[Editor's Note: Long-term readers know I am not happy with many of the business practices of Northwestern Mutual Life Insurance company. Not only do they use undertrained interns to sell whole life insurance inappropriately to financially unsophisticated medical students like me, but I don't find their term life insurance to be priced competitively either. To make matters worse, over the last decade or two they keep screwing around with the definition of disability in their disability insurance policies. I understand that decades ago they used to have a true own occupation definition that probably worked just fine for doctors. I don't know why, but they went away from it. Then they came up with a “Medical Occupation Definition” (MOD), which sounds awesome because it's “Medical” and we're “Medical” so it must be great, right? Except it's not. It's not based on the inability to do your job, it's based on a loss of income. So if they chose to work at something other than what they were disabled from, they were only paid proportionately rather than getting their full benefit. Well, they realized doctors in the know weren't so interested in that. Doctors wanted True Own Occupation disability insurance. So NML came up with a “Medical Own Occupation Definition” (MOOD). Not only does it have the words “own occupation” in it, but it also has the word “medical” in it. So it must be even better than regular old own occupation insurance, right? Well, not exactly. In this post, insurance expert Lawrence B. Keller, CFP®, CLU®, ChFC®, RHU®, LUTCF, explains why MOOD is not the same as true own occupation. Larry is well-known to long-time blog readers for multiple guest posts. He has also been a long-term advertiser and is a Platinum sponsor of our scholarship contest. Hopefully NML will eventually just go back to a boring old true own occupation definition of disability so posts like this don't need to be written.]
Not in the MOOD to Purchase Disability Insurance? I’m Not Surprised
Arguably, the definition of “disability” is the most important aspect of a physician’s disability insurance policy. Therefore, you must pay careful attention to the definition of disability found in your policy as it will ultimately determine how any claim you make for benefits will be judged. For purposes of this article, I will limit my comparison to a policy with a true “Own-Occupation” definition of total disability and the recently introduced Medical “Own-Occupation” definition (MOOD) of total disability.
“Own-Occupation” Definition of Total Disability
The term “Own-Occupation” and the definition of total disability associated with it means different things to different people, all depending upon who you ask. If nothing else, most surgeons have been told to purchase a policy with an “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. 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.
A common question asked is can a surgeon be deemed “totally disabled” if he is unable to operate but can still perform the other duties associated with their occupation? There is no black letter law that defines the material and substantial duties of an individual’s occupation. Courts have used various tests to determine if an insured’s occupational duties are material and substantial versus incidental or peripheral. Whether or not a certain occupational duty is material depends on the duty’s importance to that profession, the amount of time the duty consumes, and its qualitative importance to the professional mission1.
Lawrence Keller
The most widely accepted reading of the total disability provision of the policy requires that the insured need only show an inability to perform a single material job duty. The court found McFarland v. General American Life Insurance Co., 149 F.3d 583 (7th Cir. 1998) instructive in its analysis of this issue. The court gave the example of a baseball player, explaining: [I]f a shortstop, whose principal duties include running, hitting, catching, and throwing, were injured such that he could no longer throw, he would be totally disabled because he could no longer be employed as a shortstop. Even though the shortstop could still run, hit and catch (a significant portion of his duties), throwing is an essential function for a shortstop and thus the inability to throw means that he is unable to perform “the material and substantial duties” of his occupation….
The same could be said for other occupations. Attorney Mark DeBofsky of DeBofsky, Sherman & Casciari, PC (www.debofsky.com) states that “an excellent example is Dowdle v. National Life Insurance Company, 407 F.3d 967 (8th Cir.5/19/2005) where a surgeon who injured his back in a plane crash and could no longer perform surgery was still able to conduct office examinations- he was found totally disabled, because the disability materially changed the usual and customary manner in which the occupation was performed”.
Finally, in Kaelin v. Tenet Employee Benefit Plan, 405 F.Supp.2d 562 (2005) the Court analyzed the duties of an orthopedic surgeon, and commented, “A doctor credentialed as an orthopedic surgeon who conducts only office hours and administrative duties is obviously not performing the material duties of the usual work of an orthopedic surgeon; that is, conducting orthopedic surgery.” Kaelin, a Board Certified orthopedic surgeon became unable to perform surgery following an accident, but remained able to see patients in his office. His office practice was merely incidental to the performance of surgery. Dr. Kaelin could no longer perform surgery and “an inability to perform [surgery] means that one is no longer practicing the regular occupation of an orthopedic surgeon. Rather, he or she is an orthopedist.”
The Medical “Own-Occupation” (MOOD) Definition of Total Disability
This “unique” definition states that the physician or dentist can be considered totally disabled in one of two ways.
- If you are Totally Disabled and you can no longer do any of your substantial and material duties, you can take your full disability benefit.
OR
- If you can do one or more of your substantial and material duties, you can change your occupation altogether and receive some or all of your benefit.
To be considered Totally Disabled the second way; you must meet all of the following:
- The majority of your time prior to Disability has to be spent in direct patient care and services
- You are unable to perform the duties that accounted for more than 50% of billed charges
- You are not working
Billing Codes mean codes generally accepted by the healthcare and insurance industries, such as Current Procedural Terminology (CPT) or American Dental Association (ADA), that are used to identify and describe medical, surgical, diagnostic, or dental services directly performed by the Insured.
If the Insured can perform one or more of the substantial and material duties of the Regular Occupation and is not considered Totally Disabled, the Insured may qualify as Partially Disabled.
An Example
Dr. Smith, an Orthopedic Surgeon, was earning $40,000 per month prior to his disability. He also owned an individual “Own-Occupation” disability insurance policy with a monthly benefit of $10,000.
Unfortunately, Dr. Smith developed a peripheral neuropathy of the hands and was forced to stop performing surgery. He would likely qualify for total disability benefits under his policy 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.
He subsequently decides to work in another occupation and earns $34,000 month. However, his new income is not taken into consideration and his full disability insurance benefits continued to be paid as he remains unable to perform the material and substantial duties of his occupation.
