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 in providing this crash course video.
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. 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, 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.
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.
When Should I Buy Disability Insurance?
Luckily insurance companies don't ask about extreme tubing
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.
When Can I Quit Paying for 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 the 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, as you age, the possible payout becomes less and less. 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.
What Is the Most Important Feature of Disability Insurance?
The most important feature is the definition of disability. Unlike life insurance, where life and death are pretty black and white, disability has fifty shades of gray. You want a policy with a strong, broad definition of disability that will cover any possible type of disability. That 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. Even among the “Big 5” there are slight differences. It is okay not to purchase the policy with the very best definition of disability, but the weaker the definition, the bigger the discount you should expect.
How Much Physician Disability Insurance Do I Need to Buy?
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 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 $5K per month benefit and attending physicians typically buy a benefit in the $10-15K 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.
How Much Does Disability Insurance Cost?
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 7 times as high as your risk of dying in those years. A typical policy bought on a healthy doc in her 20s or 30s will cost something between 2 and 6% of the benefit. So if your monthly benefit is $10K, 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.
Which Disability Insurance Riders Are Worth Purchasing?
Disability insurance is typically sold with a handful of riders, each of which comes with an additional cost (and commission for the agent.)
- Residual disability– This rider should be purchased by everyone. It covers not only a partial disability but also provides a partial benefit as you recover from your disability.
- Inflation Protection- 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.
- Catastrophic Disability– This rider pays out an even larger benefit if you are REALLY disabled, usually defined as not being able to do 2 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.
What do Disability Policies Exclude?
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.
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), 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.
What do you think? What have you learned about disability insurance that everyone ought to know? How have you structured your coverage? Comment below!
Dr. Dahle,
I just finished listening to your ‘Mistaking a Salesman for a Financial Advisor – Podcast #104.’ In there you stated “It’s very rare that a disability life insurance sold to somebody by Northwestern Mutual agents is what they really want.” after Rikki’s call. I’ve been looking to get a quote for life and disability insurance, going through your recommended agents. Above it seems that you vetted Dr. Christopher Yerington, when I click on his name, on his site it states “Physicians Income Protection will cease operating as of May 6th, 2019. Dr. Christopher Yerington has joined Northwestern Mutual”. I was about to request a quote from him, but since he’s with NM, would you not recommend getting a quote from him or is he still vetted? Thanks.
I don’t recall ever vetting Dr. Yerington or approving him as an advertiser. I also don’t believe he has ever purchased advertising from us.
I certainly would not sell anyone employed by NML an ad nor recommend them to my readers. I think that’s a very poor decision for someone to choose to work for a company with their culture. Serious reputational harm there. In fact, it’s one of the questions on my application for just that reason.
There are many people who comment on blog posts and participate on the WCI Forum whose services I do not recommend, who don’t buy advertising, and who I have never vetted. My recommended insurance agents can be found here:
https://www.whitecoatinvestor.com/websites-2/insurance/
I hope I was clear enough about that. You can learn more about some of the issues my readers have had with NML here:
https://www.whitecoatinvestor.com/forums/topic/inappropriate-whole-life-policy-of-the-week/
ABJ,
Apologies for the confusion. Not sure whether the editor will publish this response but the truth is all doctors need all the information they can get presented by people who care… Dr. Dahle does this very well and somehow organizes it into approachable content which much of the financial world seems not to be able to do with both clarity AND truth. I have copies of his books in both my offices and I often have clients bring copies into meetings with pages marked or post-it notes sticking out. I do not know that I can compliment him more than my clients have.
I cannot reverse the tragedy in my own life from having my group disability insurance policy misfire upon my own claim due to being written with missing language. I cannot get back six years of uncertainty or a lost attempt at clarity through the American Legal System… which basically just was a soul-crushing experience. I can’t fix some of the uncertainty that still looms in my own life BUT I can very well teach, speak, advocate and advise other doctors and medical professionals to do better than I did. I started Physicians Income Protection in 2016 to advocate for physicians. While helping others, I have healed some of my own wounds. About eight months ago, my company, Physicians Income Protection, and myself, as a speaker and advocate for physicians were invited to consider merging with Northwestern Mutual. Initially, I passed on the offer, and… I passed on their the next offer, too. I’m a doctor, I know what many doctors say and feel about Northwestern Mutual.
