By Dr. James M. Dahle, WCI Founder
The greatest financial risk for physicians is losing the ability to turn the knowledge and skills you spent a decade learning into a huge pile of money by working in your profession for decades. There are risks that could show up in your life that would prevent you from being able to accomplish this task. One of the most common of these risks is an extended or even permanent disability. Insurance companies estimate that as many as one in seven doctors will be disabled at some point during her career. While many imagine this will occur in a sudden traumatic accident, medical illness is actually a more common cause of disability that prevents a doctor from working.
Key Takeaways: What Doctors Need to Know About Disability Insurance
- The best Disability Insurance policy is an individual, portable, own-occupation, specialty-specific policy.
- Purchase disability insurance from an independent agent who can show you policies from all of the major companies. We have a list of recommended Disability Insuance agents used by thousands of white coat investors each year.
- Buy as much disability insurance as they are willing to sell you as a resident. Include a future purchase option and a cost of living disability insurance rider.
- As an attending, increase your coverage to cover both your living expenses and retirement savings if you were to work to age 65.
- You may get sticker shock, but the reason disability insurance is expensive is that it actually gets used (1 in 7 doctors have to use their policies).
Do not take the risk of not having disability insurance. Reach out to a WCI-vetted disability insurance agent if you need to get the right coverage in place.
Physician disability is a complicated type of insurance. This post will give you the “must-know” information to secure the best protection and help you avoid common disability insurance mistakes. To start, I've partnered with Pattern, one of our recommended agents to provide this crash course video.
What Is Disability Insurance?
Disability insurance gives you an income to live on if you become so disabled that you can no longer work.
If you become disabled, a long-term disability insurance policy pays a predetermined amount each month until you either recover from your disability or reach age 65-67 (policies vary).
Why Do Physicians Need Disability Insurance?
One out of seven doctors end up having to use their disability insurance. Losing the ability to turn the knowledge and skills you spent a decade learning into a pile of money by working in your profession for decades is one of the most expensive risks that physicians face. Your most valuable asset is your ability to work.
How Does Disability Insurance Work?
Disability insurance is a pretty straightforward proposition. You buy a policy and pay your premium monthly or annually. If you become disabled, you (and your doctor) fill out the paperwork to prove it to the satisfaction of the insurance company and then they pay you the promised monthly benefit until you either recover from your disability or the insurance company meets its contractual obligation to pay the benefit.
Short-Term vs. Long-Term Disability
Disability insurance is most commonly divided into short-term and long-term.
Short-Term Disability
A short-term disability policy generally begins paying just as soon as you get disabled and then pays for a maximum period of 3-12 months. These policies are often provided by an employer as an employee benefit. Short-term disability, while inconvenient financially, is not generally a financial catastrophe for a physician saving for retirement with an emergency fund. As a result, many doctors do not buy short-term disability policies at all.
Long-Term Disability
A long-term disability policy generally does not pay immediately, but only begins to pay after a waiting period ranging from 1-6 months. Then, the policy will continue to pay you a benefit each month until age 65 or 67, depending on the policy. Since losing your ability to earn a living for the rest of your life is a financial catastrophe, any doctor who is not financially independent should buy a long-term disability insurance policy.
What Does Disability Insurance Cover?
Disability insurance covers all kinds of disabilities. The best (and unfortunately most expensive) policies cover the widest range of potential disabilities.
The Definition of Disability
The most important feature is the definition of disability. Disability insurance differs from life insurance in numerous ways, but none is more significant than in defining exactly when you become disabled (and when you become enabled again). The broader the definition of disability you get in your policy, the more the policy will cost.
Unlike life insurance, where life and death are pretty black and white, disability has 50 shades of gray. You want a policy with a strong, broad definition of disability that will cover any possible type of disability? That means “true own-occupation, specialty-specific” and no limitations on things such as psychiatric conditions or addictions. This is the main difference between the “Big 5” companies and others. Even among the “Big 5,” there are slight differences. It is OK not to purchase the policy with the very best definition of disability, but the weaker the definition, the bigger the discount you should expect.
Own-Occupation, Specialty-Specific
Probably the most important aspect of the definition for doctors is that it be specific to your occupation. For instance, if I lost my left thumb, there are a number of procedures in emergency medicine that I could no longer do. I would be completely disabled from managing a busy emergency department by myself. But I could probably still go do urgent care work. A specialty-specific definition of disability in my policy would provide me with my full disability payments in addition to the money I make at the urgent care. Sometimes, the “specialty-specific” clause is inherent to the policy, and at other times it is an additional rider (a piece of paper added to the policy for which you pay an additional premium). Either way, you almost surely want to get this in your policy. Here are the various definitions, starting with own occupation and progressing to any occupation.
Own-Occupation Definition
Under this definition, your policy will pay if you cannot work in your occupation/specialty, even if you can and do work in another field and make as much money as you want.
Own-occupation policies cover people based on the occupational duties they are performing at the time of claim. If your policy includes an own-occupation definition of total disability and you are exclusively performing the customary duties of your medical specialty or sub-specialty at the time of the claim, the policy will cover you when unable to perform your specialty or sub-specialty. If you have transitioned into a different role or expanded into a new career path that requires much less direct patient contact or procedural duties, you may no longer be considered totally disabled when unable to work in your specialty or sub-specialty. This is because your “occupation(s)” involves additional material and substantial duties, no longer limited to the performance of your medical specialty or sub-specialty. In these instances, you may be considered partially disabled or not disabled at all, depending on the exact circumstances.
Transitional Own-Occupation
Your policy will pay if you cannot work in your occupation/specialty, even if you can and do work in another field. But if you exceed your previous income while you now work in another field, your monthly benefit from the policy would likely be lowered.
Modified Own-Occupation
Your policy will only pay if you can't work in your occupation/specialty AND if you are not working in another field. This definition is also sometimes called “Own-Occupation, Not Engaged” or “Own-Occupation, Not Working.”
Any-Occupation
Your policy will only pay if you cannot work in any occupation. Note that some policies are own-occupation for a couple of years and then transition to any-occupation.
One company out there (Northwestern Mutual) sells a policy with a definition that they claim is BETTER than own-occupation. They call it Medical Own-Occupation, but in reality, it is just a form of modified own-occupation. Learn more about the NML Medical Own-Occupation Definition.
Do You Really Need an Own-Occupation, Specialty-Specific Policy?
Some non-procedural physicians argue that they might not need a true own-occupation policy. They reason that if they are so disabled that they cannot practice their specialty, they probably cannot do anything else. So, they accept a less broad definition of disability to save some dollars on the premium. If you choose to do this, make sure you understand the exact circumstances under which your policy will and will not pay out.
Mental Disorders/Substance Abuse
Many policies will only cover mental illness or substance abuse-related disabilities for a period of two years. I know an attorney who couldn't practice law after developing bipolar syndrome in his 30s. It took over a decade to get it under control. He had a policy that covered mental illness indefinitely, which prevented financial catastrophe from striking him and his family.
According to the April 2011 issue of Current Psychiatry Magazine, physicians are not immune to depression and have an increased risk of suicide. Additionally, the lack of distinction between a psychiatric diagnosis and impairment stigmatizes physicians and impedes treatment.
You'll need to decide whether this is a risk you're willing to run. If you want mental illness covered like every other illness, you'll be paying more.
Presumptive Total Disability
As you well know, disability can be defined in many shades of gray. In the event of your disability, you can expect a paperwork fight between you, your physician, the disability insurance company, and maybe even your attorney. However, most policies contain a section that defines “presumptive total disability” where you can be assured there won't be much arguing from the insurance company. The policy I used to have read like this:
“Presumptive Total Disability – Your total and permanent loss, because of Your Injury of Sickness, of one of the following:
- Speech;
- Hearing in both ears, not restorable by hearing aids
- Sight in both eyes (see below);
- Use of both hands;
- Use of both feet; or
- Use of one hand and one foot.
Total and permanent loss of sight in both eyes means: Both eyes must measure at or below 20/200, after reasonable efforts are made to correct their vision, using the most advanced medically acceptable procedures and devices available.”
Anything short of that, and you're going to have to get your doctor to certify your disability and get the insurance company to accept it. At times, this can involve visits to multiple specialists and even hiring an attorney.
Cosmetic Surgery/Transplant Surgery
Some policies will cover you if your disability is the result of cosmetic surgery or the result of donating a kidney or other body part to someone else. Others will not. Best to read your policy carefully and know what it does and does not cover.
Disability Insurance Exclusions & Limitations
Disability insurance policies generally exclude any medical conditions you have at the time of applying for insurance. For example, if you already have chronic back pain, the policy will not provide a benefit if you are disabled due to a back condition. In addition, if you admit to participating in dangerous activities such as scuba diving, rock climbing, flying, and sky-diving, the policy will likely be issued with a rider that excludes those activities from coverage. Other exclusions may also apply, such as acts of war, normal pregnancy, and foreign travel. Here is a list of common exclusions:
- War or Act of War (this could probably be interpreted pretty broadly)
- Active Military Duty (having served, this is pretty stupid since 95%+ of our military folks are never in any kind of serious danger of being hurt by a combatant)
- Normal Pregnancy (don't want to work because you're eight months pregnant? Don't bother trying to get disability benefits for that)
- Foreign Travel (varies by policy, but many don't cover you during that European vacation, much less that humanitarian trip to Sudan—read the fine print)
- Mental/Nervous Disorder (many companies limit benefits to two years, where they might pay for “physical” disorders until you're 65 years old)
- Medical Exclusions (any medical conditions you have at the time the policy is issued will likely be excluded, meaning if you have heart disease at the time of issuance and it leads to you being disabled five years later, the policy isn't going to pay. Again, apply when you are young and healthy and/or when you haven't had medical problems for several years to minimize this.)
Residual Disability
Residual disability refers to being only partially disabled. This may occur from the initial injury or illness or be part of the process of recovery. You generally need to buy an additional rider to cover this. Read this rider carefully, it can be a bit complicated. The definition of residual disability that was in my policy is listed here:
“Residual Disability/Residually Disabled – Residual Disability means You are not Totally Disabled, but because of Your Injury or Sickness:
- Your Monthly Earnings are reduced by 20% or more of Your Indexed Prior Monthly Earnings; and
- You are under the regular care of a Physician appropriate for Your Injury or Sickness; and
- You are able:
- To do some, but not all, of the substantial and material duties of Your Regular Occupation; or
- To do all of the substantial and material duties of Your Regular Occupation, but not for as long a time or as effectively as You did immediately prior to Your Injury or Sickness.”
Imagine developing painful lumbar radiculopathy that keeps you from working more than 20 hours a week. This is the part of your policy that will cover that. This rider will also explain how much you get if you are partially disabled. My old policy says it pays the whole benefit (total disability) if I can't earn at least 20% of my “indexed prior monthly earnings,” which is basically the money I earn at my job. It doesn't count my investments, other disability income policies, rent from a rental property, or my nonvocational activities. It doesn't pay anything if my earnings aren't reduced at least 20%. If I am making between 20%-80% of what I made previously, I get the total disability benefit times the ratio of my loss of income for that month divided by my indexed prior monthly earnings.
Partial Disability vs. Residual Disability
Partial disability and residual disability are generally considered to be the same thing, but there is a technical difference at some companies. For example, at one company, a partial disability rider requires total disability during the elimination period and the residual disability rider does not. With another company, partial refers to the disability, such as one that only affects one part of the body (such as one arm), while residual refers to a decrease in earnings. Either way, the key is to understand how the residual/partial rider works in the policy you actually purchase.
Disability Insurance Riders for Physicians
Disability insurance policies are generally sold with “riders.” Disability insurance riders are additional features of a policy that may or may not cost an additional premium. There are a half-dozen or more of these riders, and some are more important than others.
Residual/Partial Disability
This rider should be purchased by everyone. It covers a partial disability and provides a partial benefit as you recover from your disability.
Inflation Protection
Sometimes called a Cost of Living (COLA) rider, this rider indexes your benefit to inflation, usually starting one year after you become disabled. This is a particularly important rider if you are disabled at a young age, so I recommend it for anyone buying a policy in their 20s-40s. If you are already 55 and the policy is only going to pay until you are 65, you can probably skip this rider.
Future Purchase Option
This rider allows you to buy a larger benefit at a later date without any pesky questions about your health or hobbies. If you are in a position (such as a resident) where you cannot afford as much as you need, purchase this rider. Given the stress and relatively unhealthy lifestyle most residents lead, it is not unusual to develop a medical condition during training. If that occurs, you may not be able to buy another policy at all when you become an attending. Even if you can, that condition is likely to be excluded. A future purchase option rider allows you to buy that additional needed coverage.
Catastrophic Disability
This Catastrophic rider pays out an even larger benefit if you are REALLY disabled, usually defined as not being able to do two or more activities of daily living. Unless you are already up against the maximum amount you can purchase, I think you are probably better off just buying a larger primary benefit instead of this rider.
Retirement Benefit
This rider, in the event of disability, causes the insurance company to put some money into some type of retirement vehicle for you in addition to paying your monthly benefit. Unfortunately, these are generally high-expense, insurance-based investing products and not the best way to save for retirement. You are better off purchasing a larger primary benefit with the money that would have gone toward this rider. Just don't forget you need to continue to save for retirement using your disability benefit money since the policy will only pay to age 65 or you will be living only on your Social Security benefits. If you're interested in the details of this rider, check out this post on disability retirement protection.
Non-Cancelable and Guaranteed Renewable Rider
If your policy is not non-cancelable and guaranteed renewable, you'll need to buy a rider to get these important features. It's important to understand these terms.
Conditionally Renewable
This means the company gets to decide what the conditions will be for you to renew your policy and at what price. You DO NOT want a policy that is conditionally renewable. In fact, it would be unusual for a salesperson to even try to sell you one.
Guaranteed Renewable
This means the company can change your premium, so long as they change it for everyone in your state, your policy year, or your occupational class. But they must renew the policy at some price.
Non-Cancelable and Guaranteed Renewable
This means the company cannot change anything about the policy—not the premiums, not the monthly benefits, and not the policy benefits up until age 65 (or whatever the specified age in the policy is). Even if you change occupation to something in a more risky class with a lower income, the benefit will remain in place at the same price.
The policy I used to have technically wasn't non-cancelable by itself, but the company gave me the non-cancelable rider for free. That's my favorite price. I recommend against buying any policy that isn't at least guaranteed renewable, but I have seen a few reasonable arguments to not buy a non-cancelable policy if it saves you a significant amount of money.
Recommendations for Physicians on Disability Insurance Riders
Here's an easy cheat card to help you know at a glance what we think about all of the various riders available.