Therefore, his monthly income would be $44,000. This would consist of $34,000 (income from his new occupation) plus $10,000 (his disability insurance policy’s monthly benefit)
However, under the Medical “Own-Occupation” definition of total disability, the calculation would be as follows:
The calculation would be the lesser of:
- $10,000 (his individual disability insurance policy’s monthly benefit) or
- $40,000 – $34,000 = $6,000 (Loss of Earned Income)
Since $6,000 is the lesser of the two, it is the Calculated Benefit.
Therefore, his monthly income would be $40,000. This would consist of $34,000 (income from his new occupation) plus $6,000 (his Loss of Earned Income)
How Do These Definitions Differ?
The Medical “Own-Occupation” definition of totally disability takes the focus of a claim for total disability benefits away from the inability to perform the “substantial and material” duties since, if at that point, you decide to work in a new occupation, the Medical “Own-Occupation” can bring you back to your pre-disability income by combining your calculated monthly benefit with the income earned in a new occupation.
Annual Reconciliation
Since this policy pays benefits based upon loss of income, this policy also states that “The Company has the right to conduct annual reconciliations to assess whether Earned Income reported by the Insured during a period of Disability is consistent with federal income tax (FIT) returns. Benefit underpayments discovered as a result of the reconciliation process will be paid to the Owner. The Company shall have the right to recover benefit overpayments”.
The Argument
Some would argue that by allowing Dr. Smith to collect his full disability insurance benefit and all of the income from his new occupation, he is “double dipping” and has profited from his disability. Does this argument really make sense? One must have a great desire to become a physician – a driving passion to help people, to be challenged, and to learn throughout their lifetime. They will sacrifice their time and energy for the care of their patients, even to great detriment to themselves and their families. At the same time, they have also invested substantial amounts of money in their education and the practice of medicine in hope of career advancement, respect, monetary reward and job satisfaction. In my opinion, a policy with a true “Own-Occupation” definition of disability does not allow a claimant to profit. It allows an insured to utilize their education, training and experience to transition into another occupation, do well as a result of their efforts and be rewarded financially, without penalty, for being smart, motivated and resourceful. Additionally, they may still be paying off educational debt and/or incurring new debts as they change their career path.
Summary
While the new Medical “Own-Occupation” (MOOD) definition of total disability is being marketed as “unique” and providing physicians and dentists with “more choice” and “more control” if they become partially or fully disabled, I don’t believe this to be the case. A policy with a true “Own-Occupation” definition of Total Disability makes it possible for you to continue working and earn unlimited income, so long as your disability renders you unable to perform the “material and substantial” duties of your occupation. Some companies including Berkshire, Standard, Ameritas and Ohio National 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.
In fact, in their most recent offering*, Berkshire adds a qualifier or a threshold that can be met 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 Osteopathy 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.
Compliance mandated legal mumbo-jumbo:
1 Lasser v Reliance Standard Life Ins, Co, 146 F Supp 2d 619, 636 (DNJ 2001), judgment aff’d, 344 F3d 381 (3d Cir 2003).
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).
*Individual disability Policy Forms 18ID and 18UD underwritten and issued by Berkshire Life Insurance Company of America (BLICOA), Pittsfield, MA. BLICOA is a wholly owned stock subsidiary of and administrator for The Guardian Life Insurance Company of America, New York, NY. Optional riders are available for an additional premium. Product provisions and availability may vary by state.
These are the personal views of the author and may not represent the views and opinions of The Guardian Life Insurance Company of America or its subsidiaries or affiliates thereof.
Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.
Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS), 355 Lexington Avenue, 9th Floor, New York, N Y 10017-6603, 212-541-8800. Securities products and advisory services are offered through PAS, 1-516-677-6200. Financial Representative, The Guardian Life Insurance Company of America, New York, NY (Guardian). PAS is an indirect wholly owned subsidiary of Guardian. Physician Financial Services is not an affiliate or subsidiary of PAS or Guardian.
PAS is a member FINRA, SIPC
2017-41067 exp. 5/19
What do you think? Does NML's new MOOD definition make you more likely to consider them in your search for disability insurance? Is it “good enough”? Or do they just need to go to a true own-occ definition? Comment below!
This all comes down to cost. Are NWM policies with this “MOOD” definition substantially cheaper than a policy with a better own occ definition? I’d be ok with it in that case. What I want from my disability policy is to insure my income. If I’m still able to work and make what I made before, I wouldn’t consider myself disabled. Of course if they cost the same, then obviously go for the better own occ definition.
Sure. I’d consider a weaker definition if it came with a significant discount, but I don’t think most see any discount. Instead, they’re told the definition is even better! It’s Medical! And it’s Own Occupation!
Fair enough. Let the NWM bashing continue unabated, then.
My premium for NWM is $1400 cheaper than Guardian for the same coverage. I did have fixed premiums with Guardian so my cost will go up more as I age. Also got rid of a right knee exclusion that Guardian wouldn’t get rid of. That being said, I switched over before reading this site and now I feel unsure about my choice. Thanks for all of the helpful information WCI!!
A few things you will want to look at on the NWM vs. Guardian are the premium structures. Most of NWM have an ARDI premium structure vs. level premium. There can sometimes be an ‘Assumed’ Dividend from NWM to bring their rates down visually. Make sure all of the riders are the same with the same capacities. Finally, if you don’t want the true own specialty definition of disability, which is all Guardian sells, then price shop the definition you want against other carriers that have that in their portfolio for you select/buy. NWM does not have a true own specialty definition of disability in their policy series.
I didnt find them to be cheaper. There are lots of variables like how each one rates you and if you get any association discounts but in general i dont think NWM is substantially cheaper (sometimes even more expensive) than true own occ and also i think they are one of the more expensive of the non own occ policies.
In my opinion people have heard of NWM and thus feel more comfortable making an appt to meet with their agents who then work hard to convince you that they have the best policies for everything.