I’m a disability insurance expert now (never wanted to be but becoming disabled made me that way) and I run into many Northwestern Mutual DI contracts. Sometimes it is because a doctor is disabled and going on claim and that is one of their policies. Sometimes it is from clients asking my opinion on this or that contract from this or that carrier and what makes sense to keep or not. Sometimes it is from a young doctor asking if they made a mistake buying a certain policy from a certain carrier.
I kept writing, speaking and advocating for physicians to understand that getting great individual disability insurance is critical as part of the underlying risk management for their career lives and their financial lives. Again, the offer of a kind of merger was made to take both my messaging and my services National in concert with Northwestern Mutual. I was already working on some of my financial certifications and will be earning my CFP and CLU in the next few years. This is to expand my scope of speaking and writing as a physician advocate. My practice was expanding as clients asked me to ‘quarterback’ other portions of their financial lives. I’m slowly becoming more expert in not only insurance planning, but investment and generally family and business financial planning.
I did, a year ago begin the process of becoming an advertiser on WCI. On the editor’s, Dr. Dahle’s, application is the question “Have you ever… Northwestern Mutual?” It is there for a reason. I know those reasons well from client-stories and articles, from history and the legal cases I’ve read (I attended Law School – I’m a complete geek, I admit it… but a lot of us doctors are geeks when it comes to information!) I agree for the most part with Dr. Dahle’s information on WCI. This blog has helped countless physicians do a better job with their financial lives and doing a better job of that along with some basic work/life balance brings lower stress and less anxiety into the practicing physician’s life. That leads to less burnout and all it’s symptoms.
I did, on March 9th, 2019, decide to merge my practice with Northwestern Mutual. I did this for many reasons, one was to offer Northwestern Mutual products to my clients. Northwestern Mutual would of course prefer for me to offer their DI product in a favorable light compared to other carriers, but they also have pretty much one credo above all others and that is to ask, “Is this right for the client?” I don’t really do ‘favorable light’ because I am a scientist at heart and trained that way like many of you. Either the data shows benefit or it does not. So, let’s just say I ‘challenge’ them a little bit when it comes to disability insurance and physicians. Hence, there are some compliance hurdles with this direction I’ve chosen to pursue. Going through the corporate compliance process has been eye-opening in many ways… I imagined about two weeks ago what some physicians face with hospital system compliance and the loss of autonomy in their lives.
Over these past few years I’ve been introduced to the ‘culture’ at most of the largest 6-7 carriers in the disability insurance space. I’ve helped dozens of physicians going on disability claim navigate understanding their life situation more clearly and part of that is assisting with the claims process, which can be onerous and overwhelming. My own experience with Lincoln (one of my two own personal carriers) was disastrous, deplorable and downright evil BUT having a front row seat to several other medical professional’s claims with Lincoln after my own – no problems. My personal experience with Principal, the other carrier I had when I went on claim in 2010, was flawless for me and in fact they felt bad for what Lincoln was doing at the time. My front-row seating gave me a look at a Principal claim that was bumpy for another doctor. I am speaking at a Principal event next week in the Midwest to an audience of financial representatives and members of their national claims team. I am honored to give a few words of perspective from a physicians claimant’s point of view.
While I am sincerely hoping not to do “Serious reputational harm” to myself by joining with Northwestern Mutual, I’ve done so for many reasons all while knowing everything the WCI editor knows about Northwestern Mutual and having many great physicians caution me with their own stories and stories of friends of friends… I still did it.
ABJ, I’d be happy to assist you with disability insurance. If the fact I’m expanding what I do with (6) national carriers to yet another national carrier, Northwestern Mutual, makes you pause, I understand. No worries. Scott Nelson Archer, CLU, ChFC at MD Financial Services is a colleague in the disability insurance space and does a fantastic job with his physician clients, I highly recommend him. Scott will not steer you wrong.
What I do is work one-on-one and doctor-to-doctor to educate, advise and advocate for great income protection, basic financial literacy and work/life balance in order to reduce stress, anxiety and burnout in the modern practicing physician. I also am available directly by mobile phone for any physician struggling with suicidal ideation or in crisis. I would not have merged my company, brand and practice with Northwestern Mutual if I thought what I do would be diminished by being backed up by the company in my endeavors. I sincerely hope I am allowed by the editor to remain a contributor on WCI, even if I am affiliated with Northwestern Mutual.
Again, apologies for the website confusion,
Sincerely,
Dr. Christopher Yerington
It’s your reputation. Do whatever you want.
