By Dan Miller, WCI Contributor

There are many different types of insurance policies, and each one can make sense in certain situations. It's important to understand the different types of insurance and how they can work together to help protect your assets. If you are a high-income or high net worth individual (like many nurse practitioners), disability insurance can make a lot of sense. If you're a nurse practitioner considering getting a disability insurance policy, we'll walk you through some of the pros and cons to help you decide if it makes sense for your specific situation.

 

What Is Disability Insurance? 

Disability insurance is a type of insurance policy that pays out if you are unable to earn an income in your chosen and stated profession. The exact definition of a disability varies from policy to policy, so you'll want to make sure to understand how it works for your policy. It's also important to understand that there is a limit to the total amount of disability insurance that you can buy—in most cases, the policy you purchase will only pay out a percentage (around 60%-70%) of your pre-disability income. 

 

Why Do Nurse Practitioners Need Disability Insurance?

Disability insurance is one of the most important types of insurance for people with a high income or high net worth, like many nurse practitioners and other medical professionals. People with higher-than-average incomes often can live comfortably and reliably save for the future while maintaining a reasonable standard of living. But one thing that can disrupt these financial plans is a disability that prevents you from earning your expected income.

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How to Buy Disability Insurance

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How Does Disability Insurance Work?

Disability insurance can step in to fill the gap that might come from a disability. With disability insurance, you pay monthly or annual premiums, and if you suffer a covered disability, you will receive a payout from your disability insurance policy.

 

Understanding the Definition of Disability

One of the key differences between many disability insurance policies is their definition of what counts as a covered disability. This is one reason it's very important to understand how your policy defines it—the policy with the cheapest premium may not be the best policy, since it may be stricter on what counts as a disability. 

Some disability insurance policies may kick in if you no longer can work in your chosen profession (like as a nurse practitioner). Other policies may only pay out if you can't do ANY work at all. Read your policy carefully and/or talk with your insurance agent to make sure you are choosing the right policy for your specific situation.

 

What Does Disability Insurance Cover?

Many disability insurance policies require a medical exam before they will approve your policy. If you have a preexisting condition, it may be excluded from the list of covered disabilities. Short-term disability insurance may cover injury or illness that lasts between 3-6 months. Long-term disability insurance policies typically cover illness or injury that lasts or is expected to last for a longer period of time.

 

What Is the Difference Between GSI, Individual, and Group Disability Coverage?

There are several kinds of disability insurance policies that you can purchase. Here's a look at three of the most common forms of disability insurance for nurse practitioners or anyone else:

  • Individual Disability Insurance: An individual disability insurance policy allows you to choose the right policy and premium for your individual situation. Most individual disability insurance policies do require a medical exam—this means that you may not qualify if you have past medical issues or a preexisting condition.
  • Group Disability Insurance: A group disability insurance policy is often provided by your employer. While premiums for a group policy are generally lower than individual disability insurance (and may be paid by your employer), you have less control over the payout or the terms of the policy.
  • Guaranteed Standard Issue Disability Insurance: Like the name suggests, Guaranteed Standard Issue (GSI) disability insurance is a type of disability insurance that guarantees coverage to eligible individuals without the need for a medical exam. This means that people with preexisting conditions or past medical history can still get disability insurance. GSI insurance is typically offered as a group policy in conjunction with an employer like a hospital or medical school. 

More information here:

Guaranteed Standard Issue (GSI) vs. Traditional Disability Insurance

 

How Much Disability Insurance Coverage Should Nurse Practitioners Get?

Most disability insurance policies for nurse practitioners will be paid out based on the current salary or income of the policyholder. It's common for disability policies to pay out anywhere from 40%-70% of your pre-disability salary, depending on the policy. So, there is a limit to how much disability insurance coverage nurse practitioners (or anyone else) can get. You'll want to check with your trusted insurance agent to see what makes sense in your specific situation. And because disability insurance policies only pay a percentage of your pre-disability salary, you'll want to make sure you have a plan in place for how you might make up the difference in salary, should you become disabled.

 

How Much Does Disability Insurance Cost for Nurse Practitioners?

If you are wondering how much disability insurance costs for nurse practitioners, the answer is that it will depend on several different factors. The cost of disability insurance will depend on factors like the provider, your overall health, the policy itself, and any riders that you have. It can be a good idea to get quotes from several different insurance companies or an insurance broker that can shop around for the best policy.

nurse practitioner disability insurance

 

Which Disability Insurance Riders Should Nurse Practitioners Add?

A rider is an insurance term that provides an adjustment or an add-on to a basic insurance policy. Riders generally provide an additional benefit or benefits (for a higher premium) that allow you to better customize your policy. Here are a few disability insurance riders that nurse practitioners might consider adding to their disability insurance policies:

  • Own-occupation disability insurance: This rider allows you to claim benefits if you are unable to work as a nurse practitioner, even if you can work in another occupation.
  • Benefit update rider: This allows you to increase the amount of your benefit, even after the policy has already been purchased.
  • Partial and residual disability benefit rider: This allows you to claim a portion of your insurance payout, even if you are not completely disabled.
  • Guaranteed renewable rider: This guarantees that the insurance company won't cancel your policy, as long as you continue scheduled payments.

Talk with your insurance agent to see whether any of these riders might make sense for you.

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Where Can Nurse Practitioners Buy Insurance?

There are several different insurance companies that offer disability insurance. Nurse practitioners who are looking to buy disability insurance can choose to apply for insurance directly with a company or work with a broker that can shop your policy around to different companies, to see which company may provide the most insurance for the least amount of premium. Because of that flexibility, in many situations, it's best to work with a trusted insurance agent to find the disability insurance policy that is best for your specific situation.

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