Who Needs Disability Insurance?
Nearly every high-income professional in their first decade or two out of school should own a policy. Your most valuable asset is your ability to work. So, if you do not own a disability insurance policy, you need to go get one, now. If you have an income, it's time to buy a policy, even if money is tight as a resident. The only exception is if you do not rely on your income to live. If you are already financially independent, it's OK not to buy disability insurance. However, even if you are frugal and married to another high earner, you may wish to still have a policy. You could both become disabled, or you could become divorced.
Is My Employer's Plan Good Enough?
The most important rule of disability insurance is that any disability insurance is better than no disability insurance at all. If you are disabled without disability insurance, you will be limited to what is offered by the Social Security Administration, which provides relatively low payouts and can be difficult to qualify for. My last Social Security statement says my disability benefit would be $2,471 a month. Living on that would be a dramatic decrease in our standard of living.
Many employers (and professional associations) also offer disability insurance. If your employer is paying the premiums, be sure to take advantage. If they are not, you will have to compare the group policy to the individual policies that an independent agent can sell you. As a general rule, individual policies have a stronger definition of disability and higher (but flat) premiums but can be taken with you from one job to the next. Group policies are less expensive (although premiums generally rise as you age) and often don't ask pesky questions about your health and hobbies but cannot be taken with you when you leave.
In some cases, an individual policy is best. In other cases, the group policy makes sense. Occasionally, it can make sense to have both. Owning a pre-existing individual policy may limit how much of a group policy you are allowed to purchase.
How Much Physician Disability Insurance Do I Need?
As a resident, you typically cannot afford to buy as much as you need, but you should be able to do so even as a brand-new attending. Basically, you need to buy enough disability insurance to cover both your living expenses and your retirement savings if you were to work to age 65 but not your taxes. Physician disability insurance payouts are generally tax-free since they are usually paid with post-tax dollars.
Note that how much you need has little to do with your income and everything to do with what you spend. The less you spend, the less insurance you need to buy. Insurance agents would love to sell you the largest possible policy (which usually works out to be about 2/3 of your gross income, but it is possible to combine two companies to get even more), so you'll need to decide how much you need on your own. Resident physicians typically buy a $5,000 per month benefit and attending physicians typically buy a benefit in the $10,000-$15,000 per month range, but there are plenty of docs who buy both more and less. If your plan in the event of disability is to rely on the income of your spouse, you may not need disability insurance at all.
Average Cost of Disability Insurance for Physicians
Unlike cheaper insurance policies like term life and umbrella policies, physician disability insurance is expensive, although not quite as expensive as your malpractice insurance. The reason it costs so much is it actually gets used. The likelihood of you acquiring a long-term disability during your working years is approximately seven times as high as your risk of dying in those years. A typical policy bought on a healthy doc in their 20s or 30s will cost something between 2%-6% of the benefit. If your monthly benefit is $10,000, expect to spend $200-$600 per month for that. Perhaps the sticker shock you get upon being quoted prices will motivate you to reach financial independence as soon as possible so you can cancel the policy.
Graded vs. Level Premiums
One way to save money on your policy is to get graded premiums. Not all policies offer this feature, but those that do will charge you less in the first few years and more in later years. Level premium policies charge you the same amount in premium every year. A graded premium policy accounts for the fact that you become more likely to become disabled as you go through life. However, it can be very beneficial to you because your need for insurance actually falls continually throughout your career as your build your retirement nest egg.
Once you become financially independent, you can drop the insurance completely. This is a good idea since the total benefits a policy could potentially pay are also dropping throughout your life (since the policy will generally only pay until you are in your mid- to late-60s). Many white coat investors who are great savers hit financial independence by mid-career. If you are one of those, you are likely to come out ahead using graded premiums instead of level premiums.
Why Is Disability Insurance More Expensive for Females?
Disability insurance generally costs more for women than for men. This is simply due to the fact that women are much more likely to make a claim than men are, partly due to the unique risks of pregnancy. As a result, men should generally buy a “gender-specific” policy and women should generally buy a “unisex” policy whenever possible. It is also best to buy a policy prior to becoming pregnant. Note that unisex policies are becoming less and less common every year.
What Disability Insurance Discounts Are Available for Doctors?
Like other types of insurance, disability insurance is sold by agents who are paid commissions by the insurance companies to sell their products. It is a very competitive business. The insurance companies want agents, especially the independent agents you should be buying from, to preferentially sell their products. To incentivize the agents, they offer discounts that are only available through certain agents. Experienced, high-volume agents can often provide you with the same policy at a cheaper rate than a newer, lower-volume agent. Thus, it pays to use an experienced agent and shop around with two or three of them. Nearly every doctor should qualify for some type of discount on their policy—10%-30% premium discounts are not unusual. Types of discounts include:
- Unisex discounts
- Trainee discounts
- Multi-life institution discounts
- Guaranteed Standard Issue (GSI) institution discounts
- Association discounts
Learn more about physician disability insurance discounts.
How Do I Buy Disability Insurance?
The key to physician disability insurance is the independent agent. The agent is going to be paid a great commission by the insurance company no matter which policy you choose. Assuming policies with similar benefits, the commission isn't going to be all that different. Plus, these agents get plenty of business and none of them are starving, so they have little incentive to sell you an inferior policy for a slightly higher commission. Their reputation is worth far more than a few extra dollars in commission. Since you are (indirectly) paying the agent a very nice commission, don't feel bad about using their time and expertise to fully understand this complicated product.
For most doctors, this is a purchase that is only done once or twice in their life. Have the agent quote you different physician disability policies from each of the “Big 5” companies and show you the strengths and weaknesses of each. If you have a policy from work or your professional association, bring it in with you and have it included in the comparison. Then, you can know you made an educated decision and you can buy it and forget about it. Also, be sure to ask for a discount. The vast majority of doctors will qualify for a 5%-30% association or employer-related discount, and a top-notch agent will help you get that.
What to Know Before Shopping for a Disability Policy
There are a number of things you should know prior to beginning the process. These will help you decide how much insurance and which policy to buy.
These items include:
- Your income (check your last W-2, 1099, or tax return)
- How much you spend each month
- If your employer or professional association offers any disability insurance
The process of buying disability insurance is best done by following these steps:
- Figure out how much insurance to buy
- Choose an agent or agents to purchase from
- Find out if you are eligible for group or association policies and bring them when meeting with the agent
- Have the independent agent quote the best policies for your specialty, state, and gender, including discounts
- Make a rational selection of base policy and needed riders
Application and Underwriting Process for Physicians
Underwriting is the process an insurance company uses to determine the final terms and conditions of your policy. After selecting which disability insurance policy to apply for, you will need to go through the two- to six-week underwriting process for approval. After submitting an application, it takes 3-6 weeks to receive an offer. However, that period could be shorter or longer, depending on how long it takes to receive and underwrite (review) the required medical, financial, and occupational information. In fact, there are several unique strategies to consider when putting your insurance in place.
What Type of Disability Insurance Should I Buy?
There are two main types of disability policies: individual policies and group policies. As a general rule, individual policies have stronger definitions of disability. Many group policies are not own-occupation policies. Individual policies are also portable, in that you can change jobs and take them with you.
Individual Disability Policy
There are a number of benefits of an individual policy. The main one is that you are in control of all the details. You get to choose how much insurance you want to pay for. You get to choose which of the bells and whistles you are going to pay for. The policy is also “portable,” meaning you still have it if you change employers (or if your employer just decides to change the policy). As a general rule, the policy is also “stronger,” meaning it is more likely to actually pay you if you get disabled.
Group Disability Policy
A group policy provided by your employer is usually not portable, although sometimes you are allowed to take over the entire premium and take it with you. Group policies also frequently have premiums that increase every year or every five years, whereas an individual policy usually has level premiums. Group policies paid for by your employer may also pay a taxable benefit, rather than the tax-free benefit provided by an individual policy. Aside from the lower cost, the main benefit of a group policy is that it may be easier to qualify for. It may not require any sort of medical exam or blood work, and it may not ask any pesky questions about your medical conditions and dangerous hobbies such as rock climbing, skydiving, scuba diving, or flying.
Choosing a Waiting Period
Policies will usually give you a choice of a 30-, 90-, or 180-day waiting period. I recommend the 90-day period. A waiting period is the time between the date you are disabled and the date when the policy starts making payments to you. With a three-month emergency fund, you can easily self-insure for those first 90 days, avoiding the need for a short-term disability policy. Policies with 30-day waiting periods are too expensive and a policy with a 180-day waiting period does not provide much of a discount over one with a 90-day period.
How to Compare Disability Insurance Policies
The most important feature is the definition of disability. You want a policy with a strong, broad definition of disability that will cover any possible type of disability. That usually means “own-occupation, specialty-specific” and no limitations on things such as psychiatric conditions or addictions. This is the main difference between the “Big 5” companies and others.
Since disability is complicated, disability insurance policies are complicated. There are dozens of differences from one policy to another, making them difficult to compare. Use your independent agent for recommendations on what matters most. Just for an example, take a look at this chart of all the differences you could see between one policy and another.
See what I mean? The differences between the policy from one of the “Big 5” to another are not quite so large, but they still exist. Comparing one policy to another may be the most time-consuming part of the process of purchasing. Take your time and don't be afraid to use your agent's knowledge. They get paid about the same no matter which policy they sell you, so at least in this regard, you can trust their advice. (By the same token, you probably don't want to necessarily trust their advice on how large of a policy to purchase. Decide that before you go see them.)
When to Buy Disability Insurance?
You should buy disability insurance just before you become disabled. Since you don't know when that time could be, earlier is generally better. However, disability insurance is also expensive, and when you are young and poor, you have lots of other great uses for your money. A good compromise is to buy a small policy as you enter residency and then upgrade to a more robust disability insurance plan just before leaving residency. The younger you are, the healthier you are, and the fewer dangerous hobbies you engage in, the cheaper your premiums will be for the same benefit.
Who Do I Buy Disability Insurance From?
Disability insurance should be purchased from an independent agent. An independent agent can sell you disability insurance from any of the “Big 5” disability insurance companies. These include The Standard, Guardian/Berkshire, Principal, Ameritas/Union Central, and Mass Mutual (+/- Ohio National). Each of these offers a strong “own-occupation” disability insurance policy appropriate for physicians. Note that Northwestern Mutual is NOT one of these companies. Aside from the fact that its definition of disability is weaker than those of these other companies, the experience of many white coat investors is that their agents also often use disability insurance as the “gateway drug” to sell you an unnecessary and expensive whole life policy.
Best Disability Insurance for Physicians
I keep a list of those I consider the best disability insurance agents in the country. Save yourself the work of finding a good one you can trust and use the same agents that have been used by thousands of WCI readers in the past. You do not need someone local that you can sit down across the table from. It is better to have someone who has sold policies to hundreds of docs this year working with you by phone, Skype, Zoom, and email than someone you can sit down with who has only sold four policies. In addition, if there is some issue with one of these agents, I can usually help you resolve it quickly.
Information in this space rapidly changes. While we try to keep The White Coat Investor website as up-to-date as possible, our recommended agents are going to be our best source for updated information. I cannot emphasize how strongly I suggest you use them, whether buying your first policy or simply reviewing what you already have.
Use a WCI-Vetted Agent to Get Disability Insurance Today!
How to File a Disability Insurance Claim
Legitimate disability claims are processed quickly and without much hassle. You have to fill out a form as the claimant and your employer has to provide some information, and then they request records from your primary doctor. These are the steps for filing a claim.
- Read your policies and understand your coverage
- Check the definition of disability
- See if you are eligible for partial or residual disability
- Consult an experienced attorney
- Get a diagnosis
- Gather additional medical evidence
- Collect other documentation supporting your disability
- Establish a date when your disability started
- Plan administratively and financially for your disability
- Beware of under-reporting your symptoms and restrictions
Do I Need to Get an Attorney Before Submitting My Disability Claim?
In most cases, you do not need to hire an attorney for individual disability income claims. Most cases of disability are pretty straightforward. I think if the insurance company hears first from your attorney, the first thing it's going to say is, “Why did this person get an attorney? Maybe we ought to look at this more closely.” If you're in a gray area, maybe. Otherwise I'd wait until there's an issue. The company does assign you a claims consultant whose job is to help you get all the necessary information to the company and walk you through the process. They may ask you for more information, but I'd just try to be as cooperative as possible. However, if you start running into problems or feel the company is not doing what it should, go ahead and get that attorney. Just recognize they do not work for free.
How Often Do You Have to Be Recertified as Disabled?
It depends on the disability. For a serious condition that you're obviously not going to recover from, you may never have to do anything again—certainly no more than a form once a year from your doc who you're going to be seeing more often than that anyway. For a soft tissue injury or something from which you're expected to recover relatively soon, more frequent certification may be required.
When to Reduce or Cancel Your Disability Insurance?
Disability insurance is a temporary type of insurance, like term life insurance. When you no longer have a need for it or it is no longer a good deal, you should cancel it and use what you would have spent on premiums to save, spend, or give more than you now do. The idea is to have disability insurance in place from the time you start earning money until the time when you no longer rely on that earnings stream. Since any type of insurance is, on average, a losing proposition, you should only insure against financial catastrophe. Acquiring a long-term disability while your family relies on your income is a financial catastrophe. Becoming disabled after you are already financially independent or for only a short period of time is not. So, when you reach financial independence, you can cancel your disability insurance (and your term life insurance).
In addition, since most disability insurance policies only pay out until age 65 or 67, the possible payout becomes less and less as you age. As you move into your 60s, you may decide it is no longer worth the premiums to only get a few years of benefits in the event of long-term disability. If so, it's time to dump your disability policy. I have dumped mine, and if you follow the advice on this site, someday you will wealthy enough to dump yours too.
Key Takeaways
- Your most valuable asset is your ability to trade your time for money at a very high rate for the next few decades. Insure it as soon as you come out of school.
- The best policy is an individual, portable, own-occupation, specialty-specific policy.
- Purchase disability insurance from an independent agent who can show you policies from all of the major companies.
- Buy as much disability insurance as they are willing to sell you as a resident. Include a future purchase option and a cost of living rider. You will probably buy more when you finish training.
Frequently Asked Questions (FAQ)
Didn't find the answer to your question above? Add it to the list in the comments section. Here are some additional questions we have received on disability insurance.
How Much Does the Social Security Disability Insurance Benefit Provide?
It depends on your age, how long you have been working, and how much money you have been making over that time period. The length of period you must have worked just to get anything at all varies by your age. Usually, you will need to have worked and contributed to Social Security in 20 quarters over the last 10 years, but there are exceptions, particularly for the young.