You’re welcome to post comments here (like anyone else including many NML agents) but you’re going to get a lot of push-back on this one. I think you’ve made a terrible business move.
You said:
# 1 You wish to offer NML products to your clients? Which product do you think is so good that it is worth offering? I can’t think of a single one that is best in class for anyone. I mean, there’s got to be something for someone, but it’s so rare that it doesn’t seem worth associating yourself with a company that was listed by 45% of people who answered a Twitter Poll asking “An advisor from which of the following companies is most likely to give you bad advice?”
# 2 You’ve already experience the culture. You’re being pressured to make their less than ideal IDI policy seem better than it is. In fact, I suspect you’re going to be required to sell a certain number of them, no?
# 3 And this idea that NML’s credo is “Is this right for the client?” is not even close to accurate as evidenced by every other “advisor”/agent I’ve ever talked who worked or works for the company. The culture is the problem. Challenging them “a little bit” is hardly going to cut it. What you’re doing is trying to provide them legitimacy, but I have no idea why.
Good luck, but don’t expect much support from here if you persist in this direction.
How much of a difference does location make in the pricing? For instance I live/practice in the D.C. metro area. Would establishing a policy in D.C vs MD vs VA make a significant difference in pricing if I plan to apply for own occupational coverage and lock in rates? I read that insurance companies consider average salary and disability rates per state, but I wonder the degree to which that has a net effect in pricing all else held constant?
Any other policy differences to be aware of that vary by state when establishing a policy (if you have the option of considering moving locations prior to establishing a policy)?
The states that you mentioned don’t really have a pricing difference so you will be fine in each of them. The big states where there are price swings are CA and FL (they are typically higher by) or the mid-west like OH, ID, KY, MI, WI and a few others have a tendency to be priced below market by 5-10%.
D.C.MD,
California and Florida are the biggest States with pricing concerns for physicians moving into or out of those Stats during transitional times in their careers; graduating medical school, residency, fellowship or job changes during your career before the age of 52-55. Each one of those events ‘should’ trigger a revisit at one’s disability insurance because each one offers an opportunity for evaluation when meaningful action can most likely be taken.
Bear in mind, there can be some carrier to carrier pricing differences within the same State. My advice is to find someone (ideally an independent broker from carrier-determined obligations) who does this all the time for physicians, specifically. You would have an orthopedic surgeon do your shoulder who does (3) shoulders a year, but is great with knees… you want the guy who does (3) every other day.
Hope that assisted you,
Chris
A couple years back I was declined for disability insurance by two or three of the major carriers working with one of the WCI recommended agents. Unfortunately I developed some medical problems largely beyond my control (parathyroid adenomas, gout, ITP) before I knew what DI was. I ultimately got a policy through a local NW Mutual agent with a surprisingly good rate (compared to healthier colleagues with better policies through more reputable insurers). Should I re-apply for DI through an independent agent? Nothing has changed in my health history otherwise (normal BMI, BP, cholesterols, non-smoker, etc). I’ve read that being previously declined for DI is a death nail for a new application.
It never hurts to have a consultation and review where you are at along with your options going forward. Just be sure to have all of the past information ready (carriers interaction history and medical history) to share with the consulting rep.
Sure, it doesn’t hurt. But obviously don’t cancel the policy you have before you line up another one and don’t be surprised if that is the best policy for you going forward!
Uffda,
Time has changed, actually, even if your medical history has not. A denial of individual disability insurance can hurt further requests for disability insurance for a time, but if medical conditions and treatments are stable, then that offers the underwriters a different set of circumstances with which to evaluate risk. You’ll want to specifically work with a disability insurance consultant that will have you keep your current policy in force until an option is found that is in your better interest, if any, and one that will work through all your past available information: past medical history, current medical history, all applications to previous carriers in order to understand your best path ahead for your individual disability insurance. In circumstances where a doctor cannot improve their individual disability insurance protection, then often a more comprehensive evaluation of overall financial circumstances can lead to additional pathways to protect and secure income for one’s career and life.
Best of Luck!
~Chris
Jim,
Great site and book…thanks. Question though re: disability insurance. I have a military pension of $5k/mo and a great job currently as an oncologist with another 10 or so years of work ahead of me (till 60). What should I be looking at for disability insurance with 4 teenagers? Any recommendations for companies as opposed to the ubiquitous USAA for mil folks? Thanks!