While i favor an own occ policy, one of the problems is that there isnt good claims data to really know they are more likely to pay in the event of a disability compared to non own occ.
This was about 10 or 11 years ago, but I was considering a DI policy for my wife. The NWM guy who worked most with this type of DI policy stated the claim rate was 25 to 28 percent over a career. Tough policy type to spread risk, lack of scale, imo.
They probably did not tell you about what constitutes “a claim”…..anyone that gets paid a benefit from a carrier was a claimant so 1 month on claim is what allows them to say 1/4 will be disabled.
Typically we find that the MOOD premium costs the same as a True Own Occupation definition. You should price check your policy against the 6 carriers that have True Own Occ. In addition, if you don’t want a True Own Occ policy then for a definition that is an income protection policy only they typically have about a 15% premium discount.
When you say the price is the same or more, are you taking into account the effect of the dividend. Though not guaranteed, it has historically been paid annually for many many years.
Yes, we do take into account the Dividend. In fact, since the dividend is not guaranteed as you point out, then the real rate actually become variable thus it is projected so we will typically compare like kind product designs at that point.
One of the additional funny things is that for WL where dividends are typically compared only 2 companies further decreased from 2016 to 2017. Want to guess on the name of one of those?
You know the only reason you get a dividend is because the premiums were higher than they should have been, right? It’s not like a stock dividend.
you do realize that dividend means they get the “true cost” of the coverage right? Since it is a return of premium.
Good way to look at it.
I would rather have a policy that works and offers choices vs a cheap option that is going to pull the rug on my claim for any laundry list of reasons, especially when my potential benefit on the line as a Dr is on average $3-$5 million dollars. Yeah, I need a policy that works. This isn’t a $50k car we’re talking about – then go cheap. This is my income – the income I spent years attaining and working toward.
I would also rather have a liability insurance policy that works vs. a cheap one.
Keep your cheap option.
I guess you didn’t understand his point and you do realize he is also an insurance agent.
Those other policies work the exact same way. They are also non occ individual policies.
None of them are actually cheap just cheaper for same coverage.
How many insurances truly offer own occupation disability or just like Floppy discs and CD roms we should consider them a thing of past?
Disability insurance is definitely something you don’t want to get screwed on because of terminology. Thanks for laying it out clearly up top. I think own occupation will continue being offered if people refuse to buy the other insurances. The market has to give people what they demand. The problem is most people don’t know what to demand.
Depending upon your state of residence and medical specialty, there are only six companies that potentially offer this definition to physicians – Berkshire Life (a Guardian Company), Standard, MassMutual, Principal, Ameritas and Ohio National. Keep in mind that MetLife stopped selling fully underwritten individual disability insurance policies as of September 1, 2016.
2017-45647
This post is honestly hilarious. I’m a Northwestern Mutual advisor, one who has corresponded quite a bit with Dr. Dahle a fair amount about his disdain for NM. Most of his complains about NM I am in complete agreement, however this particular post by Lawrence “Platnium Advitiser” Keller is a joke.
The majority of the article focuses on the fact that NM will reduce their benefit if post disability you choose to go earn an income in another job which results in making more money than you did pre disability. It also doesn’t talk about partial disability.
Does anybody own the form of car insurance where if your 2013 Nissan Altima gets totaled your car insurance allows you to buy a 2017 Ford F-150 with your claims check? Or the HO policy where you get your 350k house replaced with a 650k house? No. Insurance is meant to put you in the identical spot you were in pre disability, not a better spot.
In addition to this, over 80% of disability claims are partial disability (off hand I don’t know the exact % but it’s high). The MOOD allows a physician who earns more than 50% of their benefit to either continue to work and receive the partial benefit OR quit working and receive a full benefit. In an own occ policy you HAVE to keep working to keep your partial benefit. Show me the surgeion who is no longer able to perform surgery nor take call who will continue to be a valued member of the surgical team, thus continue to earn the same income from the group/hospital. What Lawrence is saying here is that because the surgeon can’t go make more money post disability as he did pre disability (in the super likely event that the surgeon is out looking to make oodles of money post disability), you’re far better off having that option than the option that in the 80+% likelihood that your disability is partial, that increase of income is more valuable than the choice of having to work to receive your benefit versus walking away with your full benefit.
Burnout in the physician world is no secret, especially in the surgical world. The 54 year old surgeon who has been absolutely grinding since day 1 of medical school again would be way better off with the opportunity to go make oodles of money post disability than the optionality of working or not working, especially when the #1 reason he works (surgery) is something he can no longer do. This is what Lawrence “Platinum Sponser” Keller is saying in this post.
I’d imagine the fruition of this article went something like this…WCI feeling like he hasn’t had a Northwestern Mutual article for awhile so he snapchats his buddy Lawrence and asks him if he’ll write something. Lawrence says sure – feels like the whole life insurance horse is pretty dead at this point so he writes this. The only thing that would have made this article worse is WCI reminding us all how much money he can put in his qualified plans, how he donates appreciated stock to be more tax efficient, about how he paid his mortgage off and is close to financial independence but now that the fam is spending more they aren’t quite there, and last but not least would be an update on his income, preferably in graph form.
I had multiple clients email me this AM after seeing this and essentially they all said the same thing – “Hey John, check out the WCI article this AM. Appears to be more NM witch-hunting from the WCI”. That’s what you call overdoing something to the point of losing credibility.
You know, when I suggested you stop emailing me repetitively and post your comments here with your real name where the readers, other insurance agents, and your clients could read and discuss them, I didn’t expect your comment to be 80% ad hominem attacks against people using their real names online while hiding behind a pseudonym. I think I’m going to make an exception to my general rule here, and just leave your ad hominem attacks up so people can see exactly what kind of a person you are and what kind of people NML hires to work for them.