Assuming you have a long enough work history to qualify and you qualify medically, the amount generally goes up over time depending on how much you have earned and paid into Social Security. The easiest way to tell is to check your Social Security statement. At mid career, mine is about $2,471 per month. That's just under $30,000 a year, not exactly living it up.
Can I Add or Remove Riders and Exclusions Later?
The rule of thumb for policy adjustments is that you can reduce the insurance company’s liability without needing additional underwriting. In other words, you can reduce your coverage level or benefit period, increase your elimination period, or remove optional riders with a simple change application that does not require additional underwriting. But anytime you want to increase their liability—such as when adding riders, increasing coverage levels, or removing medical exclusions—they’ll want to review updated information. If you still qualify, you can add riders later, but it might cost you more. Exclusions can be removed, and it is worth pursuing medical exclusions after a certain period of time has passed, such as a five- or 10-year cancer-free period. Risky activity exclusions are much more difficult to remove. Think about it. If you are no longer rock climbing or scuba diving, why do you need the exclusion removed? If you are, why would they remove it?
What Are Some of the Differences Between Disability and Life Insurance?
Perhaps the greatest differences between these two commonly purchased products is complexity and cost. Life insurance, at least term life insurance, is a very simple and straightforward contract because people are either dead or alive. By comparison, disability is “50 shades of gray.” Term life is also much less frequently used than disability insurance, so the premiums are much cheaper. Life insurance is really to protect your loved ones, whereas disability protects you (and your loved ones indirectly).
Is Disability Insurance Tax-Deductible?
As a general rule, no. Individual policies are paid for with post-tax dollars and pay out tax-free dollars. Employer-provided policies can be paid for with pre-tax dollars (a tax deduction for the business) and thus pay out fully taxable benefits in the event of disability. However, self-employed doctors generally do not have a business structure (C corp) that allows pre-tax disability benefits.
Do You Pay Taxes on Disability Insurance Benefits?
If the premiums were paid with post-tax dollars (like most policies), the benefits will be tax-free. If the employer provided the policy, the benefits will be taxable as ordinary income. Social Security disability benefits are taxable, although few on them have enough other income to result in any tax being due.
Does Guardian Really Have the Best Policy for Doctors?
Some agents that sell primarily Guardian policies would love you to believe that, but it is not necessarily true. Guardian does have an “enhanced” True Own-Occupation definition of total disability, which it claims is a stronger definition compared to other insurance carriers. The enhanced specialty language for physicians adds extra language that provides additional ways to qualify as totally disabled based on how you earn your income, even if you continue working in your practice or you work in another occupation. Examples where Guardian might pay but other own-occupation policies might not include specialists like Ophthalmology, Urology, OB/GYN, or ENT where a doctor may gain substantial income from non-surgical clinic work. If these specialists cannot operate but can still make most of their income in clinic, the other policies might not pay out. But Guardian would. Other situations include docs doing some side gig work such as blogging, medicolegal work, pharmaceutical work, or directing a medical spa.
Some Guardian policies have other features that may be slightly stronger than those of other carriers. You should still compare them side by side and decide whether those features are worth a potentially higher premium. You almost surely want a specialty-specific, own-occupation policy from one of the “Big 5 (or 6)” providers, but it does not necessarily have to come from Guardian. As one agent told me:
“Guardian's enhanced true own-occupation definition can only help an insured and never hurt an insured. However, if the sole reason that someone is buying Guardian is for their definition, I would say that they should look at how the overall cost and benefits of the policy compares to the others. Short of a unique side gig or surgical specialist with substantial non-surgical income, unless the cost difference was minimal, I would find it difficult to justify the purchase of their policy solely based upon its ‘Enhanced' Medical Specialty definition of total disability.”
Does the Military Provide Physicians with Disability Insurance?
The military does provide some disability benefits to its members. But compared to a good individual disability insurance policy, most physicians would view what the military offers as grossly inadequate. It can be very difficult to get an individual policy while on active duty, although if you have a policy in place prior to going active, it can usually be maintained during active duty. Two companies that offer policies to military members are Mass Mutual and Lloyd’s of London. Bear in mind that a policy will rarely pay benefits as a result of an act of war, but if you are disabled due to medical issues or a non-war related accident, it should still pay out. More information at these links:
- Disability insurance for reservists
- Disability insurance for federally employed civilian physicians
- Disability insurance for military physicians
Should I Get Disability Insurance as a Resident?
Yes. My general recommendation is to buy your coverage as soon as you get out of school (i.e., your first month or two of residency), although it is possible to buy a very small policy even as a medical student. Then, upgrade your policy (either by purchasing an additional policy or exercising a future purchase option rider) upon completing your training. The younger you are, the less expensive and the more valuable the policy is. Waiting until your last year of residency, until you graduate, or until “you can afford it” leaves you uninsured and may cost you more money in the long run anyway. The insurance companies price them by age and medical problems—the younger and healthier, the better. Residents get disabled from time to time, and they often develop conditions during their long years of training that result in them paying more for insurance, having a policy with exclusions, or not being able to buy a policy at all.
Do I Need the Student Loan Disability Insurance?
Insurance companies and their agents are always coming up with new products to sell you. I came across a new one recently from a firm called InsureSTAT. It was offering you disability insurance for your medical school loans. The idea is that if you get disabled, this insurance kicks in and pays off your loans. Except you don't have to use it for your medical school loans. You could use it for anything you want.
Say what?
That's right. The whole student loan disability insurance thing is just marketing. Some policies may even offer a student loan rider on their policies, which would make your student loan payments in addition to paying you a benefit. They only do this for total disability, not partial disability, and there are minimum and maximum payments that might surprise you. In general, I see this as a gimmick rider. Spend the money on just getting a larger base benefit rather than this rider.
What Is the Difference Between GSI, Individual, and Group Disability Coverage?
Individual coverage almost always offers better policy definitions, and coverage continues as long as you pay premiums. However, it’s generally more expensive.
Group insurance is typically inexpensive or even employer-paid. Often there is little to no medical underwriting. However, the coverage may not be “own-occupation,” and rates may increase over time. The employer, rather than the employee, owns the policy, and you may not get to keep the policy if you change jobs.
Guaranteed Standard Issue (GSI) coverage is individual coverage, so GSI includes all the same advantages as traditional individual insurance. If you are healthy with no risky hobbies, you can likely get an individual policy that costs less than a GSI policy, but if you have any health problems at all, a GSI policy may be your best or even only option.
What Is the Elimination Period in Disability Insurance?
The elimination period is the period of time between the onset of the disability and when you start receiving payments. The standard is 90 days, but you can get a period as short as 30 days on a long-term disability policy. Short-term disability policies generally have no elimination period. Keep in mind that your payment often does not come until a month later, so a 90-day period is effectively a 120-day period. As a general rule, you should have an emergency fund to cover the first 90-120 days so you do not have to pay extra to get a shorter elimination period. However, there is not much savings in extending that period from 90 days to 180 days, so we generally recommend the standard 90-day elimination period.
Can You Have Two Short-Term Disability Policies?
As with most things related to insurance, the answer to this question will depend on the exact terms of the short-term disability policies that you purchase, but generally yes, you can collect on multiple short-term disability policies. Having multiple short-term disability policies is referred to as stacking disability insurance.
What Mistakes Do Doctors Make When Buying Disability Insurance?
While most doctors have lots of questions about disability insurance, the answers are generally pretty easy to find—either on the internet or from the independent agent you are buying a policy through. Doctors make lots of mistakes when buying disability insurance, but the biggest mistake by far is not getting insurance at all. Here are some other common mistakes:
#1 Buying a Policy Through a Captive Agent
Captive agents are subsidized and incentivized by insurance companies. In return, agents are obligated to sell products for that insurance company, irrespective of the client’s best interest. An independent agent (broker) better serves their clients’ best interests rather than the insurance companies. There are still conflicts of interest, but they are smaller. Even independent agents may receive higher commissions or other benefits for selling policies from one company over another.
#2 Focusing Too Much on Cost
Many physicians shopping for coverage focus too much on low cost, instead of attaining comprehensive coverage. Removing the Own-Occupation Rider or the Partial/Residual Disability Rider is not worth the cheaper premium, because the conditions to file a claim are so much more limited that they end up paying for coverage they will never qualify for.
#3 Waiting Too Long to Apply
Don't wait until you graduate residency/fellowship to apply in order to save money. Many individual disability carriers offer deep discounts for residents and fellows. These discounts often lock in for any increases in the future. In addition, residents and fellows may be offered coverage without a physical exam or blood testing. As an attending physician, even a small policy can trigger blood, urine, and paramedical examinations.
#4 Waiting Until Something Happens to Buy a Plan
Policies are issued based on medical underwriting. Once you are issued a policy, it cannot be taken away or repriced—even if your health changes. If you wait to buy a policy until you are symptomatic or have been diagnosed with a medical problem, chances are you will end up with one or more exclusions and/or modifications of benefits.
What do you think? What have you learned about disability insurance that everyone ought to know? How have you structured your coverage? Comment below!
[This updated post was originally published in 2017.]
Hayley: I am happy to look at and evaluate your situation, and advise you as to what options, if any, you have.
Evan
Hi. I’m interested in speaking with you. Would I just respond to your ad on here and put in the info requested for consult in the ad?
Hayley: You can reach out to Lisa Keller at 212-608-5445 or 800-745-1755. She will gather information from you for my review and then we can set up a call. Thanks. Evan.
The sickening thing is that to sell me the policy, the agent came out to my medical school where I lived on campus. I’ve had the same e-mail and phone number for years, but the agent who later took over my account couldn’t at least call me on the phone to make sure I kept up with this very important product? I went back and checked my e-mail and spam folders and all I saw from them besides the recent e-mails after my accident, were some surveys and some responses to my request for forgotten login information. There were no yearly e-mails by which I could think they had been trying to contact me. They had access to autodebit my bank account for the ever-increasing premiums, but they couldn’t find me to obtain permission to continue this very important addition to my policy that they saw I originally had. I mean, if I bought the coverage initially, why on earth would I intentionally get rid of it? If I were a criminal, I would certainly be found and fast. The addition should have to be expressly discontinued in writing to protect the insured. In other words we should have to opt out instead of opt in. I guess you could say I’m a little bitter.
Hayley,
You should take the time to reach out to Evan Schwartz as Scott has suggested. While there may be ultimately little to do about your situation, I implore you to follow through with an attorney and make sure of what your options are, if any. This is critical for your own mental and emotional health in the years to come… critical. I simply cannot stress this point to you enough. You need to KNOW you did everything possible for YOUR FUTURE even if the news is disastrous because, quite literally, the ball was dropped by the agents.
Your ‘frustrations’ about the agent that sold you the policy versus the agent that took over your account and barely followed up is a very common theme in financial representation. The ‘agent’ is paid most of the commission(s) in the first year or two of selling a product and after that, residual income is very little… thus the time and energy the subsequent agent put into follow up is commensurate with this renumeration structure. This structure is to the advantage of the carrier who, if you fail to make payments, loses nothing because there is no contract AND in fact, the carrier has a financial advantage if you reapply by charging you more for your age and health (in most cases) for the same benefit.
The reason I began my company is to educate medical students and residents, first and foremost, then advise doctors as to the best plan and products for their income protection and lastly to advocate through the years that they follow up and follow through because that is how I treated my patients… that is the only way I know how to treat clients. Should my clients become disabled, they are never alone in the process of being a claimant… like I was.
Again, very sad to hear your story and I feel frustration for you. I cannot tell you the number of physicians who discover what disability insurance they actually have (or do not have) after they are injured or are diagnosed with an illness.
~Chris
There’s not much incentive in a commission based structure to service past clients.
No, there’s not and that is sad. I was at a hospital today and ran into some old friends from when I was in practice. One took me aside, almost got emotional at how angry he was and clearly, still is, because years ago he had been misled by a salesperson about disability insurance and now felt ‘boxed’ in. In his specific case, sadly, I know what will happen already when I review things and I know there will be little to do about it at present.
I now am getting calls from financial representatives wanting to do the best for their clients. They have recognized the ‘game’ that certain company-specific salespeople play with individual disability insurance. While they want to be the ‘complete package’ for their clients, especially their physician clients, they know the education piece for doctors is missing when it comes to disability insurance and that general mistrust is at an all time high between the sales-games financial companies & their representatives and physicians.
For the medical students or young residents reading this blog. Really read it. You are absolutely worth it guys and girls… really, I mean it, YOU are worth it. White Coat Investor has some tremendous information available and the blogs for YOU to ask away… literally any question about how to set up your financial lives and how to think about different aspects of different financial scenarios.
You may be wondering why you are introduced to the material you see in your own residencies? Your residency leadership and directors can actually get in hot water for inviting in solid financial advice from trusted sources because there is so much ridiculousness in the financial-advice world. One of the reasons I began doing what I do after I became disabled… doctors teaching doctors… simple, straight-forward, just like I taught medicine for years to medical students and residents. Only now I teach income protection.
Doctors, you are going to do great things for a great number of people with your chosen career in this life. Please remember to take the time to protect yourself first, then use all you know to assist others. There is a reason one places their oxygen mask on first… and then helps their children or other passengers in a flight situation.
Dr. Christopher Yerington
I have a Principal DI plan, that I purchased while an emergency medicine resident, that has the regular occupation rider (HH 757) added on for own-occupation, speciality-specific coverage (the specific wording of this rider is pasted below for reference). However, I have switched from emergency medicine residency to surgery residency, and I am trying to figure out if my plan is “specialty-specific” to emergency medicine, when I obtained it, or if it applies to whatever speciality is my occupation when I would become disabled (hopefully not). I cannot find really anything out there about this unique situation (having a policy and changing specialties). Do I need to completely switch policies, update Principal regarding my speciality change, or am I covered by the regular occupation rider for whatever specialty you are in at the time you became disabled?
Regular Occupation Rider HH 7575 : This defines TOTAL DISABILITY as, secondary to injury or illness, I am:
1) Unable to perform the substantial and material duties of Your Occupation and ar note Working in Your Occupation; and
2) You are Working in another occupation; and
3) You satisfy the requirements of the Claim Information section of the policy.
Cam,
First, you have a very good policy with a great carrier, Principal. Don’t re-shop your independent disability insurance policy just yet. You are not the first resident to change specialties after applying for and obtaining great independent disability insurance. In general, your Principal policy will apply to YOUR OCCUPATION at the time of a disability claim… this applies to fellowship training and switching of specialties.
