that much larger.
Recently, MassMutual announced that, in most states and under most circumstances, unisex rates are no longer available. As of this writing, the exceptions are the states of California, Connecticut, and New York. There are also several “exclusive” discounts plans available through specific career MassMutual Agents.
If you are a female Resident/Fellow and have not yet purchased disability insurance, and live in one of these states, the time to do your research is now! In the event that you have medical issues that may be problematic in terms of disability insurance underwriting, you may also have the ability to purchase a policy, regardless of your health, with unisex rates as a result of a Guaranteed Standard Issue (GSI) plan. However, these are only available through certain agents and for those Residents/Fellows associated with specific residency/fellowship programs. Agents that specialize in working with physicians should know of and, in some cases, even have access to them.
So, if you are a Resident/Fellow and no longer have the ability to purchase a policy with unisex rates, what should you do? There are really only a few options:
- Purchase nothing at all and hope, when you complete your training, you will have the ability to purchase a policy with unisex rates as an Attending Physician. Of course, this leaves you vulnerable in the event your health changes or you become disabled without coverage.
- Use the “Lease with Option to Buy” strategy and purchase a very small amount of coverage today that can potentially be increased, regardless of your health, as your income rises. This strategy protects you against any adverse changes in health and, at the same time, limits your initial premium outlay. If a better option becomes available in the future, you can simply replace this policy if your health remains the same. If not, you can increase your coverage based upon financial underwriting only – without the need to answer medical questions or do an exam, blood or urine test.
- Purchase the maximum monthly benefit available without unisex rates. Of course, this strategy best protects you today and, again, should a better option become available at a later date, you can always replace it based upon your then-current health, individual needs, goals, and budget.
Claims Related to Mental/Nervous and/or Substance Abuse Disorders
While some carriers will cover claims for mental and nervous conditions in the same way as other disabilities, others may limit these claims to a maximum of 24 months (either per period of disability or over your lifetime) or for five years over your lifetime. This limitation is invoked if the primary cause of disability was solely a psychiatric or substance abuse disorder or diagnosis including, but not limited to, post-traumatic stress syndrome, anxiety, depression and or alcohol abuse/addiction. Although many physicians will opt to purchase a policy with the least amount of restrictions, some willingly accept a policy with this limitation in order to take advantage of the cost savings associated with it. Others, like Anesthesiologists or Emergency Medicine Physicians, may simply have no choice.
In most cases, Principal, now makes the mental/nervous and/or substance abuse disorder limitation optional. Should you choose not to have the limitation (providing unlimited coverage for these types of claims), the monthly premium would increase (as the 5% or 10% mental/nervous and/or substance abuse disorder limitation discount would no longer apply).
Conceptually speaking, if the cost difference between unlimited or limited coverage is minimal, you might want to opt for unlimited coverage. After all, you are purchasing this type of coverage for the unknown and, cost aside, the policy that pays the most money, under the most circumstances, with the fewest number of limitations is best.
A good example is a 26-year-old male, Plastic Surgery Resident that I worked with recently. He was really indecisive when it came to this area. We had reviewed things together for several weeks but he found it really difficult to make a decision. Then, it hit me and I decided to present it to him in a different way.
Foreign Residence and Travel
While some carriers allow an insured to travel or reside in countries outside the United States, the District of Columbia or Canada, the majority of carriers will limit payments for claims outside those jurisdictions unless the insured returns to the United States for a proscribed period of time – typically six consecutive months per calendar year. Therefore, if you would choose to reside outside of the United States in the event you were disabled, you should carefully examine how the policy or policies you are considering would handle your claim for benefits.
Keep in mind that if you are not a Permanent Resident (Green Card Holder) or U.S. Citizen, any policy subject to underwriting will likely include an exclusion rider for foreign residency or travel and one would need to return to the United States or Canada in order to receive benefits under the policy.
The exception to this, even for visa holders, is MassMutual. Rather than a full exclusion rider, their policy would state that the “Monthly benefits will not be provided for no more than 12 months in total during a period of Disability while the insured is outside the United States and/or Canada”.