Look, I’m sorry you work for Northwestern Mutual and that your company’s reputation among those in the know about financial topics, particularly physician-specific financial topics, is so bad as evidenced by dozens of comments on the site over years by many different docs. That’s not my fault. Like countless other physicians, I’ve been bamboozled into buying an inappropriate, inferior NML insurance product by a slick-talking but undertrained agent. If you do that to enough people, your company’s reputation starts to suffer. If you align yourself with a company with a bad reputation, it starts rubbing off on you.
Now, if you’d like to discuss NML’s MOOD or the benefits of using it over a true own-occ policy, you’re more than welcome to do so. I think it would be a healthy debate. But if you continue to post ad-hominem attacks like this, you won’t be making comments here for long. If you send me another email, it better have the words “I’m sorry” in the title. This nonsense you posted above is ridiculous for someone who holds himself out to be a professional.
I appreciate the reply. Also, my emails to you must not be so bad as they are the inspiration for the current poll that is going right now as well as a future post.
The reason for the satire is that your readers deserve content that goes beyond your own personal bias and what is truly true, and what is truly true goes beyond this ridiculous article saying a contract is bad when in the incredibly unlikely event that one is fully disabled AND wanting to go make more money than they were pre disability after they are fully disabled.
Now that we got that out of the way, can we proceed with the “what matters more” debate?
1) Being able to make oodles of $$ post disability. Oodles being defined as more than one was making in their speciality.
2) In the event of a partial disability (which comprises over 80% of disability claims), not being forced to work to collect the partial disability check and being able to retire and take your full disability check. (assuming over 50% of revenue comes from one duty – I.e surgery).
Partial disability concerns are a factor but you didnt phrase it in a way that is going to endear you to anybody, even other agents likely. I seriously doubt you had a bunch of clients who contacted you and felt WCI was again on a witch hunt. Id be kind by saying you exaggerated that ridiculously. Let me guess these clients also are happy with WL and the NWM term?
Frankly NWM once had a true own occ policy. They got rid of it for their benefit but still charged own occ prices. Physicians have been figuring out in the disability space that NWM isnt the company to go with. Glad the partial disability wording has improved. Maybe if they also came down in price they would sell better.
Is a handful of emails in one morning a bunch? I’d consider it to be. If 50, not 5, is a bunch then yes I exaggerated. I encourage my clients to read this site because there’s a ton of great content on it, and I get the posts emailed to me directly because I want to read them, but it’s in the context of WCI being on a NM witch hunt. The funny part about that is you’d think coming to a site like this you’d get an unbiased view point as opposed to going and talking to someone who could profit off the advice (like me), but you don’t get that here.
Guardian and NM have the best contractual language. This article was not price-focused, it was contractual language focused. If we want to discuss price then we can discuss price and I’m happy to do that.
I also very rarely sell whole life insurance. If you’d like to discuss why I choose to stay at NM while rarely using their flagship product I’d also be happy to do that, but this isn’t the place for that.
I’m still waiting for someone to tell me that being able to make more pre disability income after a FULL disability is a more valuable contractual benefit than having the choice between working/not working versus being forced to work to receive a partial benefit. I’ll keep reiterating this until someone acknowledges it as this was the crux of this article.
Doubt you got 5 and doubt they said he’s on another NWM witch hunt.
You put guardian and NM as best wording. If NM meant north western mutual then you are mistaken.
I’m not sure many are going to argue that double dipping is better than partial. You can keep waiting if you want.
I’m not surprised to find out you excessively email WCI. Nor am I surprised to hear you continue to work for them. You really don’t need to explain it.
“Excessively email” is defined as three different occasions.
1. Disability Insurance
2. Overfunded VUL
3. WCI excessive talking about himself and his money and situation.
He then emailed me without me soliciting the email. So the scoreboard is:
Me: 3
WCI: 1
Excessive?
You seem numerically challenged, not a great trait for someone who handles the money of others.
I count 16 emails from you in my inbox over a period of five months and 12 comments on this post in the last 24 hours. Would it help you remember them if I posted them all here? On a different note, don’t you have something better to do than pester some schmuck blogger? Does your employer know how much of their time you’re using making their company look bad?
I know I have more important work to do than trying to convince you that a product you profit from selling is inferior. I’ve found that’s generally an impossible task. As Upton Sinclair said,
https://xkcd.com/386/
NML is not even in the top 5 for strongest contract.
Is a handful of emails in one morning a bunch? I’d consider it to be. If 50, not 5, is a bunch then yes I exaggerated. I encourage my clients to read this site because there’s a ton of great content on it, and I get the posts emailed to me directly because I want to read them, but it’s in the context of WCI being on a NM witch hunt. The funny part about that is you’d think coming to a site like this you’d get an unbiased view point as opposed to going and talking to someone who could profit off the advice (like me), but you don’t get that here.
Guardian and NM have the best contractual language. This article was not price-focused, it was contractual language focused. If we want to discuss price then we can discuss price and I’m happy to do that.
I also very rarely sell whole life insurance. If you’d like to discuss why I choose to stay at NM while rarely using their flagship product I’d also be happy to do that, but this isn’t the place for that.
I’m still waiting for someone to answer my question about what’s more important contractually…
John, you’re not doing yourself or NWM any favors. Not only do you look like a fool, but your whole premise is incorrect, “you think coming to a site like this you’d get an unbiased view.” Nope, i think, in coming to wci, I’ll get information. Often it will have biases, namely those of the WCI, and when bias may exists, it’s explained up front.
Here’s the little secret for you, most of us here are intelligent enough to weigh the info against any bias and decide if it’s useful to us or not. What I’ve read and learned here has saved me oodles (your word) of money to this point and will easily save me more than seven figures over my lifetime. For that sage wisdom I have paid WCI ZERO dollars. Have my page views earned him revenue and enterprise value? Boy I hope so, because it’s provided tremendous value to me at no more cost than my time to read the info. That’s why so many love this site, we get a ton out of it for essentially zero cost.