E
No, don’t call USAA. Call an independent insurance agent:
https://www.whitecoatinvestor.com/how-to-buy-disability-insurance/
https://www.whitecoatinvestor.com/websites-2/insurance/
E,
“Military service, while known for its substantial benefits package, has one area where its benefits package is inadequate for physicians…disability insurance. This is even more of a critical situation for military physicians about to leave the military. When their service ends, so does their disability protection.” https://www.whitecoatinvestor.com/disability-insurance-for-military-physicians/
However, you’ve left the military and are on pension with no active duty requirements for the remainder of your life. First off, E, thank you for your service to our country, thank you for the time you took from your life to serve in a capacity many simply cannot or will not to give me and my family the life we’ve enjoyed in the United States of America.
Individual Disability Insurance: You are in a unique situation with the pension income, established work in oncology (which may have group benefits including disability insurance). I believe you are looking for a solution that fills in the ‘gap’ between what your pension and group disability insurance would generate in monthly income for your family and the maximum you could have were an injury or illness to rob you of work-generated-income from age 50-60. As the father of (4) myself, now 24, 22, 15, and 13 and approaching 50 years old, I believe your target coverage date of age 60 would be appropriate only in reference to your overall financial-life’s strength. You should consider all the pieces of your financial picture in choosing an end-date for your individual disability insurance. My advice would be to get a policy in place until age 65, not 60 and then go through the process of reevaluating the total need for the additional income each year, Age 60 –> Age 65.
For example, let’s say you can qualify for and acquire $7,000/mo in individual disability insurance through age 65 by your health, age and income right now, today. When you turn 61, you look at the cost (which will be substantial for that level of benefit) and decide you really have the kids and your retirement (with the pension) on okay ground, even solid ground… but everyone is having grandkids and you are planning on working another few years but you are not pulling 100% of the hours or income you did in your 50’s… $7,000/mo can be reduced by you calling your disability insurance carrier and requesting a reduction in coverage down to say $4,000/month and your premium will decrease with the reduction in benefit amount. Alternatively, you are completely and utterly financially independent at age 61 and whether you worked or not would have no bearing on resources for yourself in retirement or those wishes you have of travel, visiting grandkids or even legacy planning… then you call the insurance carrier and say thanks, but I’m done with needing this and you simply stop paying the premium. I find many individuals do not know they can ramp-down the coverage during those last several years of work, should they choose.
If you are in good shape at age 50, with no chronic medical conditions, take no medications on a regular basis and have had few traumas or injuries in your life then there is avery good chance of qualifying for great disability insurance… but it could be pricey due mostly to age. If you have chronic health issues and are on a few chronic medications or have had injuries then the amount of benefit offered could be limited and the carrier will be placing limitations and exclusions on what is offered.
Your question is what company is best for you? AND what should I be looking for in a policy?
What to look for:
Benefit Amount – that you can qualify for will be based on your W2 earning from the earned income from oncology minus other income sources such as the pension – not every carrier does this the same way and therefore, you will want to work with someone who can shop and compare the top 4-5 carriers for your situation to optimize this. Ideally, the benefit amount you seek should gap the difference completely and then you select how much of that you actually would like to pay for in premiums based on your entire financial picture. For you, I would qualify for the maximum benefit you can and put that in force today, then reevaluate at age 55 and then every year beginning at age 60.
Elimination Period – for most physicians I recommend 90 days but with a pension guaranteed and health coverage for life for you, in order to reduce the premium cost you could select a 180 day elimination period, or even longer. The elimination period is like the deductible on your car insurance. In an accident, the care insurance carrier expects you to pay the first $500 or $1,000 of the accident and they’ll cover the rest. A disability insurance carrier expects you to cover the first 90 days, 180 days or longer and then they’ll pick up the rest. All carriers allow for this choice of elimination periods. For your situation, I would consider the longest period your finances can tolerate to reduce premium costs.
Residual and Recovery – these riders help when you have a reduction in income from injury or illness but not complete loss and then also assist as you return to full work but have not yet generated your previous pre-disability income. Carriers like Guardian and Ameritas begin a residual benefit with as little as 15% loss of earnings, other begin at 20%. Without these provisions, you need to lose 75% of your income to qualify a claim for benefits. For your situation, I would have these.