Once you complete your surgical residency and are Board Certified as a General Surgeon, then the “substantial and material duties of Your Occupation” will relate to the practice of General Surgery. If you further sub-specialize in say, Vascular Surgery, then upon completion of that fellowship and additional Board Certification, the “substantial and material duties of Your Occupation” will relate to the practice of General Surgery and Vascular Surgery, if substantially and materially different… which in the case of Vascular vs. General Surgery, they are not much different.
If it will make you feel better, I would be glad to personally review your specific policy and make sure you are in good shape.
~Chris
There is nothing you need to do, as you noted the definition is based on what ‘you are doing at the time of claim’. Now you may want to check rates based on Surgery vs. EM as there is a price difference with some carriers.
What are the basic questions I need to be asking about a DI policy? My wife is a pediatrician and I am a stay at home dad. Sadly she doesn’t have DI but we know we need to get her a policy, just not sure what all we need to know before contacting an agent. Thanks in advance for all your help!
Josh,
The basics EVERY physician should know about disability insurance:
1) Get the best private policy you can, given your health and age.
2) Place Guaranteed Insurability and Future Purchase Option riders on the policy.
3) Female colleagues, if at all possible, get your private disability insurance before you are pregnant for the first time. Otherwise, future pregnancy-related claims may not be covered.
4) Consider a COLA rider (Cost Of Living Increase) rider.
5) If your specialty has a patient population that will leave and go to another provider if you are out of work for 12–18 months (this will include 30% of physicians over their careers) or longer than 18 months (this will be 1 in 5 of you, or 20% of physicians during their career), you may also want a Residual rider to bridge the gap while you return to work and rebuild your patient population.
6) Should your practice area have a higher psychological disability claims rate, such as anesthesiology, some companies offer riders that may be important when looking at your career in its entirety.
7) If possible, attempt to purchase your private disability insurance from an independent broker. Company-specific agents unfortunately have a built-in conflict of interest when proposing disability solutions to physicians. However, if you go with one of the top three companies you will most likely be in good shape.
8) Lastly but importantly, pay your private disability insurance with post-tax dollars! (Again, pay your private disability insurance premiums in post-tax dollars out of your personal checking account) This means that the benefit will be paid to you in post-tax dollars and you will not have to worry about a changing federal tax rate in the future.
Josh, this is what I do now as a disabled physician, I teach and advise doctors to understand how to protect their incomes. Reach out anytime, I’d be happy to walk you & your wife through the process.
Chris
You don’t need to know anything before contacting one of these independent agents:
https://www.whitecoatinvestor.com/websites-2/insurance/
They get paid a nice commission to sell you a policy and they should earn that by educating you about disability insurance.
Chris’s list is nice, although I’d nitpick at it. Let’s use his list:
# 1 Best may not be the policy with the widest coverage. Value has a place here. A slightly worse policy at half the price may be the best policy for you.
# 2 An attending doesn’t need a FPO rider. She should just buy as much coverage as she needs right now. Your need for DI is never higher than at the start of your career. A resident or similar doc expecting much higher income and spending in a few years should buy an FPO rider.
# 3 Women also usually want a unisex policy. DI is cheaper for men then women, so men should get gender specific and women she get unisex.
# 4 A COLA rider is worthwhile for any doc in the first half of their career. If you’re buying a policy at 55….not so much. It only pays to age 65/67. I’d just use those dollars to buy a larger policy.
# 5 I think everyone ought to have a residual disability rider. It protects against partial disability, which is quite common.
# 6 This can be a tough decision. Depending on specialty and state, some policies limit psych claims to 2 years and others go all the way to age 65/67. No right answer here, but if you become severely bipolar like an attorney cousin of mine, I can tell you which one you’d rather have.
# 7 I agree an independent agent is critical.
# 8 You generally don’t have a choice with an individual policy. It’s group policies that are sometimes bought by your employer with pre-tax dollars. But if I had the choice, I might consider paying with pre-tax dollars. The tax deduction would be nice, it’s guaranteed (and disability is not) and if I were disabled, I’d be in a much lower tax bracket.
This post may help you learn more: https://www.whitecoatinvestor.com/what-you-need-to-know-about-disability-insurance/
Good luck! The main thing is to just go get it. Any disability insurance is better than none.
Josh,
The basic questions I would suggest are:
What are the definitions and which is the right one for ‘us’ especially based on her specialty?
What type of premium structure do you want, fixed, projected, or increasing?
Are there any discounts at her employment?
What are the premium savings for an extended waiting period?
My theory is keep it simple, keep it skinny, buy what you need to run your lifestyle, and option what you might want down the road.
My husband and I bought disability insurance through a financial advisor several years ago while in residency. At that time they advised us to buy two policies from two different companies (Ameritas and Principal). The reasoning at that time was that our income was low at that time so we could start out with a little from each company, but as our income increased, we could increase the policies and having two would allow us to have an overall higher maximum than we could get with only one policy. We have since used the future purchase option and have increased our coverage for only one policy, while the other policy is increasing annually through the cost of living rider.
Has anyone ever heard of this as a strategy? Is this a good idea or should we just cancel one and keep only one policy. Our current insurance agent hasn’t ever heard of doing this and couldn’t really understand the reasoning because he said that the companies communicate with each other and the maximum with two policies would really be that different than the max we could get with just one policy. I should also mention that we do not plan on maxing out on both policies. Thanks
Sure. You often CAN get a higher overall limit with two polices than with one. Sounds like you need a second opinion.
COLA riders don’t kick in until you’re disabled though.
Liz,
Do not cancel the one policy yet for either of you.
The strategy you describe is often termed ‘stacking’ and currently allows the protection of up to $30k-37k/month (depending on carriers). The strategy is often employed by higher earning physicians. Some doctors privately want to know that they have true own-occupation protection for their career incomes and do not want to rely on group disability insurance. There are a few other reasons to employ this strategy as well but those are done in concert with additional income protection techniques, again, for higher earners.
What you need is an independent insurance broker to review your income and policies and give you an opinion as to how to proceed. I was disabled in 2010 from anesthesiology. My private individual disability insurance (Principal) has functioned flawlessly. My group disability insurance policy began me down a 6 year legal battle into Federal Court. It was horrific and should never happen to a physician.
What I do now is educate, advise and advocate as a disability expert and for physicians and medical professionals. I also life-coach physician-physician and physician-professional couples as I am married to a doctor as well. I teach one-on-one (or in your case both of you) case-by-case physician-to-physician. I am a completely independent insurance broker (no ties to any specific insurance carriers) that reviews physicians and medical professionals income, disability policies and overall income protection strategies and gives an opinion as to how to proceed.
~Chris
You can buy the two contracts, the carriers do talk to each other (the 2nd carrier inquires about 1st carrier benefits to make sure you are within their issue limits at the time the policy is originally bought) but the bigger question, as you mentioned, is do you need the capacity of the two carrier capacity or would one be sufficient? The individual carrier issue limits with Ameritas was $15k and Principal was either $15k or $17k (depending on when they were bought) are those benefit limits sufficient? The cap (participation limit) between the 2 of them would have been Ameritas $25k and Principal was $30k. The real ‘con’ for doing 2 contracts (unless you need more capacity than any one carrier can provide) is you have two companies to file a claim with, go through that process and maintain communication with during a claim process so why have 2 if one will fill your needs?
Hope that helps.
I question the timing of purchasing an Own Occupation policy as a resident.
Most start at 5k per month, that’s $60k per yr. That doesn’t come close to the “future earnings” that is the primary goal.
If your goal is to put in place the “guaranteed insurabilty” and the “student loanrider” , would it make sense to buy in the last year of residency? When you get your contract, boost your coverage to the desired, usually 60% of income or $25k per month. The residency coverage would not be as good but you would avoid the exam and have it in place for the point in time you can afford it and have the income to pay it. At that point its a choice of stacking etc. but you would have an exam anyways. A 5-6 year premium on an own occupation policy is a serious hit for a resident to insure that amount of compensation.
Once you have your contract, can you up the coverage?
Keep in mind, the goal was to most easily insure the attending pay bump.
Tim,
You can certainly wait or buy early, either is probably fine to do. The advantages to buying early is there is less time for things to have gone wrong with you from a health standpoint and you are younger so it costs a touch less. The con is…you have to pay for it. One option you typically have is buying a small policy ($1k-$2k) load it with options to $20k and typically pay around $20 per month per $1,000 of monthly benefit, that might solve the problem of costs. Keep in mind the carriers don’t hand this stuff out so if you want $20k per month that will take an income in the range of $600,000 to qualify for it. The comment of ‘60%’ that falls in the ‘group’ category where they then tax the benefit and it comes with offsets where the carrier gets to hold back part of that distribution, the individual policies are tax free and have no benefit reductions capacity for other benefits.
Why would you say waiting is fine? If that’s the case, then not buying at all is fine. It isn’t fine. Residents become disabled all the time. Just because you can’t get $250K in coverage doesn’t mean $60K is worthless. The first $60K is probably the most valuable. Plus it’s cheaper, Plus it locks in the ability to buy more (if you pay for a FPO rider).
I hear your passion and being that I was disabled from 1990-1993, I really understand it. Should everyone have coverage, probably yes but statistically will they be fine to wait a year, probably (as I had stated) yes, is there a possibility that they won’t be OK to wait a year, yes. I certainly wish I would have had something other than workman’s comp back in 1990 but I was 20 and did not know better. The fact is we see pretty much every week how a disability policy kicks in and literally changes our clients lives when they went from being a productive working individual to no longer being able to work due to an illness or injury. It is important but hey some people don’t wear helmets when they ride motorcycles either….
Tim,
I advise every resident to purchase their individual disability insurance (IDI) policy their intern year from a great carrier. Your health is absolutely guaranteed for how long? Exactly, it is not guaranteed any longer than this moment in time you are reading this comment on WCI. That is the big ‘pro’ of acquiring IDI as early as you can, you are as healthy as you will ever be. Scott pointed out the ‘con’ is paying for it over those few years before to are an attending physician.
Non-Cancelable/Guaranteed Renewable: Optimally you want BOTH of these provisions.
Non-Cancelable Policy means nothing about the policy can change:
– The coverage stays the same
– The premium the same
– Group policies will NOT have this provision
Guaranteed Renewable Policy means the policy language will never change HOWEVER the premium can change:
– The coverage stays the same
– The premium CAN CHANGE. (The company evaluates its book of business periodically and can choose to increase premiums or decrease premiums [never has occurred] on categories of policies based on any number of factors: State Issued, Date Issued, Age at Issuance, Type of Policy, Etc.)
– Group policies will NOT have this provision
While the “Student Loan Riders” are options that can come with IDI policies, the actual insurance to pay your student debts off, if disabled, costs very little each month (about $20/month in most cases for $2,000/month in coverage). This can be purchased separately or in concert with an IDI policy. Everyone’s loans, income and circumstances are a little different and there are a number of options to explore in handling debt repayment that work in concert depending on the specific doctor.
The most easy manner to absolutely ensure the attending ‘pay bump’ is to have a Non-Cancelable/Guaranteed Renewable IDI policy in-force that has Future Insurability Options up to a maximum limit (usually $16k/month – $20k/month depending on carrier and policy).
While the MOST IMPORTANT item in an IDI policy is the language used to define:
ANY OCCUPATION: Insurance pays you a disability benefit if you are unable to work at a job in any field.
OWN OCCUPATION: You will receive benefits if you cannot perform the duties of your own occupation even if you earn money in another field. Even if you earn more than you did in your own occupation.
The NEXT MOST IMPORTANT provision in your Disability Insurance Policy is the Future Purchase Option or Guaranteed Insurability.
– This rider allows you to buy additional coverage down the road without having to provide medical evidence of insurability. The insurance company cannot ask you any questions about your health. It Guarantees you the right to increase your coverage as your income increase. Many physicians can guarantee ALL of the coverage they will ever need during their career while in their residency.
– The primary reason you purchase disability insurance as a resident: By being younger and healthier at the time of purchase you never have to answer a health question again or explain hobbies and activities outside of your career.
Once you have your IDI policy (the contract) in place Future Purchase Option or Guaranteed Insurability comes in (2) flavors:
1) Benefit Update – this is an every so many years benefit update that allows the coverage to climb over time with your income. Pro – you can buy a small initial policy (less cost during residency) Con – You have the use each and every Benefit Update until you max the policy or you lose the subsequent Benefit Updates (that can be painful in a busy physician’s life)
2) Future Increase Option (FIO) – this generally requires you to purchase 1:3 up front. Hence your example of buying $5k/month benefit, in order to get a FIO for up to $20k/month. Pro – you’ve locked in the ability to go to $20k/month which for 75% of practicing physicians for the years 2020-2055 will be adequate. Con – you have to pay for it during residency.
Stacking – the utilization of (2) IDI policies for high income earning physicians. For 25% of doctors practicing between the years 2020-2055 they may choose this as an income protection strategy within a larger income protection plan for their career and their life. If you are headed into a speciality where your base salary will be above $500k/year at the beginning of your career AND will rise much higher during those first 5-7 years of practice, then it is one of many strategies you may want to consider.
Tim, after practicing anesthesia for 11 years and suddenly becoming disabled, I learned more about disability insurance than anyone else I knew. Today, I teach medical students, residents and young physicians how to properly protect their physician income and assist them in setting themselves up in life. Reach out anytime, I’d be glad to assist you.
~Chris
Sure, that works great as long as you don’t get disabled during residency or don’t become uninsurable. If either of those occurs, you’re far better off buying a policy with a future purchase option as an intern, which is what I recommend. If you are still insurable at the end of residency, then you have a choice to do the future purchase option or just get an additional policy and save the FPO for later if wanted/needed.
You are 100% correct!
One may become disabled or become non-insurable.
Two, most residents do have a disability plan. Far , far inferior to a separate own occ plan with the riders.
Your current position is about $60k per year.
Disability comes in many different forms. Permanent disabilty falls into the catastrophic range usually. What can you afford on the residents pay?
Just as a “beater” can serve transportation needs, the group policy can be used as a DI version. You can upgrade. The question is how one spends the money. There is a risk of course. My point was what is the risk? My supposition is simply that more residents withdraw or are dismissed that drops from disability claims. It’s not naked without coverage, you have a “beater policy”. You NEED to upgrade for sure when the Big Bump comes. The smart way to do it is as soon as you have more certainty on the horizon. Your are paying for a $60K benefit. Does a school teacher or carpenter need their own policy, own occupation and does that mean group disablity plans are worthless? It’s the compensation “bump” that is the “game changer”, its worth the funds to insure it and do it intelligently. Funds in residency are tight. Carrying six years of a “beater” and a “really nice policy” for the same $60k will cut something else out. There are risks, but the reward is only worth $60k until one becomes an attending. You 100% right, if you collect during residency its sad and the $60k will mean alot.