I wonder how many of your clients can say that about your work? Rant and rave all you want, I suspect most regular readers find it amusing and satisfying — knowing that the information shared here will keep future millions out of the pockets of ‘financial guys’ like you who are merely salesman eager to take advantage of information asymmetry and financial niavete to sell people products that are more more costly or inferior to what could otherwise meet their need for less.
I think most disagree that a contract without a true own occupation definition and a contract with it can both have the “best contractual language” and would think a NML employee suggesting that had a serious bias.
I’ll let Mr. Keller address your concerns about partial disability, but in my opinion, when you’re looking at definition of disability you should start with the total disability definition and if that’s crummy, move on to a policy where it isn’t rather than looking for a reason to still buy that policy.
Physicians, IMO, are the smartest people in the world. My admiration for the work you guys do is honestly through the roof. It’s unbelievable what you guys do when you punch the clock.
With that said, explain this logic to me (and I’m assuming decisions are made on logic and not emotion – that is how medicine is practiced, correct? Evidence based research? Not “what feels good”??)..
Statistically speaking, roughly 1/4 people become disabled long enough to collect disability. Of that 25%, let’s say 85% is partial disability, 15% is full disability (note: social security disability only pays on full disability and google how difficult it is to get the government to pay on disability – it’s hard). So WCI is telling me that he believes it’s more logical to buy insurance based on the an event that occurrs to 3.75% of the population (.25*.15) versus one which occurs to 21.25% (.25*.85).
How is that good advice? Again, if you could keep the reply to the right side of the brain and avoid how you feel about me, NM, this presidential administration, etc. that would be much appreciated as I truly want to understand your thought process behind this.
When I buy insurance, it’s for the worst case scenario. I want insurance against my house burning to the ground, not my bike being stolen off the front porch.
When I buy disability insurance, the worst case scenario is total disability early in my career. That is my # 1 concern about the policy. So when someone presents a policy to me where that isn’t the best it can be, I move on. Especially when I know there are 5-6 other companies where I won’t have that concern.
Hope that helps. I suspect you might agree if you weren’t associated with NML. It seems everyone else who isn’t does- insurance agents, disability attorney, doctors, financial advisors.
Do you see anyone out there who isn’t associated with NML saying this policy is awesome? I don’t.
I could care less about NM, honestly. I can sell the Guardian policy and make the same amount of money. Actually, almost all insurance companies pay a higher FYC (first year commission) than NM. If you look at the expense ratio of insurance companies, you’ll see NM with the lowest expense ratio by far in the industry. Part of that is because they pay far less up front and only pay the rest if you service and keep the policy in force.
On that logic, I assume all your life insurance would be AD&D then right? Accidental and sudden death being the huge risk to your family. If you got terminal cancer and died 12 months later you could of course spend that 12 months putting a contingency plan in place.
So all metaphors aside, WCI…just so I’m clear, you AGREE with this statement.
“It is more important to me that if I were to become fully disabled that I could go make earn an income that exceeds my pre disability income than it is to have the option between working/not working to receive my benefit if I were partially disabled”.
Yes, all my term life insurance pays in the event of an accident. Only a fool would buy a policy that didn’t pay for an illness as well since it is so easy to do so.
If I become fully disabled my insurance policy will barely pay me anything anyway so I’ll likely be cancelling it soon if you really want to know about how I currently feel about disability insurance in my personal circumstances. Hard to figure out what you want. You say I talk too much about me on my own blog and then you ask questions about my own personal life. If you don’t want to hear about me and my life, stop asking questions about it.
If you get no additional benefit from selling NML policies, I see little reason for you to sell their policies when you could be selling a better policy, probably for a cheaper price. Why don’t you explain to readers why you sell NML policies in that situation because this bit about the partial disability contractual language doesn’t seem to be convincing anyone.
You dodged my question once again…If you could just say that you either agree or disagree with the statement about what is more valued (making excessive post disability income or the optionality…) I will then be able to move on. I have asked it at least three times now and it’s gotten no reply each time.
I’m sorry. You seem to misunderstand the mission of this website and thus the point of the time I spend on it. The purpose is not to answer your questions, nor educate you on what an ethical advisor and agent should be doing with their life. It is certainly not to conduct lengthy dialogues with you via email or comments. It is:
1) Help docs get a fair shake on wall street
2) Make me some money
3) Connect docs with the good guys in the financial services industry (and I have yet to meet one of these who works at NML)
So if you need your questions answered, I’d suggest contacting someone else. If you wish to dialogue with the author of this particular post, I would suggest addressing him and perhaps he would find that worth his time. His phone number and email are easily found on his website.
I’m sorry you’re fixated on your questions and unable to move past them. If you like NML disability insurance, buy as much as you like. No skin off my nose, but don’t be surprised when docs realize that what you’re doing for them isn’t what they want.
Been reading through what John is actually saying, and I’m assuming he is an actual adviser at NM. I’m confused by the nasty responses to him and the focus on how bad something is that a doctor blogger, who its my understanding is not an adviser, is understandably trying to protect other doctors from poor financial decisions. I’m sure doctors have patients that diagnose and prescribe themselves via Google, and that doctors can understand what it must be like to be told how to do their job by someone who is an attorney or something. Could be a very intelligent, well-read individual, but the credibility is…well hearsay, not experience.
I like that John talks about having a choice. He keeps circling back to what the advantages actually are at NM, why he makes the decisions he makes, gives credit to the blog consistently, and he seems to be catching a lot of personal slings and maybe slinging back a bit when cornered on inane details like how many emails or whatever.
My cousin is a dentist with a hand injury and is totally disabled on his NM policy, and partially disabled on his Guardian. He is not considered disabled on his ADA coverage.
Makes you think about who is better at paying a claim and how a contract works.
Thanks for sharing your cousin’s story.
I’d love to see data, not anecdotes, showing which insurers are “better at paying a claim.” I haven’t been able to get my hands on it. It appears to be a closely guarded secret at every company so I am forced to rely on the opinions of those whose profession is to fight to get insurance companies to pay claims. I have yet to meet one who recommended NML for disability.