Occupational Definition – this is the most critical language in the disability policy and the optimal own-occupation for you would be something like, “If you cannot perform the material and substantial duties of an oncologist, you receive a benefit.” However, there are varying definitions and language from the carriers and in your case I would want to work with someone who can help you understand the differences.
Surgical/Procedural Duties Definitions – This can be an extra from the “Own Occupation” language and these are designed for physicians in practice whom from hands-on surgical/procedures garner 50% or more of their income. In general, this is not the case for Oncologists, as such, no need to have this in your situation.
Increase Amount(s) – Known as FIOs or BUs or APBs (Future Increase Options or Benefit Updates or Additional Purchase Benefits) this allows for the additional purchase of benefit at a later date when you are making more income. This is a MUST for disability insurance as a resident physician or really any practicing doctor under 40 who is looking at another 25 years of potential career as inflationary pressures alone may puch incomes to a level where one may consider wanted to have more pre-qualified individual disability insurance. In your case, this is not needed and would be an extra cost in the premium that you do not need because with a 15 year horizon you are likely already near the top of your earnings as a doctor in oncology and there is not enough time for inflation to hurt you in any substantial manner for earnings potential. For you, qualify for the maximum you can up front, today, and select no FIOs or BUs or APBs.
COLA Riders – Cost of Living Adjustments are great on young people’s disability policies… this feature protects the benefit amount’s value from being eroded over time from inflation. I do not recommend COLA on anyone over 50 because the cost-to-value is not there for the additional premium amount.
Mental/Nervous Disorder Riders – As you have likely seen active duty, you will be realistically limited to a 24-month benefit. With ANY history of any DSM-5 diagnosis or any medication(s) to treat these conditions, they would likely be excluded from your policy.
What company(s):
There are (7) major IDI (Individual Disability Insurance) carriers in 2019: The aforementioned Guardian and Ameritas, then Principal, The Standard, Mass Mutual, Northwestern Mutual and lastly, Ohio National.
Insurance is adjudicated on a State-by-State basis, therefore, depending on your State of residence when applying, one or more of these carriers will be simply uncompetitive for your situation. As Jim and WCI blogs repeated recommend, you are generally best finding an independent insurance agent/broker that can (has the ability) sell you all (7) carriers without preferential-treatment for their commissions or renumeration.
Should you have difficulty finding someone to work with, reach out anytime and I would be happy to give 3 or 4 recommendations from around the nation or assist you in located someone local to work with for your life’s situation.
Best of Luck, E, and again much thanks from my family to yours,
Chris
Chris,
Thank you so much for taking the time to answer and for such great detail… been perseverating over this since retirement and your advice helps clear up a ton of questions! All the best,
E
Hi, WCI.
I am new to this website and have been reading your posts for the past few months, which are very informative. Thank you, WCI.
I have a dumb question for you.
If a physician has a medical condition which would, more likely, be a main cause of disability in the future (of course if he/she gets disabled), the insurance company would exclude the medical condition from coverage or the premium would be much higher, I assume. In that case, does it make sense to purchase a disability insurance policy which does not cover your specific current medical condition, which, you believe, would be a main cause of disability if he gets disabled in the future?
Would appreciate your input.
Thank you.
Sure. You could always get disabled from something else. Even those with chronic low back pain could get in a car accident or develop cancer.
J,
As a disabled physician, I never thought my disability would come from a high forceps birth injury that secondarily caused decreased function in my left brachial plexus and the loss of my left median nerve distribution to my hand and forearm at 40 years old. As a clinical anesthesiologist, you need two good thumbs.
My individual disability insurance policy has treated me well. My group disability policy has resulted in six years of litigation and eventually, because of ERISA laws, I lost the right in Federal Court to understand how that group disability policy functions if I ever earn a dollar. Which sucks. The fees for my attorneys sucked.
I’ve spent the last four years educating and advising doctors and dentists, primarily, about the need for great individual disability insurance. While my case is unique in that my group carrier misconstructed the policy language making the contract virtually uninterpretable… the penalty is suffered only by me and my family and only if I choose to attempt gainful employment. Which really sucks after putting so much time and energy into my education(s) and experience(s).
Many doctors I have advised come with previous athletic injuries, high school and college sports, or competition injuries from a host of events and non-college sports. What I’ve learned is that those that make it to and through medical school have a few attributes: Tentatious, Adaptable, Multi-Talented, Compassion for Others, Curiosity, Incredible Teachability and eventually most of them develop some level of Service Oriented Life… how that looks individually varies widely but as a group, physicians are simply amazing!