Active Duty Military Residents/Fellows
MassMutual’s Future Insurability Option (FIO) Rider is typically 3X the base policy’s monthly benefit (2X the base policy’s monthly benefit in California and Connecticut). Therefore, starting with $2,000 month, an FIO Rider of $6,000 month would be available. This would allow for a total monthly benefit of $8,000, not including the Automatic Benefit Increase (ABI) Rider which, would allow for an additional $300 month over five years or a total of $8,300 monthly benefit. Assuming no other coverage this would require (protect) an earned income of approximately $185,000. However, those Residents/Fellows in higher income specialties will likely require a much larger amount of coverage. The same would be true for Active Duty Physicians that are ultimately planning to separate from service and enter private practice.
MassMutual makes two different increase options available. The Future Insurability Option (FIO) Rider and the Benefit Increase Rider (BIR). Purchasing two different policies from MassMutual for $1,000 month with each increase option rider allows for this (the BIR is not available in California or Connecticut). One policy, would have the FIO Rider and allow for a potential maximum monthly benefit of $4,150 ($1,000 base policy plus $150 ABI over five years plus the $3,000 FIO Rider) and the other would allow for up to $20,000 month (or when combined a total of $20,000 month, subject to income and other disability insurance, in force, if any). This combination also protects against any subsequent changes in health, noted on your military exit physical, would not be taken into consideration, after the initial policy or policies were medically underwritten.
Premium Rates and Contractual Provisions
Finally, remember, if policies are structured the same way and all agents are showing policies with the same discounts, the premium rate will be the same. This industry is heavily regulated and the premium rates and contractual language must be approved by each state. Therefore, if the plan parameters are the same, the only way that one agent can provide a lower price to the consumer is by having access to or knowing of a discount plan that another agent does not.
Parting Thoughts
Do you right disability insurances for people who are 60 and older
Yes, there are carriers that will offer coverage to those over 60.
I’m currently in the process of applying for disability insurance. My first company we applied to, Guardian offered a bad policy that would only pay out for 10 years of disability and nothing for mental health due to the fact that I met with a therapist during residency for work load stress and couples therapy. I never took any medications and only met with them for 6 months. While the mental health issue was not as important to me due to the no family history, the 10 year payout was extremely off putting as I want one that pays out to 60+. My last visit to said therapist was >6 months ago. I’m hopeful that other companies will provide policies for extending coverage and paying out to 60.
If this is not the case, what would be the best thing to do? Purchase a policy with 10 year max out payout and then in 3 years, after not seeing a therapist reapply? And hope that my health remains good otherwise, (no doctor visits outside of PCP and had a sport hernia repaired 3 years ago).
Other carriers will be more favorable. Feel free to call or email and we can discuss your situation in more detail.
What would you recommend the contract say as job title when someone is a resident (i.e. general surgery resident). Would someone change this when they start fellowship to say that subspeciality? Then again when they become an attending?
It is important to remember that your occupation at claim time is based on the main activities of your work immediately prior to the start of your disability.
Therefore, you would list your occupation, as you stated, as a General Surgery Resident. You would really only notify the insurance company when 1) you are completing an application to increase your coverage, which would include, your then current occupation or 2) filing a claim for disability benefits.
“Under these riders, every three years you would have the ability to increase your coverage. However, you must “check-in” in order to keep the Benefit Update Rider (Principal)”
I must have not understood this when I got my policy through principal. I had understood that upon completing my training and starting my attending job, I could increase my benefit from its current $5K per month, but based on this, my first 3 years will come up at the start of my 1 year fellowship, meaning it wouldn’t likely be eligible to increase much. Does this mean I won’t be able to increase my benefit again until 2 years into my being an attending? And therefore I am effectively “under-insured” for 2 years?
Also, does principal reach out to me for this every 3 years? Or do I have to proactively pursue this renewal process myself?
Thanks for your time and for a well outlined post.
You will be able to increase your coverage at the time you complete your fellowship (as your income will increase by 20% or 50%, depending upon when you purchased your Principal policy).
Principal will contact you via regular mail and email (if they have your email address) regarding your Benefit Update (BU) Rider. application You can then complete it via paper, online or have your agent complete it for you. You will need to complete this in order to retain the option on your policy for future use.
How does own occupation work for primary care physicians? If they look at my CPT codes for the last year, the great majority of them are E&M visits, with some office based procedures a minority of the total time. If I’m significantly disabled, couldn’t the insurer argue that even a quadriplegic could do telemedicine and bill E&M visits?
It just seems to me that primary care is so broad that it could be easy for the insurer to wiggle out of this one. The case for surgeons and proceduralists is much more clear cut.
Sometimes in the gray areas you have to enlist the aid of an agent, your doctor, and even a lawyer to get your benefits. I don’t get the impression that most disabilities are in the gray area though.