The reason “John” is getting crap is because of his ad hominem attacks.
Kind of saw it as a person who is an expert at something getting defensive because of being outnumbered. I’m sure you wouldn’t appreciate a naturopath starting a blog that claims that all a cancer victim needs is to just use lavender oil and get some sleep. He sounds like his opinion is opposite on a few points re: financial advice, and that creates opposition.
John mentions that there aren’t a lot of facts available IN GENERAL about Disability. WCI mentions the same. John gave more factoids than anyone else’s comments whose bottom line is “go cheap”. Causes me to step back working with such a large idea.
Doesn’t a consumer’s decision then become almost an entirely emotional purchase? Seems no one likes that. My comment above describes my choice if: my income is way too large to fathom self-insurance and I would like to have a choice to not work. If you repeat a minimalist idea of a disability product to cover utter catastrophe only, that doesn’t really cover as many scenarios in my head as a young, healthy person. I want the thing to work whether I have something big or small happen.
No such thing as “income too large to fathom self-insurance.” Only “spending too large that I can’t afford to self-insure.” You don’t insure your income. You insure your spending. I mean, don’t get me wrong, an agent would love to sell you enough to replace your entire income, but that isn’t the financial catastrophe you should be insuring against.
You can get a deluxe policy with all the bells and whistles if you want. Just don’t be surprised if you get a little sticker shock when you see the bottom line. IDI is expensive stuff.
I posted some golden follow-up yesterday. It was in review quite a while. I think it may have been eliminated from your site because it was effective language that doesn’t align with an obvious attempt for you to be biased. This site is not trustworthy.
I don’t know what “golden follow-up” is, but I can tell you that I’ve never moderated, much less deleted, one of your comments. I just checked the spam folder and didn’t find one in there from “Grace,” although there were 691 spam comments in there!
Probably just lost in space. You might trying making your point again.
Grace its pretty hard to take you seriously (meaning to believe you arent just another agent) when you dont understand why he got “nasty” responses. Did you actually read his inappropriate rant which started the entire conversation? I would think only an agent could come away with your conclusions after reading that. There has also been some lack of complete transparency/honesty in my view. Like he talks about how he doesnt care about which one he sells or he can sell other companies just as easily or make more money. He is required as a NWM to show the NWM policy first. He also didnt include any of the other bonuses like retirement, office costs, etc that he gets from NWM when stating he makes more from other companies. One should also realize that agents have a license to SELL life insurance. They fall under a suitability standard and not a fiduciary standard. I have a different view on professionals. Maybe you dont. I dont hold it against the guy trying to sell me a car but i know that person is a sales person. Same is true of him. He is selling.
Now as ive said in many threads etc, im not aware of any actual claims data that allows one company to make any statements that they are better. With that said NWM once did have an own occ policy. They got rid of it for really their benefit and for many years now have been trying to win people back who realize that from a legal wording stand point (since again there is no claims data to judge by) that NWM just doesnt have as good a policy as own occ but charges the same as own occ. Thats a big difference to some of us. Nobody here actually has argued against his point that a NWM policy has some advantages compared to others for partial disability. It just is not as important to most of us. It certaintly isnt to me. There just isnt a good reason why NWM removed own occ coverage (from the client perspective) but continued with own occ pricing. If they brought their price down then i think many of us might more consider it.
see reply above. I don’t appreciate your tone.
Please stop saying “oodles”
Now that WCI has waved the white flag that the actual content of this website doesn’t matter, I am all done. I was totally confused and it’s my mistake. When the article is about contractual language of a DI contract and the editor is an author/traveling speaker/highly compensated blogger about financial matters I thought a simple question about the article could get answered.
If someone else wanted to come to the great WCI’s defense and answer my question that’d be great. If not, continue with the NM blasting because that’s more fun than the acknowledgement that I make irrefutable points. I’d be happy to do a guest post about why I’m at NM. Obviously, that will never happen but know that it isn’t because of willingness on my side of things.
Why don’t you just tell us why you work at NML right here in the comments section? Then we don’t have to wait 3 or 4 months to hear about it. Be sure you include the reasons why you think it’s a good idea to associate with a company that continually sells inappropriate products to physicians.
Beats me why you think the content of a website doesn’t matter because the owner of it refuses to get sucked into some bizarre line of questioning that is somehow supposed to prove a clearly inferior policy is actually superior. You asked your question. I answered your question. You asked it again. I answered it again. You asked it again. I answered it again. You then state “I win, he surrendered, I’m out of here, WCI’s a fool, now I feel better about the fact that my company rips off doctors, now I can tell my clients I am smarter than WCI etc etc etc”
Feel free to walk away and stop commenting at any time. Like I said, the point of this site is not to convince you to stop doing what you’re doing, it’s to convince doctors not to work with “advisors” like you. Once you realize that, everything else starts making a lot more sense.
Really great article. Thanks!!
My northwestern guy tried to sell me a policy with a “medical occupation” definition as if it was better than own-occupation. 😛
Quite simply, this new MOOD definition is not a true, own occupation definition in the traditional sense. The first big problem is that definition 1. requires the insured to be unable to do “any” of his or her material and substantial duties. The courts have yet to define what “any” will be in the context of NWM’s new MOOD definition, but I strongly suspect that courts will interpret the word “any” more broadly than the traditional own occupation definition, to the detriment of policy holders and in favor of NWM denying more claims.
As to definition 2., this also reduces coverage to policy holders, because it narrows the traditional definition of own occupation total disability by requiring that the insured “not be working” in order to receive total disability benefits, and it tightly defines what the scope of a doctor’s own occupation means, pigeon-holing it.
In my humble opinion, after representing and advising thousands of claimants in own occupation disability claims and lawsuits, this definition is worse than any traditional, own occupation definition, like those currently being used by NWM’s competitors.