Tim,
One of the reasons WCI recommends buying a own occupation policy with a future increase option while being an intern is because disability insurance is not quite like a beater automobile for 3-5 years during residency.
Sure, we would rather be in a Mercedes than a Scion if we were involved in an automobile wreck… but disability insurance is an income protection vehicle you, your future family and kids and your remaining life are all simultaneously driving in when WHAM… you lose the remainder of your career earning capacity… and the only time you might get to buy it is today, as young and as healthy as you are. Think about kids, a wife, a home, a life and plans made and strived for… that is what I had at age 40 when my career was ended by the loss of use of my left hand.
The ‘cost’ seems to be your focus. You need to open your mind to your own future. Every additional dollar I paid in premiums from Intern Year through 1st Attending check, that entire amount was not even the daily bounce in my retirement accounts at age 40. Point is, cost is very relative. The “Tim at 40” is going to thank the “Tim of Today” for doing the proper thing for all the future Tim’s and is not going to spend one moment worrying about the loss opportunity cost of the money spent on proper independent disability insurance.
Owning transportation is NOT about doing the right thing by yourself and those you love and will love.
Owning outstanding true own-occupation independent disability insurance that is both non-cancellable and guaranteed renewability with a future increase option to cover most if not all of your expected attending salary IS about doing the right thing by and for yourself, your future self(s), those you love now and will love through time.
Every single intern and resident I have sold a disability policy to has found the money in their budget once they understand that a physician’s income protection begins with a great disability policy. Tim, if anything happens, you do not get a do over on this one financial item. After having great DI, I teach and advise on basic financial literacy, including life insurance, debt management and world-class savings habits. I want every resident to have an amazing financial foundation to their life.
Individual Disability Insurance is really the first financial-life planning vehicle that you, the future attending doctor you will become shortly, is purchasing. Picture yourself graduated, an attending, contract in hand, new job starting tomorrow July 1… what would that guy obtain?
Best of Luck! Reach out anytime and I’d be happy to assist you in doing this correctly the first time.
~Chris
Chris, you sure spend a lot of time on here promoting your business for someone who has never bought an ad from us. That’s technically not required to leave comments on the blog, but some might consider it poor form to repeatedly take advantage of a resource created by someone else to build your own business without even a token “thank you” purchase or contribution to the WCI scholarship. I count 28 comments so far and you solicit business in each one of them.
Kind of like the guy who goes into Starbucks to use the wifi but brings his own coffee.
Obviously we’re running a for-profit business just like you are. It makes it a lot harder to sell ads when people coming here to get information about disability insurance go to someone that doesn’t buy ads. If you’re ever interested in buying an ad, you can reach out to Cindy at cindy (at) whitecoatinvestor.com. I do require applications for insurance agents and financial advisors. The agent one can be found at the bottom of this page: https://www.whitecoatinvestor.com/websites-2/insurance/
Dr Jim,
First, I want to thank you very much for the separate section to have on Disability insurance that you have.
Second, I greatly appreciate your honest comments, reliance on experts, and most of all, the touch of humility you show.
Third, my knowledge was only gained from your site and Larry Keller. I talked with others, and found Larry’s knowledge and service outstanding.
The in’s and out’s of DI are complicated.
I bought and paid for my daughters policy and renewed it. I am “cheap”, she needs it and has her last year of her second fellowship .
Fourth, I am a Dad. Very protective. I looked up where you trained and residency. Jeff Miller does not advertise here. I know Jeff and when his financial blog highlights you, I know it’s a reliable source. I only reference his site when it specifically has an article that applies to a topic.
Fifth, I noticed on your scholarship page, Larry Keller contributed big. In addition to the ads, he provided content. As a fairness to those you list as providers, I don’t see you pushing specific vendors.
Sixth. I hope Chris seriously considers contributing with content, advertising, and the scholarship too.
By the way, the reference’s to sites and providers is helpful. I personally feel that contributing is one thing but customer acquisition in comments at some point turns into advertising.
Hi WCI (and others who may have thoughts):
I’ve been offered policies from the big companies and the main difference I see between them breaks down between Guardian’s definition’s of own occupation and the others (I’ll use Standard’s language because it is the policy I am most interested in):
Standard’s language: “Under this rider, you are considered totally disabled if, due to injury or sickness, you can’t perform the substantial and material duties of your regular occupation even if you are engaged in another job or occupation for wage or profit. You must also be receiving regular medical care from one or more physician(s) appropriate for your injury or sickness. If you are a physician or dentist and have limited your regular occupation to a specialty recognized by the American Board of Medical Specialties or American Osteopathic Association Bureau of Osteopathic Specialists or American Dental Association, then that specialty will be deemed your regular occupation.”
Guardian: “Total Disability: You will be considered totally disabled if, solely due to injury or sickness,
you are not able to perform the material and substantial duties of your occupation, even if you are gainfully employed in another occupation. Working an average of more than 40 hours in a week, in itself, is not a material and substantial duty. Your occupation means the occupation(s) in which you are gainfully employed during the 12 months prior to the time you become disabled. Your occupation does not mean a specific job title, designation, industry, or job with a certain employer. If your occupation is limited to a Medical Doctor or Doctor of Osteopathy and more than 50% of income is earned from hands-on patient care, 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 provide hands-on patient care. Hands-on Patient Care means meeting with a patient in a clinical setting for the purposes of providing medical advice, evaluation, diagnosis, or treatment, that you regularly and personally provide, during the 12 months prior to your disability. 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.”
Is there any reason to pay extra for the Guardian Policy for their own-occupation language regarding “hands-on” patient care?
Also, is a 3% COLA rider enough? Or, is it worthwhile to spend extra for the 6% COLA rider?
Thanks.
– Adam
I don’t think there’s a right answer. Both are very strong definitions. The likelihood of one paying and the other not is very low.
I think a young doc buying a policy ought to buy a COLA rider of some type. I don’t think there’s a wrong answer here. 3% for less money is good because it’s cheaper. 6% for more money is good because it offers more coverage. Obviously, if you get disabled and inflation is higher than 3%, you’ll wish you’d bought the more expensive policy. If you don’t get disabled or inflation stays low after you do, you’ll be glad you bought the cheaper one. Neither will protect you from hyperinflation.
Adam,
Both Standard’s and Guardian’s own-occupation definitions are strong. We have clients on claim with both of these policy’s language and there has been no problem with benefit payments from either company, both are excellent.
Many procedural-based physicians in our practice choose the Guardian language because they can often remain ‘hands-on’ while they can no longer operate instrumentation. If 50% or more of your income is derived from procedures, then you may want to consider Guardian. However, in reality, based on actual claims in a population of more than 3,000 physician policies over 40+ years no procedural-based physician on claim with Standard has had any difficulty receiving benefits.
Definitely get COLA 3%, You can pay for 6% but statistically you will finish your career without disability and will have just paid more for the policy over time.
If your income will climb over the next 8-15 years of practice then make sure you have some Future Increase Option (FIO) available.
Also, make sure your policy is Non-Cancelable meaning nothing about the policy can change. The coverage stays the same AND the premium the same.
Disability Insurance is one of the cornerstones of a physician’s income protection plan. Adam, make sure you are working with an independent non-carrier specific insurance broker.
Best of luck,
Chris
Adam,
After 25 years in this business one thing I have found is that the carriers will occasionally throw words into these contracts to make them appear better than the next company. The reality is they all perform essentially the same at claim time when you have a true own specialty definition of disability (not just definition of occupation). I am not typically the biggest fan of cola since mathematically it takes about 10-12 years on claim for it to have been the right choice but if it makes you feel more comfortable then by all means buy it. Just make sure you are getting the best cost per dollar of coverage for options and design features you want.
I couldn’t help but notice that no one seems to have offered their take on the pros and cons of disability insurance for medical students (like me). My school just sent me an email “strongly recommending” that I sign up for one of 6 potential policies. A sample of one of the options is a policy at $41/ month for a weaker definition of disability (no mental illness coverage) for a payout of only up to 12 months at $1000/ month should the student become unable to attend classes or rotations. The other selling point is a health-status-blind chance to buy more coverage out of medical school. The policies seem pretty limited in scope and time, but relatively inexpensive. Any thoughts?
If you can buy a real policy and have the money, maybe. But a crummy policy? I probably wouldn’t bother. $1000 a month for 12 months isn’t going to fix a catastrophe.
The reason the carrier choice is limited is due to the fact there is no employement at the moment and not everyone that starts med school finishes and becomes a MD/DO thus there is not a clear occupation for the carrier to follow. Once you are a MS 4 or even a 3 we can get coverage but because you are not yet IN residency the occupational class is placed at the lowest of any doctor class thus the cost is the highest. When we have these situations for our clients we will write case, assuming the client wants the coverage, but then once in residency we will re-classify the occupation thus lowering the rate. As for designs I am with WCI, at $1k of benefit and 12 month benefit period along with $41 monthly premium, no way. That should have a cost of about $10. We never have a benefit limitation soley due to being a MS so kind of expect about $20 for a $1k benefit as a MS but with benefits to age 65. If we can help further let me know.
GoalsDoc,
WCI and Scott are both correct. The target data for you to place on your calendar in Match Day. At that point you have an upcoming employment contract, a starting date, an anticipated salary AND you are still YOUNG and HEALTHY as you are ever going to be. Find and deal with an independent insurance broker who works with physicians and medical professionals.
If you have further questions; let’s ask them here on the forum because WCI medical student readers like you read these discussions. If you have specific medical history, you should not discuss that per se on a public discussion board. As a disabled physician myself, if you have private medical concerns, I’d be happy to have a one-on-one doc-to-doc phone conference.
~Chris
As a psychiatrist, I am having difficulty understanding why I need own occupation coverage. If I cannot practice as a psychiatrist for any reason [tbi, cognitive issues , als, dementia, chronic pain], I certainly will not be able to work in any capacity. If I do become a quadriplegic, I will still be able to practice psychiatry. I’ve seen it. Many of you have devoted much more time to this than I have, so please help me understand why I should consider own occupation coverage.
Dr. Lubin,
I personally don’t think your specialty typically needs a true own specialty policy for exactly the reasons you just mentioned. The reality is if you become so disabled you can’t do the typical (not always) duties of a psychiatrist then you probably don’t have the capacity to do much else. I almost always suggest all of my primary care (psy, peds, IM, and FP) physician clients look at a solid Own Occupation Not Engaged contract because then you still get to decide if you are going to work post disability or not and you will then save 12-20% in premium depending on the carrier you purchase from. Most contracts will still pay you 100% of your benefit with the Own Occupation Not Engaged definition if you are earning less than 20% post a disability of what you were earning prior to the disability so if one wants to do something productive but not earn a ton then they still can and it probably won’t affect your policy benefit payout.
You will want to be very careful of is any policy that states that after a period of time (24, 36, or 60 months) you will be ‘REQUIRED’ to go perform ANY job the carrier thinks you should based on Education, Training, ‘OR’ Experience, just to many possibilities for the carriers to say go be X. Just yesterday I looked at one for a client that said he will be required to do ANY job the insurance company thinks is ‘Reasonable’ for him. My opinion that is to wide open, reasonable to you is one thing reasonable to some insurance company is whole other. Don’t do these types of contracts, keep control of what your future holds, don’t buy a policy that controls your future employment.
If we can help further just let me know.
James,
If you are just starting out your medical career-life you are facing a big decision that affects all the “you’s” in your future. Psychologically, it affects the ‘you’ of today the most, right now – mostly when you consider the ‘cost’ of disability insurance because you are not able to fully comprehend the ‘benefit’ of disability insurance. That’s not a deficit of intelligence… it is a deficit of perspective for graduating residents. As a disabled doctor, it is an experience I would rather not have, but I do and I teach from that perspective. When you are 40, 50, even 60 years old, your choice(s) about disability insurance now will either leave doors open and resources available in those futures for all the ‘you’s’ or not. 1 in 3, that’s your chance of a disability.
I agree with Scott much of time on WCI, on this one, I disagree. Especially in Psychiatry, especially for the practice timeframe of 2020-2055. You’re speciality is unique in a bunch of ways and will, frankly, be transformative of health and wellness in the 21st Century in the United States. While you may not foresee injury or illnesses that would prevent you from practicing board certified, medical-malpractice-insured psychiatry… I can think of one scenario after another from a history of working with 100’s and even 1,000’s of physician stories when it come to disability.
“If I cannot practice as a psychiatrist for any reason [tbi, cognitive issues , als, dementia, chronic pain], I certainly will not be able to work in any capacity. If I do become a quadriplegic, I will still be able to practice psychiatry. I’ve seen it.” You wrote.
You have made correct assumptions about your own occupation but an incorrect assumption about ‘work in any capacity’ because your future, specifically 2020-2055, holds a bunch of changes coming to the world. If any of those things you mentioned really happened, it will not matter… most policies should function adequately, you may not even know whether your policy is paying you or not depending on the severity of your disability. There are a lot of things in the realm of injury and illness just short of those horrific items to also disabile you from your legal, insured practice and income.
Own Occupation Not Engaged is certainly one manner make you ‘feel better’ and save you 10-20% on premium payments over great true own-occupation policies – Scott is correct on that savings. If financial savings outweighs all other decision making, find an independent disability insurance broker and get a good Own Occupation Not Engaged policy.
I advise against this for highly cognitive specialities, such as psychiatry, and the generalists practices, in general, looking forward at the practice of medicine 2020-2055. I work with these generalists and a few more cognitive-involved physicians who are currently facing going on disability claim for ‘forced’ reasons… some fight it, some hire attorneys but in the end – the ones that thought about the unknown-unknowns of becoming disabled when they purchased those right-out-of-residency policies; their policies pay them NO MATTER WHAT they do or earn, period.
If I were young, maybe just graduated residency in 2016, or even last year in 2018… and knew what I know, lived what I have lived and are still living against my own group disability carrier for the right to be purposeful and live again… well, personally, having lived as a disabled physician – I would do a few things differently. That is what I teach one-on-one, doctor-to-doctor.
The one thing you must avoid, especially as a psychiatrist, is the ANY OCCUPATION language in an independent disability insurance policy – Scott explained this well above. Make sure your policy’s OWN-OCCUPATION PERIOD language is to Age 65, 67, or 70 (whatever the life of the policy you choose) – if you graduate (2015-2020) I would chose Age 67 given the trends in health, aging, longevity, etc and your age of qualifying for gov’t programs.