Hi Larry,
Thanks for providing this useful information. I had a question regarding Principal’s mental nervous limitation. My current DI policy through Principal has a 2 year limitation and it was my understanding that one couldn’t have both own occupation and unlimited MN coverage through principal.
Are you saying that this has changed? And if so, would I be able to simply call Principal to have this limitation removed or would I need a new policy or go through underwriting again?
You are correct. Yes, this has changed.
The mental/nervous and/or substance abuse disorder limitation and discount associated with it are optional at the individual level, except for policies in CA, Guaranteed Standard Issue (GSI) plans, and single-life cases in the states of Florida, Louisiana and Nevada.
The limitation is also mandatory for Emergency Medicine Physicians, Anesthesiologists, Pain Management Physicians and CRNAs (and any resident who has declared one of these as a specialty).
If you currently have a policy with a limitation and now qualify to potentially purchase a policy without the limitation, you would have to terminate your existing policy and replace it with a new policy from Principal (this is known as an internal replacement).
Would I then lose all previous discounts since I’m terminating my policy and purchasing a new one?
Potentially, yes.
You would have to compare the discounts and pricing available to you today to what you are currently paying to determine if it is worth replacing your current policy or simply keeping what you have in place.
Okay thanks for the info!
You are correct. Yes, this has changed.
The mental/nervous and/or substance abuse disorder limitation and discount associated with it are optional at the individual level, except for policies in CA, Guaranteed Standard Issue (GSI) plans, and single-life cases in the states of Florida, Louisiana and Nevada.
The limitation is also mandatory for Emergency Medicine Physicians, Anesthesiologists, Pain Management Physicians and CRNAs (and any resident who has declared one of these as a specialty).
If you currently have a policy with a limitation and now qualify to potentially purchase a policy without the limitation, you would have to terminate your existing policy and replace it with a new policy from Principal (this is known as an internal replacement).
This is not a question on this post…But thanks Larry.
WCI – What the heck is going on with your website? The “latest post” section on your landing page no longer updates and now even when I find it through a couple clicks it is not up to date. Been going on a week or more as far as I have seen. What’s up?
Thanks for the feedback. You’re the second to mention this to me. Sounds like a problem with the caching similar to what forum participants are seeing. The developer is working on it but it sounds like we need to cache less which will unfortunately probably slow the site down slightly.
Hi Larry,
Great article! I’m an ER resident at Jefferson in Philly looking at a a few options for DI. I️ met with one agent who recommended a policy with Guardian ($203/mo) and another who showed me the same quote with Guardian (as well as there other Big 5 carriers), but recommended a MassMutual policy ($142/mo). He also showed me Principal ($141/mo) but explained that because of the closeness in price, and that MassMutual had stronger increase guarantees, that MassMutual was going to be best for me.
When I️ met with the Guardian agent again, he basically told me that when it comes to coverage, “you get what you pay for” and that he rarely recommends the MassMutual policy. He also referred to several of my colleagues that purchased the same Guardian coverage from him.
When I️ went back to the other agent recommending MassMutual with this, he told me that the Guardian agent was likely saying what he could in order to make a sale since the more that I️ spend on the coverage, the more the agent makes in commission. He also pointed me to this article, and explained that if one policy was going to be “head and shoulders” better than anyone, that WCI would be only recommending that physicians purchase that policy vs. knowing the various differences.
My head says to go with the MassMutual policy, but most of my colleagues do own the Guardian one. What should I️ do?
There is an exclusive discount plan at your hospital with MassMutual that includes a unisex rate, a 35% discount and an occupation class upgrade (which further reduces the cost). I would need to see what was presented by each agent and learn more about your situation in order to make a recommendation. If you email me the illustrations for review and give me a call, I would be happy to discuss things with you in detail.
If you email me the illustrations of coverage for review, I would be happy to chat with you.
There are discounts at your hospital with all of the carriers you mentioned. The MassMutual plan at your hospital is exclusive to one agency in Maryland. It has a unisex rates, a 35% discount and an occupation class upgrade (which further reduces the premium rates), which is why the premium rates are very similar to Principal for a male.
I think you should just email Mr Keller directly. He’ll get back to you very quickly and he’s very helpful.
Look at them all side by side and pick the one that is best for you. That’s making an informed decision. It’s how you would do anything else, so why not this?