I have no dog in any insurance policy sales fight, and am neither for or against any particular insurance company.
Just callin it how I see it.
Evan Schwartz, Esq.
Schwartz Law PC
http://www.schwartzlawpc.com
[email protected]
“Making Insurance Companies Keep Their Promises”
Evan – appreciate the legal insight here. Could you expand on your second paragraph please. If one a fully disabled based upon their illness injury, that means they are unable to perform any of their duties. They aren’t working regardless of the DI contract they own, right? They can’t do any part of the job?
If they’re partially disabled, the MOOD gives them the choice of continuing to work and receiving their partial benefit OR not working and receiving their full benefit.
Evan,
I’ve copy/pasted the definition of total disability within the MOOD policy. This is straight from the contract.
The insured either:
1. Is unable to perform the substantial and material duties of the regular occupation, even if gainfully employed in
another occupation;
OR
2. – Before disability, spent more than 50% of time providing direct patient care and services, and
– Is unable to perform the substantial and material duties that accounted for 50% or more of the insured’s charges for
direct patient care, and
– Ceased gainful employment
If the Insured can perform one or more of the substantial and material duties of the Regular Occupation and is not considered Totally Disabled, the Insured may qualify as Partially Disabled.
If 15 other experienced disability insurance attorneys come and post here with a similar stance saying that the non-NM policies have a superior definition of disability, would you stop selling NM disability policies?
I think I know the answer but I’ve been wrong before…
Why wouldn’t I? The $ I make makes no difference. Im seeking best possibly client outcome.
I’m not sure if it’s just me (it probably is), but does what I just copy pasted seem a little different (or a lot) than what Evan said?
You would sell NML policies because those earning go towards validating your contract, earning expense allowance bonuses, other perks, etc.
Seeking best possible outcome for the client…Not my experience with nwm. When I bought my policy I was only offered a nwm policy…no other options. After speaking with other docs who Owned nwm it was same thing….only offered nwm. Wasn’t until I decided to cancel my policy that he fessed up that he could sell any of the big companies. However when I bought from Larry I was given 4 different options with multiple different companies and, correct if I’m wrong Larry,but he has a relationship with guardian and guess what…he steered me away from guardian based on my situation.
Meanwhile, on another thread, there’s a resident posting who was sold a NML policy inappropriately and trying to understand why and what he should do now….
I’ll add it to the list:
https://www.whitecoatinvestor.com/forums/topic/inappropriate-whole-life-policy-of-the-week/
Meanwhile forum members are wondering, “What’s up with Northwestern Mutual?”
https://www.whitecoatinvestor.com/forums/topic/northwestern-mutual/
I think this discussion has really solidified my pursuit of FI. I want to get to the point when I can drop my Disability policy ASAP. I much rather insure myself. Certainly these products are needed, but there are no winners here except for the insurance company. If you use it, it is because something terrible happened, and if you don’t you paid a ton in premiums over your career. The only company I trust is myself, so hopefully in 7-10 years I can dump my policy.
How will you decide when you have saved enough to dump the policy?
Anecdotally when I shopped around for disability policies last year I obtained a quote from NWM and from an independent agent who advertises on WCI (Not Mr. Keller for what it is worth). My biggest issues with NWM were:
1. NWM’s policy was 2-3x more expensive than the other 4 quotes that I received from the independent agent (no quote from Ohio National).
2. The NWM agent was very evasive about what work I could do after being disabled and still receive full benefits. They also could not define for me exactly what would count as fully disabled as a surgeon. (This was also during the time that NWM was changing up their MOOD definition).
I ended up going with a Guardian policy as they clearly spell out their definition of disability and it was the most generous towards surgeons. Bonus: Guardian allows you to pay monthly premiums without a penalty.
I wish I could say your experience was unusual. Did he also try to sell you a whole life policy?
Thanks for all you do WCI! I have enjoyed reading everyone’s comments on this blog and wanted to see if anyone could help me figure out my own personal situation.
I have personally been weighing this issue for a few months now- I have a NWM DI policy that I was sold back in residency (2008-2011). I have since completed an Allergy fellowship and have been in a private practice for 4 years. I had originally signed up for an increasing premium DI as i could not afford the level premium at the time. I am looking to switch to a level premium policy and have been looking at the different policies I could switch to versus just staying at NWM. I have read numerous articles/comment threads here about the disdain for NWM. However, the price for a Guardian policy vs the NWM is pretty similar. My question relates to several considerations:
1) I am an Allergist, not a surgeon. My workweek is substantially different in both the hours worked and the physical toll it takes on my body. In trying to work through the various scenarios that would make me “totally disabled,” I have to imagine there are fewer instances of this than for someone that requires fine motor control, spending many hours standing, needing to get around a huge hospital, etc to complete the ordinary tasks of their day. Is the difference between MOOD and true Own Occ definitions as large when taken in the context of an office based outpatient specialty like mine (or even Family med, Internal Med, Pediatrics, etc).
2) This article does focus more on the “Total” disability pros/cons and does not explore the differences and pros and cons of the partial disability definitions. Is there a substantial difference? I can’t say I completely disagree with the concept of outlawing the “double dip” that could be done with one of the other policies. However, all things considered, if the partial disability component is similar between the NWM and true Own Occ policies, then having a Own Occupation definition does seem superior.
Would WCI ever consider doing an article truly comparing some of the top DI policies as it pertains to total disability and partial disability, breaking down the language so that laymen could understand (my eyes go cross every time I try to read through the 10 paragraph policy definitions and qualifiers and rider provisions, etc)????? It could even be broken down into Pros/Cons for Surgical vs Nonsurgical specialties! Thoughts??
If you email me or any of the other agents on the site, we would be happy to review your current coverage (and potentially converting to a level premium) to what is available in today’s marketplace.
You can then determine what makes sense based upon your individual needs, goals, budget and philosophy.