Must haves as a Psychiatrist: 1) NON-CANCELLABLE and GUARANTEED RENEWABLE [policy cannot be cancelled, premium price cannot change] 2) FUTURE INCREASE OPTIONS [because you are definitely going to make more in your field in 15 years than you are making today] and absolutely, 3) FULL life-of-policy MENTAL/NERVOUS BENEFIT [most cap out at 2-years only… Emer. Med, Anes, PSychiatry all need Full Mental/Nervous coverage in their private individual disability insurance policy.
Reach out anytime with questions or issues on this subject. Best of Luck!
~Chris
I disagree that non-cancellable is a must have for reasons discussed here:
https://www.whitecoatinvestor.com/is-noncancelable-really-worth-it/
I also disagree that FIOs are mandatory for an attending. Your NEED for DI should be going down throughout your career as your nest egg grows, not up.
I don’t think I could buy more than a 2 year mental/nervous policy back when I bought mine. That was the only option. It beats a kick in the teeth but I agree that one is probably worth shelling out for. None of us are immune to mental illness.
This is a gray area that for some crazy reason I only hear about from psychiatrists and never from nephrologists or pediatricians or family practitioners or internists.
It’s far more important to have SOMETHING in place when it comes to disability insurance than exactly what the something is. Obviously in this case and in some ways, you get what you pay for. A stronger definition costs more money and in some situations, more benefit. But that benefit is clearly worth more to an ophthalmologist than a psychiatrist.
“1 in 3, that’s your chance of a disability.”
I would appreciate any statistics on this.
If 33% crosses all occupations and income levels for permanent disability, that would seem to exceed any type of need other types of insurance.
That’s over twice as high as any statistic I’ve ever heard on it. I agree it needs a source before it should be believed. I’ve heard 1 in 7 before and that only from the industry itself. Last reputable study I saw suggested that 12.8% of Americans are currently disabled from working, but you and I know that many of those folks were never really capable of substantial work like the sort people who buy disability insurance do.
WCI,
I’m familiar with the 12.8% number with regard to one-year-or-more of disability (includes blue and white collar, all employment, I believe). Yes, I know that many of those folks were never really capable of substantial work over a lifetime in the first place. Not docs, though, not specific to our audience.
For doctors I’ve seen: “More than One Year” from 1 in 14 to 1 in 17 depending on the carrier and that looks right compared to actual data on the 9,500+ actual insured lives I have access to… Long Term Permanent… the numbers go down to roughly 1 in 49 for “More than Seven Years.” Under One-Year… could be 1 in 7 overall for doctors but even that could be inflationary if pregnancy-related delayed returns to work are considered ‘disabilities’ claimed or unclaimed.
A doctor being out seven months after an automobile accident with multiple plus pelvis fractures would not even be in the 12.8% statistic. Rebuilding your practices aside, a seven month lapse in income can be simply devastating for a physician’s’ family, their practice, their partners and themselves.
Should they have had six month in savings? Damn straight they should have and proper advocacy for that type of protection and savings taught by doctors to doctors, on leading platforms, such as WCI has increased awareness of fiscal issues among doctors. I see this trend of doctor-led education for physician-fiscal issues accelerating into the 2020’s and beyond and growing virtually for the rising Millenials at a very good pace.
~Chris
I want to hear more data from your database. What do you have? Disability by specialty? Disability lengths? etc.
So 1/3 is inaccurate? Please provide source.
“Hearing” doesn’t usually increase reliability.
Thank you. A lot of talk about accidents doesn’t help either.
This is personal, my disability robbed me of my career in 2010 when I lost the good use of my left hand, and my group carrier robbed me of my life after I was disabled. Pushing me to the point of contemplating suicide in 2016. I worked many hours to understand why?
I spend my time teaching other doctors to avoid the few mistakes I made financially – the single biggest one of all was not knowing I had the choice (from my practice group) to purchase an individual DI policy instead of just taking the offered group policy because only the older guys selected to do this because they had made the deal with the carrier’s representative and understood the group carrier needed enough lives to insure… so us younger docs did not have a choice offered to us.
Many doctors simply do not understand what their group disability policy really gives them in the event of a disability.
Getting good data about this industry, specific to doctors, is next to impossible. Here’s the type of public stuff out there that much of the written pieces cite:
Very often cited. Clearly biased and inflationary due to funding from the Insurance Industry:
Council for Disability Awareness. Chances of disability. July 3, 2013. http://www.disabilitycanhappen.org/chances_disability/disability_stats.asp
Good table, old data but public information: Disability Insurance Quotes. The chances of becoming disabled. Disability Insurance Quotes. https://www.disabilityquotes.com/disability-insurance/stats.cfm#D
This one is interesting as it is surveyed based and Unum sponsored it… generating reliable statistics publically is difficult because anything uncovered statistically that does not assist in the selling of coverage is buried completely. FRom these types of ‘studies’ you get – “Fewer than 5% of disabling accidents and illnesses are work-related. The other 95% are not, meaning worker’s compensation doesn’t cover them. Approximately 90% of long-term disabilities are caused by illnesses rather than accidents.” That’s from – Consumer Federation of America; Unum. Employer-sponsored disability insurance: the beneficiary’s perspective. Unum. September 2013. http://forms.unum.com/StreamPDF.aspx?strURL=/FMS_122301-1.pdf&strAudience=StreamByNumber
Even if you look at information generated inside the ‘medical world’ such as:
American Academy of Family Physicians Insurance Program. Disability insurance myths that lead to financial mistakes. July 11, 2017. http://www.aafpins.com/2017/07/disability-insurance-myths-lead-financial-mistakes/
It’s a mess.
The same references are used over and over. So, about 17-18 months ago, I said this is crazy! I’m a scientist! Let’s do some retrospective work, how hard can it be? I asked many sources – if I could “using metadata-only” try to come up with a rate for doctors “Actually going on-claim for disabilities.” The potential data pool was over 9,500 insured policy holders over 35+ years – the majority of which is not electronic and all the files of actual claimants, which require permission from the insured for me (not an agent of record) to look at and so multiple NDAs, cover-your-ass language letters and then I generated some… numbers. I saw the problems with generating simple accurate numbers for this data. Clients who changed policies or left these brokers over the years and subsequently got disabled could not be accurately counted. Some pooling had to be done for time’s sake – because none of this work generated any income.
I wanted to know, most of all, for myself, how many doctors just get permanently disabled from their careers and the result was 1 in 49 between ages 30-50 have their career end by disability. But some things were not counted… for instance, a covered doctor 25 years ago, who lost the use of both hands, had their career ended and went of claim for total disability for six years. I thought, well, what happened in year #7… did they go back to work? Doing something else, got off claim, no… they were settled out by the carrier AND dropped from the records because they were off-claim. Initially, I was looking at going on-claim to being off-claim as data for 1 year, 2 years, 7 years, permanent… but unless I walked every single record, understood each story, on every single claim and categorized it all correctly… my data would be well, crap.
So, I got the bright idea to simply ask the carriers… I mean, they would have to know, right? They do but they are so utterly squirrely about this it like those books or movies where people have talked to the NSA. Can I get official data? I asked. “No, absolutely not.” I’m occasionally unforgivingly stubborn and I pushed my own carrier that I am on claim with to the limit and was met by someone high enough up that it was explained that actual data would be harmful to the industry because it would be so confusing as to be unhelpful – he didn’t have to say it, but the reason is that the data would hurts sales by confusing potential customers completely and would baffle brokers. Humans can only understand complexity to a certain level ‘outside’ an area of expertise.
I gave up after a couple 100 hours… I now understood the difficulty in the task. I understood why it was practically useless but from what I did mostly complete, then best-guessed and made educated-assumptions to at least have something I could ‘feel’ okay about.
Science gave in to Reality and pressure from others, eventually. And then there were lawyers, too.
Doctors with Private Individual Disability Insurance: (Had to go on-claim)
1 in 12 will be out “about or up to one-year” at some point in their careers from age 30 to 60 years olds. The rate rises for ages 50-60… not even distribution. Older = More disability. (Okay data)
1 in 14 to 1 in 19 will be out “about or up to two years,” again 30 to 60 year olds. The rate rises for ages 50-60 also, not even distribution. Older = More disability. (Worst data set)
1 in 49 will be out permanently or greater than seven years, like me, during ages 30 to 50 year olds and for age range it was far more evenly distributed than the other two pools. (Best data)
Are these accurate… to a point within a small pool over a long period of time. Are they publishable… not at all… however, since [and I must state this] – “Any conclusions based on [the] data analyzed for the purpose of calculated disability rates from actual disabled physicians and dentists are the opinion and the opinion only of Dr. Christopher Yerington; not representative of any broker, carrier or insured group of individuals” I can state those three specific broad numbers for 1, 2 and more than 7 years but must absolutely disclose that this is my opinion. Lawyers read: THIS IS MY OPINION.
Perhaps a much smarter researcher than myself will figure out, one day, how to get accurate numbers that will be more meaningful about actual physicians going on actual claims and how they return to work or not. Northwestern Mutual has huge numbers of data on doctors and disability and could easily publish meaningful statistics… would those numbers, in all likelihood, be confusing? Sadly, yes.
Why? Well, the whole industry has evolved over the decades, they’ve changed the policies, they;ve gotten the pricing wrong, they’ve merged or sold ‘disability’ books to one another… the ‘real’ data is likely lost in the shuffle of time, evolution of the industry and frankly, retrospective data 1980-2015 may not correlate with actual practicing doctors from 2020-2055. If you think you are frustrated with this… you have no idea.
The one stat I did the best work on from the data pool(s) (because I was most interested – it was personal) was permanently disabled sometime from age 30-50. That number is about 2%, I got 1 in 49, which is in-line with some of the carrier numbers I’ve seen over the past 2-3 years in understanding my own disability.
When you die, it doesn’t really matter to you any longer if you had the ‘right’ life insurance policy, you are dead. Humans understand death well (most of them) and so many of us purchase life insurance and so few of us die, it has become so cheap it is a commodity. WCI investor I am disagree on Term vs. Whole a bit in that he firmly believes 100% Term is the best cost vs. benefit for Life Insurance – and he is correct… if cost and benefit are the only two considerations, 100% Term is 100% correct. (Great explanations on this site.) Hell, for 85% of doctors, 100% Term is going to be the best, most-right choice for Life Insurance… but not always. If there is something else to weigh in the decision then it can get more complicated.
When you are disabled, permanently, pieces of who you were die. Your life changes. Your relationships all change. Your friends change. Your family ‘sees’ you differently. You are squarely to blame for the ‘right’ or ‘wrong’ of your disability insurance product. You then get to live the absolute misery of your decisions and watch, day by day, how your family plays the new set of cards dealt to it by your disability. Humans do not understand disability because the experience of being disabled is so vastly different from person to person. The experience of being dead, on the other hand, is the same, universally, for all history. Few purchase Disability Insurance compared to Life Insurance and some good percent, be it 7%, 10% or even 25-30% of us then experience some degree of disability… so it is not cheap and unlikely to become a commodity.
The ‘group’ of physicians is self-selected, highly motivated, intelligent, compassionate, tenacious, dedicated hard-working and service-oriented (for the most part) and their general knowledge far exceeds the general public. They ‘lose’ 10-years of life training. 85% of them incur the average price of a home in America worth of educational debts to do this. In short, they are a ‘unique’ pool.
Could the rate of doctor disability be as high as 3 in 10 or 1 in 3… it could… but it is likely less than this – I personally believe it to be about 7-8% for being out one-year (totally disabled). Less than one-year, partial disabilities, way higher than 7-8%, is it 30%, 33%… I do not believe so from what I have learned.
I do know that for the coming 21st century’s doctor career (2020-2055) Proper Income Protection is a absolute must-have. Quality Independent Disability Insurance is one of the cornerstones of the foundation of Income Protection for the American Doctor.
~Chris
All I can say is that I disagree with Chris on many fronts with his last post. Many primary care physicians get over sold on language in policies that never come to benefit them from them If they have a claim time. I always try to balance Probabilities vs. Possibilities when building/suggesting features for each client.
When an agent is as passionate as Chris appears to be in his post then I typically suggest to the prospective client that they should ask that agent to refer over to them 3-5 current clients (that is not many), currently on claim, who (in your case) are psychiatrists, have a true own specialty definition of disability and are employed in some post disability occupation that the income earned from that new occupation would have negatively impacted the payment capacity of the Not Engaged clause (you have to earn greater than 20% of your pre-disability earning to negatively affect the policy). Once you have those discussions with those clients currently on claim, with post disability earnings greater than 20% of the pre-disability earnings then you can decide for yourself in your specialty what is really ‘mandatory, strongly suggested, encouraged, or advised against” options/features.
At the end of the day this is your policy not anyone else’s and what should be done is have ALL of the options put on the table, explained to you and then you need to choose what is best for you and your family.
Scott,
“At the end of the day this is your policy not anyone else’s and what should be done is have ALL of the options put on the table, explained to you and then you need to choose what is best for you and your family.” Scott at MD Financial Services
On that, we wholeheartedly agree! I am passionate about proper income protection for physicians and disability insurance is part of that foundation, as well as proper life insurance and having enough basic financial literacy to conduct your life’s expenses prudently such that you become a world class saver. This is critical for doctors in the 21st Century.
That prudence in expenses includes disability insurance cost as both Scott and WCI allude to… my passion comes those physician and medical professional clients on claim that suffer the altogether unnecessary indignities of the carrier’s process when the policy language is constructed such that the sold expectations and the realized reality differ to a large or even monstrous degree. From carrier specific financial representatives, Scott is so right, “primary care physicians get over sold on language in policies that never come to benefit them… If they have a claim” because their primary objective is commission. These medical groups often have some of the worst Group Disability Policies, too.
Residents, one great way to get first-hand disabled doctor information is to ask your Program Directors to get you the names of faculty or previous residents that have become disabled. Scott is VERY RIGHT about that… 3 to 5 conversations with disabled physicians in your field will forever change your perception of your ‘why’ on disability insurance. Work with an independent insurance broker and get an education first, then talk about policies… if the person you are talking to will not spend good quality time getting to know you and with you having you understand disability insurance as a physician before shoving quote(s) at you, get a second opinion.
Scott, maybe we should write something together on partial employment and earned income by disabled physicians on-claim that necessitates worrying about over 20% of pre-disability income… because I am convinced the number of physicians in this category from 2020-2055 will rise dramatically due to technology. When I speak with a 28-30 year old new doctors, I am looking forward at their career-life 2020-2055. Tele-presence, gig-economy, app-driven income, etc is all changing many earned-income possibilities. Already, many young doctors are immediately creating other streams of income related or closely related to medicine, their field and speciality. For the doctor who is just a doctor, only going be a doctor and only ever earn money from being a doctor, you are correct on the risk vs cost vs. benefit ratio on not-engaged… that’s not the doctor of the future I see.