I didn’t buy a Guardian policy. I had a policy from “The Standard.” If I were buying today, it would probably be a Principal one. So no, I would have no qualms whatsoever buying a “non-Guardian” policy if that was the right move for me.
Don’t buy from an agent that only sells Guardian. Buy from an independent agent that sells policies from everyone, even if you are buying a Guardian policy.
Feel free to email me the illustrations to review and then we can discuss your situation in more detail.
There is an exclusive discount with MassMutual at your hospital that includes a unisex rate, 35% discount and occupation class upgrade. This is one of the reasons that the pricing compared to Principal is very similar.
I can easily walk you through things and help you make a decision.
Hi Larry,
I’m an internal medicine resident at the moment looking to purchase DI in the near future. My question is regarding the “true” own-occupation definition as I continue to train and my “occupation” and “material and duties” evolve. As a medicine resident, and if I remain in internal medicine, my job would be mostly cerebral. However if I apply to and become a cardiology fellow and general cardiologist, the job would have more procedures involved (generally minimally invasive). But I am currently planning on pursuing a sub-specialization in the field of electrophysiology, a procedure heavy field. How would I navigate purchasing insurance now with these changes in occupation and FIO?
The coverage provided under a policy, including the “Own-Occupation” definition of total disability, is portable from one job or occupation to the next and your occupation at claim time is based on the main activities of your work immediately prior to the start of your disability.
Some insurance carriers will classify Internal Medicine Physicians more favorably (assign a better occupation class, making the premium lower) than Cardiologists.
Some others will differentiate between Medical Cardiologists and those that perform procedures. As a result, you may be in a better position purchasing your coverage while you are an Internal Medicine Resident compared to a Cardiology or Clinical Cardiac Electrophysiology Fellow.
Pricing is all about what you are doing when you buy the policy. After that, disability is all about what you are doing when you are disabled. But you pay based on what you were doing when you bought the policy even if the later occupation is riskier.
So if I am understanding both of you correctly, the language in the policy remains the same no matter my occupation. What does change, is what qualifies as disability based on my duties in the year prior to disability. Whether those duties are primary cerebral vs primarily procedural vs a combination does not matter. What does matter, is what percentage of my income I lose by being unable to perform those duties. That will determine partial vs total vs not disabled and subsequent payout.
That is correct!
As a female physician, in my early thirties, I was offered a gender neutral disability plan upon residency graduation. Due to the health review I was only offered a 2 year benefit period, with no future increase option. Is it worth paying the $100 monthly premium for a 2 year benefit period? I know the gender neutral option will soon be going away
That’s a bummer. Is it worth it? Depends on whether you get disabled or not, but 2 years isn’t much. It’s not quite a short term disability policy, but it isn’t that different. I probably wouldn’t buy one that would only pay for 2 years because losing the ability to work for just two years is not really a financial catastrophe to me. But it is still a lot of money to lots of docs, so if it is to you, then better insure it at least until it isn’t.
Hopefully in a couple of years you can get a better policy if your health improves.
Hi,
I have recently been looking into disability insurance and I have been offered a policy from guardian for about 200 a month but with the basic partial benefit and benefit purchase option as opposed to enhanced partial disability rider and future increase option. The monetary difference is about a 75 dollars. Is it worth it?
Thanks
As a general rule, the partial disability rider is something that gets used a lot, so I wouldn’t be afraid to spend money there. The FIO is appropriate for residents, fellows, and military docs in my opinion. Others should just buy the insurance they need.
Berkshire (Guardian) is making changes to their policy as of February 25, 2021. I do not recommend the Basic Partial Rider. If you send me an email or give me a call, I would be happy to share my thoughts with you.
Larry
Hi Larry,
I am currently an ortho resident looking into DI and have a question regarding the Berkshire (Guardian) BPR vs FIO. The monetary difference between the two riders is roughly $75/month based on quotes I have received. Is the FIO worth the extra monthly cost? Or would it make sense to go with the BPR (which is included for free) since the biggest pay increase I would have would be from resident/fellow to attending?
Bob-
Please see my recent guest post https://www.whitecoatinvestor.com/finding-the-right-disability-insurance-policy-is-as-easy-as-1-2-3/ . The only thing that changed is as of October 18th, if you are a Resident and receive a 10% discount, the discount will now apply to all BPR exercises.
If you forward the quote you received, I would be happy to review it and discuss things with you in detail.
Larry
Sorry, I meant OrthoBro.
Larry