Doctors return to work at 5 times the rate of other disabled individuals because they do and are more than just their medical acumen. You are correct that an injury or illness could lead to a disability insurance application being outright denied by a carrier or, more often, an exclusion or restriction will be placed on the policy for future reconsideration.
You queried: “Does it make sense to purchase a disability insurance policy which does not cover your specific current medical condition, which, you believe, would be a main cause of disability if he gets disabled in the future?”
YES. YES. YES. YES. YES!!! And if I ask 100 disabled physicians that question they would all say, YES!
Why? Because 90% of injuries and illnesses that cause permanent or long term (greater than 2 years) disability could not have been foreseen by the individual and will not be a result of existing illnesses or injuries. That’s 90%.
You do not know, today, what technologies or medical methodologies for treating your particular illness or injury will exist in 15 years… perhaps what you worry about, your medical condition, will no longer cause disability…. you also cannot conceive of the changes rapidly occuring in the practice of medicine to predict that you actually will be disabled from medicine with your current issue. There are surgeries happening right now where the surgeon is at home operating 100’s of miles away. There are psychologists who practice completely by telepresence because their patient is on the International Space Station. GE is working on a whole body scanner will narrow scope AI to evaluate the 90+% of the issues that cause pain or discomfort to a human body as well as detecting abnormalities far in advance of causing symptoms… one day, by 2030-2035, they will be as common as blood pressure cuffs at pharmacies.
Insurance is about “Risk Transfer” and that is how you want to picture it. Take your predicted career income and attempt to cover as much of it as you can, therefore transferring the risk you cannot practice medicine, and earn that expected income for yourself, your family and your future.
Utilizing WCI example: Let’s say though, that you really are a mess in your lower back; sports injuries because you were an all american NCAA Div I player, tried out for the Olympics and and, for the purpose of illustration, have been in a car wreck that also re-injured your back. No disability insurance company is going to insure your lower back… but the rest of you, sure they will. The cost may be a little higher and you’ll want to work with or plan your finances accordingly by saving at a much higher rate than your peers and aggressively become debt free ASAP. In the event the lower back does permanently disable you from clinical practice, your individual disability insurance may not pay out but your group disability insurance would for about two years and then those benefits would go away because you are too educated to remain disabled from any occupation.
The above paragraph is the exact scenario I worked through with a late 30’s dentist. Athlete, car wrecks –> bad lower back. I convinced him that until he could financially self-insure (meaning assets alone can generate 60-70% of your current working-income) that he should carry as much individual disability insurance as possible. I did not sell him his policy and have permission to use his general story as we are friends.
In late 2018, he suffered atraumatic bilateral retinal detachments. He spent 10 days on a Jackson-like surgical bed inverted for hopes of regaining his vision. It was an awful ordeal. Scary as hell with younger kids. His vision mostly returned BUT depth perception and other key visual accuracy components allowing him to do procedures, have not yet recovered. He’ll be at major risk of future blindness for life unless technology advances greatly for his condition. He’s receiving benefits from his group’s disability insurance (which may continue after two years if he’s “blind-enough”) and his private individual disability insurance will pay to age 67. The practice group he partially owns has been fine, his family has been fine, his life will recover even if he never fills another cavity… oh yeah, and his lower back still bothers him.
I’ve assisted in the handling of nearly 50 claims in the last 3 1/2 years. Most are over 55 year old and cancer is the #1 reason. The treatments are very hard. The recoveries are ‘okay’ and the difference between those with great individual policies from top carriers and those relying on group disability insurance are night and day, financially speaking and emotionally speaking. Even at 63 years old, physicians who are disabled are glad to have most of their incomes still coming into their households even as one put it, “I’m really just getting back all those premium payments!”
Best of luck! If you need help thinking it through for yourself, you can always reach out to me. WCI does a very good job of screening their advertising insurance dealers and brokers. Hope this helps with the human-side of considering disability insurance… the fiscal-side of the decision always sucks – no one likes paying that premium, no one. You just do it because watching your family live and love and learn and grow… from the sidelines of life is bad enough, to do so without an income… I’ll let you picture that one for yourself.
~Chris
How do I find an independent agent?
There are a number of us here on WCI that are independent who contribute content and answers, in addition just look at the ads and his recommend list and I am sure one of us can help you out.