Jon,
I feel you are along the right step in that a number of people buy a true own occ when their specialty really does not call for it. The difference in having a true own occ vs. an own occ not working is only if you are so disabled that you can’t do your specialty and are still able to be off doing another specialty or occupation. As a surgeon that damages their index finger of their dominant hand then yes, own occupation definition makes complete sense. As an allergist you are probably going to have to be pretty disabled to not do your occupation thus what other occupations ‘could you do’? I think an own occ not working makes a ton of sense for your specialty.
In my opinion, for your situation I would also look at the increasing, projected level and level premium modes. As Larry said, all of us can do that for you and I think you will find it eye opening….
Let me know if we can help further.
It would be easier to do if the policies weren’t constantly changing and if the policies didn’t differ from one state and specialty to another. It just isn’t that simple. That’s why I recommend you go see an independent agent who gets paid similarly no matter which policy you buy. They can walk you through all those paragraphs and what they mean for you.
I’ll leave the question about the NML partial disability advantage, if any, to Larry to address.
Thanks everyone, I appreciate the feedback!
Also you might want a non own occ from another company.
I have read most if not all the comments here. The thing most important to me is how “inability to perform material/substantial duties of occupation” and working in a completely different occupation/specialty/same occupation but neutered in duties is interpreted by the Company when one makes a claim. Because if one becomes “totally disabled” according to Larry’s interpretation, my view is that the best plan will pay out claim while still allowing employment with pay of any amount.
By the way, one last thing. I think Jon was treated very unfairly. I agree with Grace on that. Sorry WCI. The premise that doctors should scoff at NLM’s contract MOOD is much more nuanced than you make it out to be. He cited the 3.75% vs 21.25% differential and you ignored the fact that many people (including myself, a doctor) may place value on that. It is good to be opinionated, but your opinion does not necessarily=fact. Remember, many Nobel prize winners were seriously and rudely made fun of early on because of their discoveries that were later proved true. Never good to be too overconfident.
Perhaps if you met 3-5 doctors a week who had been sold a NML product inappropriately you might feel differently about the company and its other offerings. If you assume NML is out to hose doctors with an inappropriate product, you’ll be right most of the time. They sell whole life inappropriately routinely, overprice their term insurance, insist on using an oddball disability insurance definition, put high ER and often loaded funds into Roth IRAs etc. I have yet to meet a doc being advised by a NML “advisor” who actually had what I would call an acceptable financial plan and suite of financial products.
If you think the MOOD definition is better, then buy that. No skin off my nose. But I find it so inferior that I recommend against it, even without taking into account NML’s other business practices.
Dear WCI,
Very interesting to read your concerns about the medical occupation definition at NML. I purchased disability insurance from them 7 years ago and currently pay $250 monthly for $4500 monthly coverage (I also have a small policy through my hospital-based job). Are there disadvantages to leaving a disability plan and going with a new company after 7 years (i.e. losing accrued dividends)?
Thank you.
For me NML quoted me ~250/month for a 5K policy (similar to what Rob was quoted). In comparison when I went through Bob Bhayani as on independent agent (See WCI recommend insurance agents at https://www.whitecoatinvestor.com/websites-2/insurance/ ). I ended up w the same policy for ~$65/month. So unless your dividends are over 2K you are going to make your money back in less than a year just by shopping around. (Similar story to my term life insurance but that is different thread).
Of course I think the Guardian disability def is better than NML’s weird MOOD (per the rest of comments on this thread).
You’re right. I forgot to include the dividend, which was $1450 for 2018 leaving an overall monthly cost of $122.40. Thank you for your comment.
The one you have may be the best policy for you, but I’d least shop it around with an independent agent and make an informed decision.
As time goes on, your cost of disability insurance goes up. That’s the main issue. I wouldn’t worry about the goofy dividend thing much. I’d just meet with a good independent agent, see what’s available at what price, and then make a decision to either keep you NML policy or get a new one.
Got a NWM DI policy for review –
Is the terms for “accident” the same across the board for all companies? We learned in second grade not to define a word by the same word.
Accident = bodily injury resulting from an accident, independent of illness or bodily injury…. what the heck? bodily injury independent of bodily injury? an accident is an accident?
Totaly Disabled = not able to perform the substantial or material duties AND not gainfully employed in any occupation.
If can perform one or more os substantial and material duties then will only be considered Totaly Disabled if (all 3 have to be met):
– not gainfully employed in an occupation
– more than 50% of time with direct patient care and services
– unable to perform duties that account for more than 50% charges
If not, then may qualify for partially disabled
Are there any companies out there thar would allow for total disability and the option to become gainfully employed in another occupation?
Yes. The Big 6 all offer that standard in their disability policies.
Depending on the state you live in there are 6 carriers that would continue to pay 100% of the benefit to you regardless of any post disability income or time that you spend doing any other job if you can’t do the job you were doing at the time of claim. That is what a true own specialty plan is all about, protecting your specialty you trained for and not just your income.
If we can help further just let me know.
Depending on the state you live in there are 6 carriers that would continue to pay 100% of the benefit to you regardless of any post disability income or time that you spend doing any other job if you can’t do the job you were doing at the time of claim. That is what a true own specialty plan is all about, protecting your specialty you trained for and not just your income.
If we can help further just let me know.
Does NM mutual now offer a better definition? I went through an agent who went over lots of policies and at the time I felt comfortable with NW mutual, but now I’m feeling hesitant again. Any thoughts?
I’m not a fan. I’d at least price policies from the Big Six and compare.
No, the definition of disability has not changed. I would be happy to review your policy and discuss other options if you desire.
It looks like Northwestern Mutual changed their definitions again in 12/2022 (https://news.northwesternmutual.com/2022-12-06-Northwestern-Mutual-Expands-Disability-Insurance-Choices-for-Medical-Professionals). Does this update achieve a true own-occupation level of coverage or do they still fall short?
https://www.whitecoatinvestor.com/disability-insurance-your-health-is-your-wealth/