When I started writing for ACEP Now a couple of years ago, I was encouraged to write about controversial and inflammatory topics as much as possible. So as you might imagine I wrote about whole life insurance, annuities, financial advisors and other topics. However, in my most recent column, I decided to address a topic that I thought perhaps might generate a little more heat and I was a little nervous it wouldn't even be published. But I never heard back from the editorial staff and eventually it was published…accompanied by a statement from ACEP defending itself against my column.
The column was about the life and disability insurance that gets pitched to us every month in the mail from the AMA, ACEP, and other specialty societies. I've been seeing these things for years and once looked into the disability policy to compare it to what I already owned. But what triggered the column was comparing the life insurance being offered to what you can buy on the sites of some of my advertisers, like term4sale.com and insuringincome.com, and seeing that it was basically going for twice the price. At any rate, here's an excerpt:
Every month, I get mail from the American Medical Association, ACEP, and other organizations trying to get me to buy life or disability insurance through them. Why do I get these, and are these the best policies for me?
Professional associations, such as ACEP, offer benefits such as insurance policies to their members for various reasons. First, they understand that these are important financial products for their members to purchase. When physicians become disabled without disability insurance, especially early in their careers, a financial catastrophe often occurs. Life insurance is similar. If you die prior to reaching financial independence, those who depend on you financially will very much appreciate your making up the difference between your portfolio size and what it would take to be financially independent with a solid life insurance policy or two. Your association wants to make it easy for you to do the right thing.
Second, some doctors have a difficult time obtaining disability or life insurance on the open market due to health problems or dangerous habits. Association policies often ask fewer health questions; do not generally require a physical; and rarely ask about dangerous hobbies, such as rock climbing, scuba diving, flying, or skydiving. For these doctors, the association policy may be their only opportunity to get the coverage they need or want at a reasonable price. People in these situations see these offerings as important benefits of the association and are more likely to join if these benefits are offered.
However, what cynics would point out is that the insurance agent or company selling these policies is generally sharing revenue with the association. Unfortunately, that conflict of interest ensures the association may not give you unbiased advice on these topics. While it is possible an association group policy is your best option, you need to shop carefully prior to actually purchasing it. You will often find an association policy is neither the best nor the least expensive option.
Association group disability insurance policies generally have three significant flaws. The first is that their definition of disability is usually weaker than that available through a good individual policy. This means it is less likely to pay you in the event that you actually become disabled. The second flaw is that the payout is also often decreased by factors you might not expect, such as Social Security disability payments. The third flaw is that the policy can be changed by the association at any time and usually can’t be taken with you if you decide to leave the association. Emergency physicians should also be aware of other limitations, such as a requirement in the ACEP-sponsored disability insurance plan that you be working at least 30 hours per week. Consider that 15 eight-hour shifts per month, generally considered full-time among emergency physicians, when divided over 31 days is only 28 hours per week. If you are working any less than that, you may not qualify at all for such a policy. In return for accepting these weaknesses, association disability policies are generally less expensive, sometimes much less expensive, than a good individual disability policy.
Read the rest of the article here (as well as the response from ACEP) and then come back and let me know what you thought.
Have you bought an association insurance policy? Why or why not? Have you regretted it? Would you consider buying one? Comment below!