Scott
Does the agent get paid a commission on the sale of an insurance product?
Yes we do.
Am I told I am told how much the fee/commission is when a purchase a product? I have a northwestern product and I am looking to supplement.
In some states it is required disclosure based on certain products but most reps will just tell you when it gets down to “here is what you should have”.
The brokers who post and advertise on WCI are good and well qualified. It’s about getting the best product, not the commission. All brokers will be paid commissions for selling LTD products.
Thank you everyone.
Not usually, but if you ask a good agent will tell you. But the commission will be similar across the various products, or at least not different enough to really sway the advice.
https://www.whitecoatinvestor.com/websites-2/insurance/
Can physicians on a work visa, like H1-b, buy disability insurance ?
I ask because if i cant work as specified on my visa, it terminates within 30 days.
I think so, but that’s a good question for an agent.
Yes, you can buy coverage but be mindful that you might end up with an exclusion for foreign travel or for most carriers they have a 1 year out of country on claim clause which kind limits the value of the policy if you are then prevented from returning due to a visa issue. Now if home might be back to Canada that is typically included for places of care with no limits. Occasionally we will have our H1b clients go ahead and buy a contract so they are protected against partial claims where they can still work some, can lock down their current health status, along with securing the rates and features knowing they are soon to obtain their green card.
Hi, my wife is from Australia and I could see if I couldn’t work anymore wanting to move there. I spoke with one agent who said all disability insurance requires US residency at least 6 months of the year. Is that true? Or should I be looking for another agent who can negotiate a better policy? I would be willing to pay a little more to have the option to leave the country.
The agent you spoke with is incorrect. There are three companies that could potentially offer policies without such a limitation, but it depends on your citizenship status and state of residence. The agent may have been correct about your specific situation, but it would be worth getting a second opinion.
Thank you for this extremely informative blog and discussion (in addition to the book and podcast). I am a fellow going into practice soon and one of the questions that I still have, after talking to two agents, is on how the definition applies to surgeons that are salaried in academic institutions. For example, Guardian’s definition of own occupation is “If your occupation is limited to a MD or DO 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”. How do they quantify the percent of your income that comes from surgeries when you also get paid for productivity in other areas such as research, teaching, admin, etc?
If you become disabled and cannot operate but your practice maintains >50% of your salary by increasing your responsibilities in clinic, teaching, research, will you then not qualify as totally disabled but only partial?
Good questions for an independent agent or an attorney who works in the field. I don’t know the answers.
Hello,
I am a graduating fourth year medical student. Our Med School sent out an email announcing the option to continue long term disability insurance coverage. They state “This coverage is issued WITHOUT ANY MEDICAL UNDERWRITING QUESTIONS and is only available until 30 days after your graduation”. The policy is through Guardian.
My residency program pays for group disability insurance. Would you recommend I get my own independent disability insurance to supplement the benefits provided by my residency program? If so, do you think that the conversion offered through our medical school is a wise option or should I seek an independent agent?
Why not seek out an independent agent to help you evaluate your options, including the med school policy?
I read #5 above but am still confused about the what the broadest definition of disability should be. can you give an example of this so i know what to look for? i am terrible at understand legal language
You need an own occupation definition. It usually reads something like “If you cannot perform the essential duties of your OWN OCCUPATION, you will be considered totally disabled. For medical doctors, your specialty will be considered your occupation.”
Is it normal for an underwriting process for DI to take several months? I am working with Pattern and they are telling me this is typical but this is quite surprising to me — is there any way to incentivize the insurer to speed up the process? Thanks for any thoughts!
Several weeks at least, but months suggests you either have something complicated in your history or there is a delay. Shoot me an email and I’ll see if I can help.
KM,
From the time you get your requirements done (application, phone call with the carrier, any income doc needed and if there are labs required) it should take 2-4 weeks normally. If you have medical records that need to be obtained that can take some time as copying medical records are not a high priority for many physician offices. If you can find out what is outstanding on your case from an internal case manager then potentially you can help push that along. Typically offices will get you a 1x per week update on what is outstanding on your case so that you don’t have to be in the dark. I would suggest giving them a call, ask what is outstanding and what you can do to get this approved and issued.
Due to receiving a kidney transplant a little over a year ago, I have been unable to acquire any life or disability insurance. My current plan is to take the money not spent on these policies and save/invest and hope for the best. Is there any other options I can take to protect my family were something to happen?