~Chris
Sure,
Disability is defined as – any illness or injury preventing an individual from employment
Permanent Disability is defined as – any illness or injury preventing an individual from employment ever again in any occupation
I’ll address statistics, but the most important item about Independent Disability Insurance for Physicians is the language of the actual contract. Most pay 2-4% of there annual salary to ‘protect’ 50-70% of their income. That 2% difference is a huge deal to some people, to others, it the difference between nightmare, forever and moving on with your life, if disabled.
That’s your question, IF disabled?
From all sources, in total, in the general population, blue and white collar workers, Some Disability occurs at some time, for some period of time in a ridiculous available data range of 50-80% – and that is not even breaking that up to short-term disability and long-term disability… THIS DATA is useless for physicians.
It’s like telling people they have an 80% chance of being involved in a car accident. It’s actually higher than that, over the previous 50 years, something like 92% of Americans have been in a car when the car has hit something it was not supposed to hit. Dying from that event: 1 in 583 chance over your entire life. https://www.iii.org/fact-statistic/facts-statistics-mortality-risk Being disabled from that event: No data available. (Too many variables)
However, to understand disability statistics for physicians, one has to understand the language and the overall disability statistics in the USA. Start with something like: Disability and health in the United States, 2001-2005 Published Date: July 2008 Series: DHHS publication; no. (PHS) 2008-1035. This will give you overall statistics, demographics and classifications on all disability in the US Population. There are many sources available from our US Government on general disability and this is ‘best’ it can do, which is sad. However, it makes sense, disability is taboo, the why’s and how’s are often forced by statues and policy language into buckets that may or may not fit an individual… and people lie, cheat and steal, even against insurance companies… and those companies omit or obfuscate data, any data, that would somehow, someway, psychologically or emotionally reduce the chance that people buy disability insurance.
For Doctors, Dentists and highly-licensed highly-educated medical professionals, business and legal professionals… data is very much harder to come by. For my business and for personal edification out of fury and frustration, I have done much research and met with dozens of underwriters and business development individuals inside the big carriers in this business. Some under strict NDAs and others, more casually. My goal was and is to know, for sure, what I know in order to guide the next generation of doctors into avoiding the pain I had to deal with when I became a disabled physician. Getting ‘official’ data out of the major disability insurance carriers that insure physicians and dentist for is like pulling teeth without anesthesia! (No pun intended.) Yes, I’ve gotten a peek at the inside and I’ll give you my stats in a minute.
So where do the ‘public’ statistics come from on this stuff? These Big Carriers put together something called the Council for Disability Awareness. Barry Lundquist, interim president of the Council for Disability Awareness, was quoted: “In retrospect, we agree the N.S.C. stat may not be the best to represent the risk of income loss due to disability. However, we do stand behind the validity and appropriateness of our statistics, and the fact that the risk is significant and that workers simply don’t pay enough attention to the reality of disability.” https://www.nytimes.com/2010/02/06/your-money/life-and-disability-insurance/06money.html
That particular NYT article went on to say, “Numbers for white-collar workers are usually lower than for assembly line workers. If you have no chronic conditions, eat decent food and avoid cigarettes, your odds may drop to 10 percent, according to the “Personal Disability Quotient” quiz on the Web site of the Council for Disability Awareness.”
You’ll also read statistics about doctors returning to work at 5x the rate the general population returns to work after a disability. While true, the barriers can be considerable for working disabled doctors. Here’s one on that: As far as disabled physicians remaining in the workforce in America – Am J Phys Med Rehabil. 2005 Jan;84(1):5-11. “Physicians with disabilities and the physician workforce: a need to reassess our policies.” DeLisa JA1, Thomas P. and the NYT wrote about it here: https://www.nytimes.com/2017/07/11/upshot/doctors-with-disabilities-why-theyre-important.html
Why not publish the data – well, if maybe only 1 in 10 white collar workers (doctors) becomes disabled and they returned to work at 5 times the rate of normal workers… why would they buy disability insurance? It’s an expensive bet to place, very expensive. It’s expensive for many reasons, but mostly, great disability insurance is expensive because it is worth every penny if you are the individual on the page full of statistics.
I truly wish I could post an official graphic showing you the rates of physician disability – I am trying to get one put together for publication with MGIS – A large, and mostly good, group disability insurance carrier for doctors and dentists. When I do, I will be writing about it online.
The amalgamated statistics I draw from when speaking or writing on the subject are from all my research and contacts plus my major mentor’s (representing just under 10,000 insured physicians over 35+ years) life’s work are as follows:
3 of 10 or 1 in 3 physicians will have a disability that prevents them from working for up to one year sometime during their career. Actual data has been climbing in this category “Up to One Year” due to the fact that post-pregnancy time off of greater than three-months but less than one-year is sometimes counted for this statistic AND the number of female physicians has steadily increased over the past decades. Subtracting pregnancy-related ‘disability’ due to normal, non-ill, non-injured causes (where no disability claim is made) – is a difficult guesstimate – AT BEST. However, using best-guess for a few things… over and over again the rate is 3 of 10 or about 1 in 3 doctors. (30%-33%) is the semi-standardized number used on promotional and advertising materials. Okay, so that is “Up to One Year” AND this includes BOTH total-disability and partial-disability which makes the overall statistic mildly inflationary but the point is: Disability Happens. For your career life as a doctor, age 30-65 years old, you are 50 times more likely to suffer a disability, for some time, than you are at risk of death. Shockingly, or not shockingly, if you are into numbers, actuarial science and the insurance industry – great disability insurance will cost you 50 times more than life insurance.
Of those physicians who are disabled for “Up to One Year,” a percentage of them will remain disabled for “More Than Two Years” and a small percentage of the “More Than Two Years” will be disabled for “More Than Seven Years.” Being disabled for “More to Seven Years” in Medicine is career ending as your skills and knowledge are somewhat perishable. This is, of course, more true of procedural based medical practices than cognitive based medical practices. Reviewing actual lives covered vs. total permanent disability that is career-ending… for just under 10,000 lives insured over 35+ years the permanent disability rate is between 2% – 5% for physicians. Why the range? Well, because the life of a policy only goes to a certain age, like 65, 67 or 70 and disability claims increase with age, permanent disability rates increase with age and so that one-year, two-years, seven-years data gets funny after age 60.
Those physicians, like me, who suffer a career ending permanent disability end up being a small percent of the “3 of 10 Doctors” but the effects are devastating if you are on claim with a horrible uncaring company for decades as opposed to if you are on claim with a company that properly priced in paying you to age 65, or 67… or even 70 for your own-occupation. Who paid that difference in premium prices between good and bad policies? The insured did. This is where the old adage, you get what you pay for comes into play.
Looking forward to the practice years 2020-2055 for those doctors graduating right now 2015-2019… what disables people is changing, slowly. We, as a society and because of the very medical science we practice, are getting far better at treating physical injury and illness… to the point that the remaining nerve-based and psychological scars from life’s adverse events are slowly but surely taking their toll, even on doctors.
I hope that helped clarify it for you, reach out anytime if you have questions,
~Chris
TLDR: This comment might be longer than the post itself. You know you’ve written nearly 3000 words on this website today alone? You could write a book very quickly at this rate.
Correct my math:
Promotional disability is 1/3.
Short term disability is covered under different policies.
LT DI is between 2%-5%, per his analysis and extrapolation, with qualifying over 65 mumbling.
I thought he had access to proprietary claims data.
This is so confusing. How many phone calls will be needed? Total paying benefits/Total Policies ( preferably just physicians).
May I copy this and publish it as an ebook?
Side hustle! Please!
Tim, I’m working up to a book! (Apparently, on WCI today)
I wish it were a side hustle. I wish I was not disabled. I wish I could do cardiac and trauma anesthesia again, because I loved it.
I got personally screwed by a misconstructed unilateral group disability policy when my left median nerve stopped functioning secondary to a brachial plexopathy. Someone should have told me to give up and go die… oh that’s right, my carrier’s claims specialist did just that after I gave them the records for my hospitalization for suicidal ideation caused by having no understanding of a path forward in my work-life after medicine.
Going through that, did change me… I lost in Federal Court. I lost my sanity for a few months. I cannot beat my group carrier at the disability insurance shuffle as a claimant and ERISA Law really only protects the Insurance Company form the Insured… at least, in Court. ERISA as a guideline for insurance companies to behave responsibly is a good thing.
Can’t win… so I did what I think many doctors would do if they had a condition and there was no cure… I researched and learned all I could. I did meet some really great, talented independent brokers who were taken with the level of ‘care’ I had for my fellow physicians to get this right in there lives.
Proprietary claims data is just that, proprietary. I did some bench-research to arrive at something for myself and I’ve pushed, I’m still pushing, in fact, to get better data published for doctors to make informed decisions. Until then, I teach. Have I stepped on some toes to try to get answers, yep… but I am a better advocate for it… even with the scolding I’ve taken legally.
~Chris
Happy New Year, all. Having just reviewed all of this, I can only comment based on my experience handling long term disability claims and lawsuits (though I’ve done so for nearly 25 years), and having represented approximately 10 psychiatrists during that time. A decision whether to purchase true own occupation coverage is, like many purchases, a cost-benefit analysis. The road to your benefits is always easier when you own a policy with true, own occupation coverage and good residual disability benefits. That proved to be the case for a psychiatrist I represented recently with Parkinson’s Disease. There are so many conditions that can affect our health and our ability to perform our occupational duties. Moreover, people’s lives routinely change over their careers. I have represented so many individuals whose occupational duties have changed over time, or who have completely changed occupations entirely. Owning a policy with true own occupation and residual benefits proved to be a key element in me and my firm getting them or making sure they kept their benefits.
Evan.
Please be advised that that name of my law firm changed this week from Schwartz Law PC to Schwartz, Conroy & Hack, PC.
http://www.schlawpc.com.
Evan,
Cost-Benefit analysis for private individual disability insurance for physicians done in generalities will end up working, in general… by may not specifically work for a specific case of disability for a specific doctor. “The road to your benefits is always easier when you own a policy with true, own occupation coverage and good residual disability benefits.” – Evan Schwartz.
In re-reading this WCI Disability Insurance blog and my recent posts… the ‘goal’ of the discussion for every advisor and commentator is to have physicians financially safe and protected. That means something a little different for each client AND it means something learned a little differently by each advisor owing to their experiences.
I wrote a lot, even too much, this week on WCI… while sort of missing the point that my personal claims experience and my consultant work with attorneys on disability claims cases for physicians have, as Scott alluded, made me ‘passionate.’ I’ll even go as far as ‘jaded’ about the disability claims process. As a commentator on a blog, the focus, my focus, should be on the specific questions/comments posed and not the sweeping underpinnings of the physician disability insurance carrier world and why evidence-based data is not public.
Evan’s comment just reiterated my own ‘passionate’ views. I am a disabled doctor. I lived the experience and it was awful. Truly awful and I sincerely hope not one of you ever has to go through it. Educating medical students, residents and young attending physicians that the best protection they can get is true own occupation allows me some comfort knowing, some percentage of these doctors will lose their careers early AND receive a benefit, for the life of the policy regardless of income or activity if they cannot perform the substantial and material duties of their own occupation.
Sure, even those disabled doctors on true own occupation policies with zero restriction/limitation/ambiguous engaged/activity language still have to 1) be seen regularly by their own personal physician quarterbacking their illness or injuries care that underlies their career-ending disability and 2) comply with the disability carrier’s request for information, exams, or other compulsory events the continue the claim.
The rate of doctor disability is irrelevant to those who become disabled while dependent on their income and really irrelevant that disabled doctor’s spouse, children and extended responsibilities that they may still continue to have to practice groups, other businesses or financial activities related to the entrepreneurial American physician.
We, doctors, never unload all the medical information we know to a patient, only the most relevant and critical information for understanding and decision making. That is what I absolutely love about WCI! Information presented for doctors to make simple, knowledge-leveraged and personally-profitable decisions (mostly by reducing cost and liabilities) about their own financial futures. Pulled the WCI Book ([email protected]) off my office library shelf yesterday. I opened it to pages 60-61. The book is so often cited to me by resident physicians I knew right where this line was in it.. Page 60, Paragraph #2, first Line: “Early in residency, buy as large of a high-quality, speciality-specific, own-occupation, individual disability insurance policy as an agent is willing to sell you.” WCI.
Do that… and you will have acquired a huge foundational building block for the financial security and protection of your physician career life. Add inexpensive term life insurance when responsibility dictates, save, save, save and always look to reduce your liability exposures. That is the goal each advisor and commentator has for the new and young doctors reading this!
~Chris
Ob- Gyn resident here, Question, does anyone have an idea of what a solid independent disability insurance should cost for an ob-gyn resident in her 20s? I have a quote of ~$150/month but am nervous it is a steep price. Any ideas/ advice?
If you are healthy and we can get an unisex then about $25 per month per $1,000 of monthly benefit for a solid basic policy. If a unisex is not available where you work then count on $35-$40 per month per $1,000 of monthly benefit.
OB/Gyn Resident,
1) Acquiring excellent disability insurance as young as you can, as healthy as you can is a huge plus in disability insurance cost over your career lifetime.
2) Unisex pricing is still available in a couple of States like Ohio or Montana. Discounts may be available through various programs you may be connected to through your residency, hospital or State or National association(s).
3) As Scott stated, 2.5-4% of the benefit or $25 – $40 per $1000 of benefit is the price of quality individual disability insurance. Disability insurance is expensive because it is utilized.
~Chris
Quick question about DI, after you are disabled and start getting your DI payment monthly, what happens to your student loan payment? Am I still responsible for paying student loan?
Depends on the loan. With federal loans and most private loans, permanent disability results in loan forgiveness. Obviously many disabilities aren’t permanent.
Thank you for the answer!
Agree with WCI comment – if permanently disabled there are forgiveness programs at the Federal level and many private lenders, if one qualifies for federal loan forgiveness secondary to permanent disability, they will allow loans to be forgiven. This may come with the burden of applying for SSDI (which can take up to 2 1/2 years) on some private lenders.
I will add that many disability top insurance carriers recognize the burden of modern educational debt for physicians and offer a rider to (on top of the disability benefit) for debt repayment specifically. Cost-wise it is inexpensive to add to a disability policy and you can drop this rider as soon as your debts are eliminated. Is this right for every physician, no. Is it right to do in your case, maybe? One of the things I love about WCI is that this site makes you think, as a physician, where you spend your dollars on financial services, both protections and security as well as investments and fees for building wealth.