Not really, but be sure to look into any available employer or professional association group policies available to you. Your bank or credit union might also offer some tiny policies at terrible prices. You’re basically looking for a policy that doesn’t ask any pesky medical questions.
Obviously shortening the time until you don’t need the insurance also reduces, but does not eliminate the risk you are trying to insure against.
1. If I have a PLLC, do I purchase disability insurance under my LLC or myself ?
2. I am in my mid 40s. Am I too late to purchase disability insurance?
Just buy it yourself.
No, but it’ll cost more than if you had bought it at 25 (assuming you’re still insurable.)
I am presently looking to purchase a disability insurance. I am canadian, on a H1B visa here.
I have been informed by the broker that;
– if i become disabled, and choose to move back to canada, only “The Standard” from the top 6, would pay my benefits for longer than 12 months.
– I was hoping someone could also help about the option for mental health, drug abuse rider, unlimited or 24 month?
– Should i go with FIO or BRP?
Thank you in advance.
Actually a number of companies would still pay you while you are in Canada. If you are still in the market ask your broker to inquire with each carrier how they handle that issue. Heck my recollection is that if you live in NY and buy a policy then moving to Canada with an ongoing claim is a requirement in those policies. Standard is not the only one that allows claims greater than 12 months in Canada.
I was denied coverage because I have type 2 diabetes. I was able to secure a plan through AMA, but the maximum coverage would provide only $7000/month. I am trying to get additional coverage. Any suggestions?
Did you work through an independent agent already? What did he/she say?
It was through drdisabilityquotes.com. They asked me some questions over the phone, and a few days later told me that based on a prescreen with the different companies, I was denied. I was surprised, because I am in pretty good health otherwise, with very good blood sugar control. They told me to go through AMA, because it’s “guaranteed issue.”
Okay, so you haven’t been denied. They did exactly the right thing for you, shopping you around informally.
As you know, DM is a huge risk factor for tons of bad stuff so I guess we shouldn’t be surprised that it basically keeps people from getting disability insurance without a more expensive policy like a guaranteed issue one.
You might see if there are any other GSI policies you might qualify for through your employer or specialty association.
Thank you very much for taking the time to respond to me. I really appreciate it!
-Brian
Important distinction, in my understanding, between employer vs self-paid premiums: Benefits from an employer paid premium are subject to taxation, and self-paid are not.
That’s generally correct.
I went with a different agent through a different website and had a much better experience. It was through http://www.PhysiciansDisability.com. The agent was able to get me a solid plan through Ameritas, despite my medical history.
What do you mean “different” and “better”? Who’d you try at first?
I first spoke with an agent from drdisabilityquotes.com. He asked me some screening questions over the phone. A few days later, he informed me that I would not be eligible for disability coverage because of my type 2 DM. He recommended that I go through the AMA, because it would be guarantee issue. I looked into the AMA plan, and it was not very good (7k a month max). I tried a different website, just on the off chance that I would get a different answer. It worked. The agent Matt Glass walked me through the whole process, and I was able to secure a good plan through Ameritas.
Thanks for sharing your experience.
As a prior active duty physician, how did you get around to obtaining disability insurance while active duty? or did you just wait till your service obligation was complete? I am currently active duty physician for the next 3 years, the only disability insurance that seems to cover military personnel is with mass mutual and only for about $2500 per month. Would you recommend signing up for this now or waiting till service obligation complete to get a better quote
More info here: https://www.whitecoatinvestor.com/disability-insurance-for-military-physicians/
I would definitely wait until after you separate. I am also not a big fan of wasting money on the high premiums associated with disability insurance. I have never had it, because if I did get injured, I could just retrain for another specialty, do insurance reviews or, now, telemedicine. Salespeople get the highest commissions from selling disability insurance.
What specialty would you retrain into if you were disabled by severe Bipolar Disorder or chronic, severe, debilitating MS? I think you underestimate the risk you ran/are running. Just because insurance is expensive or sold via commissioned agents is not a reason to avoid buying it if you need it.
Would one be able to exercise an FIO right out of residency just prior to becoming employed? What does exercising an FIO at the end of residency typically involve — just an offer letter?
Have a senior resident that is unable to increase her individual disability to the level she wants even with an FIO due to mandatory group disability at her new employer’s. Would like to know how to avoid such a situation in the future.
I think so, but consult with an agent to find out for sure.
It’s definitely a problem with mandatory group DI.