It would be great if there were statistics published about national physician disability rates, permanent vs. partial, recovery time periods and return-to-work stats… there never will be – I’ve tried. Ultimately, if it is you who gets disabled from practicing clinical medicine… no statistic in the world will help you ‘feel’ any better about it.
Having a solid debt strategy and elimination plan is the single best thing you can do for your peace of mind when it comes to loans. Living below your means out of residency, saving continuously and having quality individual disability insurance, even if you are disabled, you would have the capacity to eliminate your remaining loans – with or without complete federal forgiveness.
~Chris
I just would like to say thank you to everyone who have been contributing to this website. I am a resident who is very serious about getting DI and I just spoke with Scott from MD Financial Services who actually introduced to speak with Gary, his partner. My concern is that most likely I will be working with this folks over the phone without really meeting them and getting to know them. And to be honest, I do I know these people are really the agents that they claim to be? It’s not that I don’t trust people, but is there a need from my end to make sure these are certified agents working on behalf of insurance companies, or should I just have leap of faith with the whole process? My apology for casting a doubt here, but after so seeing so many financial scams I just need some more confidence before I move further, again thank you very much for your time and advise.
If they’re advertisers on my site, you should feel very safe taking a leap of faith that they’re real agents. They wouldn’t pay me lots of money without getting lots of business here and that means many of your fellow WCI readers have used them. I assure you they let me know when they have a rotten experience and it’s a very rare situation. I don’t know Gary personally, but if Scott is partnering with him, I’m sure he’s fine.
But if you prefer, you can probably find a local independent disability insurance agent you can sit across the table from.
Hans,
Your concern is one echoed by many residents and young physicians who utilize financial services through the Internet or remotely. As a physician myself, who is disabled now 10 years and who (as a second career due to my own experiences as a DI claimant) educates, advises and advocates for young doctors to properly get their individual disability insurance done correctly – I have corresponded over time with both WCI and Scott Nelson-Archer, CLU, ChFC on the subject of physician disability insurance. Doctor-to-Doctor: Scott is the real deal in properly protecting physicians with quality individual disability insurance; if he introduced you to Gary personally it is because he trusts him, knows him and works with him. I have physically spoken to Scott about physician IDI on multiple occasions this past year.
WCI has gone to great lengths to interview and complete some due diligence on it’s advertisers and commentators. I know this because I have gone through the process myself. It’s to maintain quality and integrity for the community WCI serves and the editor does an outstanding job compared to some other online entities. If you have any concerns that what you are being told or offered is not 100% in your best interest – email me and allow me to review it. I never charge for reviewing what a resident-physician is looking at for their individual disability insurance. I know my own financial-life and that of my family has been preserved after my disability because someone like Scott did their job and cared about getting my individual disability correct and proper more than they cared about making a sale. I’d be glad to tell you exactly how it would function if an illness or injury robbed you of your ability to practice clinical medicine.
The most important thing you can do for your financial protection and security as a doctor is protect as much of your career income as possible; as young and as healthy as you are today. Right now, is exactly as long as your health is guaranteed. Hans, you are ahead of the game by doing your research, asking questions and demanding to know what you are doing it the best you can get – it is literally that important should anything happen.
If you would like to work face-to-face with someone, ask Scott to refer you to someone he trusts that is local to you and has the same capabilities, discounts and integrity to get your IDI done properly. Scott’s been in the business long enough to know people in nearly all the major metropolitan areas. I do the same for any resident that reaches out to me online and wants to have that human-to-human trust verification process occur… and honestly, sometimes it is a requirement of feeling okay about what you are doing.
Hope this helps you be a little more confident that you landed online in good hands!
~Chris
Thank you so much everyone for the replies! I spoke to both Scott and Gary and I feel much more confident with many of you backing up. Again thank you everyone and I look forward to learning more.
Best,
Hans
I’m not convinced that every doc can actually have a high-quality, high-volume physician disability specialist in their local area. Personally, I’d rather work with a top notch expert by phone/email/skype than someone who sells 1/10th of the policies that I can sit across from.
Having personally searched for high-quality, high-volume physician disability specialists in over 10 States for clients seeking this personal-touch in 2018… be totally convinced. They are out there, like Scott Nelson-Archer, CLU, ChFC out of Littleton, CO but there are many many more company-specific disability insurance agents that are good at selling their carrier’s specific product.
The key when looking is:
Independent Agent – this means someone not ‘captive’ to any one carrier but that can offer all or nearly all top carrier’s individual disability insurances. These agents will run quote(s) on 3-4 carriers for you routinely and walk you through each policy, answering your questions and concerns… if not, they are not independent. They will also chase down all and any discounts available to you in your State, speciality, residency program, associations or other.
High Quality – Doctor, you earned your career! You gave up your 20’s, 83% of you are in debt upon completion of training you ABSOLUTELY DESERVE to work with a high-quality agent. I advise those I educate: 5+ years as an agent or directly working with/under someone with 10+ years of experience as an independent agent if less that 5 years. Do not ‘click’ your way to thinking your are well-insured – reach out, have a conversation by phone/email/skype – you are worth it, your family is worth it and your future is worth it.
High Volume – You want the agent assisting and advising you to have personally worked with 100+ doctors or be an agent directly working with/under someone with 100+ physicians actually insured with disability insurance. If they have less than 100 actual doctor-clients they have worked with to acquire high quality disability insurance – you do not ‘trust’ what they say, you talk to the agent directing/working with them.
Imagine your kid needs an operation. Are you and your spouse going with the surgeon who did that procedure in residency as part of training or the surgeon who did 140 of them last year alone. Your physicians income protection for your career earnings is that critical should any illness or injury rob you of the ability to do clinical work for a time, or permanently, like me.
Scott’s outfit, when we spoke on the phone last month is over 10,000 physician lives insured, I believe. The mentors I utilized for my own education into this 2nd career after clinical anesthesiology have 3,000+ and 4,000+ physician lives insured, respectively. I believe so much in the independent, experience and volume equation for safety for my own physician-clients – I do not allow myself to do solo-work yet because I’m just now reaching 100+ physician lives insured and my personal focus is education and advocacy. I’ve treated my own education into fully understanding physician disability insurance like a residency.
Best of luck, any questions, concerns, or just to review what you are about to purchase, reach out anytime for help,
~Chris
“Depends on the loan” AND it depends on your policy. Student Loan rider is available.
Someone recommended AMA disability insurance for me (resident). I noticed it’s not on your list of recommended “Big 5” companies. What are your thoughts? https://www.amainsure.com/insurance-products/disability/resident-disability-insurance.html
Is there something about it that makes it particularly attractive in your case? Was it one of my recommended independent agents that recommended it?
https://www.whitecoatinvestor.com/association-disability-plans-all-that-glitters-is-not-gold/
Jessica,
That AMA Insurance program is underwritten by New York Life. It may or may not be suitable for your particular situation. Reach out to any of the guys associated with WCI or that advertise here. The WCI has done an amazing job over the years of filtering the noise in financial literacy for physicians.
If you want to have a one-on-one discussion doctor-to-doctor about this subject, reach out to me personally anytime.
~Chris
We were discussing the options available to us the other day with a financial planner that works with our residency program. He brought up a plan through one of the big six that is own occupational, portable, no limit on mental health, with the usual riders, and is about $34 per 1k coverage (up to 5k – being a resident, we didn’t talk about >5k yet, but that’s something I need to ask). This was about 30/month higher for the 5k worth of coverage than the least expensive plan with the same coverage. He seemed straightforward, and his rates for the other companies were the same as quoted by others I’ve received, and even stated that if we’re not involved in risky activities and don’t mind filling out the big surveys, we’d probably be better off going with the other plan. The kicker, and big thing I’m curious about is that there are no activities that are excluded. Have you seen this before? This is important to me, but I wasn’t aware that such coverage existed!
Insurance companies only underwrite what has happened from an activity participation standpoint and any for any activities that you have planned. An example is if you said “I am going rock climbing with WCI on X date or I have been rock climbing with WCI” then the underwriting is going to take that into consideration. If however, you said “I want to go but there are no plans” then that is not taken into consideration because most of those application questions ask “Have you ever X or do you have plans to do X over the next 12 months” or something along those lines, depends on the carrier. “Want to’s” and “Plans” are different things in the eyes of the carriers so if you currently participate or have plans to participate in a certain activity then depending on the activity it might be excluded. If you just have wants and ideas at this point you probably won’t even trigger a ‘Yes’ answer thus it would be covered in the future if you then engaged in that activity.
Hope that helps!
The hard part isn’t the going forward thing. You just don’t buy when you’re planning a trip. The hard part is the going back thing. If you go on a trip every 3 months, it’s going to be pretty hard to convince them you’re not going to do the same thing going forward. But if you haven’t been in two years…
Have I seen what? That one plans costs less than others for a given individual/state/specialty/health status etc? Yes. That’s the one you should buy. Maybe it’s a GSI plan or something, can’t quite tell from your description, but they usually don’t ask about health/risky hobbies on those.
Anyone here have experience with the AMA or ACP life and disability insurance through New York life? I noticed New York is not part of the “Big 5”, are they any good? Thanks
ABJ,
The reason you don’t see them is that is a group association product where the carrier controls the contract along with the language, thus they can change terms and premiums on you, the existing client, to help them hit their profit targets. If you want to ask for a copy of the latest policy and send to me I will highlight up / make notes then send back to you for review. Here in a nutshell is what they have going on in their policy that is not beneficial to the insureds.
When comparing association plans (group association plans) vs. Individual plans from the big 6 there are several major differences:
1: The waiting period language in the association plan has states you have to be “Totally and Continuously” disabled during the waiting period for benefits to ever start vs. Individual contracts that say you have to have a “15-20% loss of income” due to the injury or illness to trigger benefits. I usually suggest to people to think about how many times they write “light duty” return to work releases for their patients vs. “Totally disabled and the patient must stay at home for the next 3 months” releases. It is not very often one gets the stay at home release thus the benefits from the association plan would never become active.
2: The association plans contract can change the language or premiums at any time they choose, since it is a group policy, they can do whatever they want. The individual contract can never change anything in the policy unless the policy holder wants it changed. You can never get notification with us that the policy premium increased or that we changed, let’s say, your definition of disability.
3: The association plans will have an Own Occupation Not Engaged definition of disability where % of income lost is % of benefit to be paid. The individual policy can have one of the following definitions of disability, it’s your choice:
A: True Own Specialty where you can work in another occupation and you still receive 100% of the benefit purchased.
B: Transitional definition where the carrier pays you 100% of the benefit until the post disability income plus disability benefit equals your pre-disability income.
C: Own Occupation Not Engaged definition of disability where % of income lost is % of benefit paid.
4: Most Employer Group plans will have offsets against Workman’s Comp, Social Security, No Fault insurance, and other Group or Association plans. What that means is if you buy an association plan and you have an employer plan your association plan may eliminate the benefit distribution capacity from your employer plan so check that carefully. Individual Contracts have no offsets against anything.
5: Your premiums will be scheduled typically for the following percentages increases:
Age 40-44 you will receive a 28% increase
Age 45-49 you will receive a 28% increase again
Age 50-54 you will receive a 43% increase again
Age 55-59 you will receive a 34% increase again
Age 60-64 you will receive a 31% increase again
Age 65+ you will receive a 55% increase again
These rate increases are on top of the prior one so they compound! In addition, keep in mind they can change these rates any time they choose.
Scott,
Wow! Great answer. I’ve read it twice now and although I normally chime in on this subject… Not Today. When a physician has the option, health and youth to secure an individual disability insurance policy it will be superior to the group coverage offered through associations.
However, when health or other specifics prevent the ability to acquire individual disability insurance; these association plans offer basic income protection for illnesses or injuries that if totally and completely disabled from the practice of medicine, a doctor would have something in place for themselves and their families.
Chris
https://www.whitecoatinvestor.com/association-disability-plans-all-that-glitters-is-not-gold/
Great article. I learned a lot. I’m currently a 4th year medical student about to graduate. I matched into orthopedics. Should I get disability insurance now or wait until my residency starts? God forbid something happen to me before residency in a couple months but you never know.
Michigander,
If you buy it now you are younger so a touch less of expense and presumably healthier than you might be in 4-5 years when you are done with training. The issue with buying now is you can expect to pay about $20-$25 per month per $1,000 of monthly benefit so not a lot in the big picture of things when money is tight that can feel like a strain. My suggestion for all of our 1st and 2nd year residents is to look at a minimum contract ($1-$2k) of benefit that will lock in your benefit, rates and future purchase options at the health you are today and keeps the premium to between $20-$50 typically, of course depending on design and age.
Hope that helps.
I guess there is some risk there. You can probably buy it now “as a resident”, but I’m not 100% sure. The risk of being disabled in the next 2 months is obviously pretty low but put it on your list of things to do in July. No reason you can’t get started on it all now.
Michigander_ortho,
Once you Match as a 4th Year medical student, you can begin the process of applying for individual disability insurance (IDI). Many of the insurance carriers will allow you to get as much as $5,000/month of benefit of IDI (as a Matched Medical Student/Pre-Resident) which would later be able to increase with your income when you are an attending orthopedist. Every residency program will offer Group Disability Insurance but this insurance benefit will be limited in almost any circumstances if not totally, permanently and completely disabled… so do not depend on this residency provided group coverage to believe you have ‘good’ disability insurance. Insurance pricing is State dependent, so the State you are in may or may not be less expensive than the State you are going to… some States are much more expensive than others.
The “Risk” is low statistically for the next two months of your life – True. It is not Zero. I advocate for doctors, which you are now that you have Matched and probably will be ‘officially’ when you graduate this week or next, to purchase disability insurance as young as they can and as healthy as they can because your health is really only guaranteed today, right now, and not any longer.
Each year I speak to and educate many medical students about disability insurance beginning right after the Match. About 1/3rd of those I speak to act immedeately, another 1/3rd weigh the pros/cons of pricing State vs. State and wait until they have those first couple paychecks and fully understand their resident budget then they choose to act… and the other 1/3rd they get crazy busy, forget, choose to wait, remember two or three or six years later when another resident gets in a car wreck (for example) or they have a health scare (my most recent example of this was an unfortunate resident slipping down the stairwell on-call moving briskly to a code – thankfully they only broke their tailbone) and then they seek out their own options for individual disability insurance.
You’re ahead of your colleagues even asking about disability insurance here on this forum. Put it on your personal to-do list and get it done when you can, there are very very few reason to wait. Work with an independent insurance broker or someone who can show you all your options from as many of the big carriers as possible. Any of the advertised WCI links will help you. I recommend working with someone over just ‘doing it online’ so you have a chance to really understand your options.
Best of Luck and Congratulations on Graduation, Doctor!
~Chris