This post is rather lengthy for a Friday Q&A series, but I thought it was worthwhile as I've been hearing more and more from docs looking at Northwestern Mutual for disability insurance.]
Q. Is a Northwestern Mutual Disability Insurance Policy Good For Doctors?
I'm a family practitioner in the market for disability insurance. I met with a Northwestern Mutual (NML) rep who is telling me that NML has a better policy for doctors because of its better partial disability definition. Specifically, I'm told that their partial disability wording is special. Here it is:
Partial Disability: If you are unable to perform one or more of the principal duties of your regular occupation, *OR* spend as much time at your regular occupation as before the disability started; and you have at least a 20% loss of income caused by disability, and you are gainfully employed.
The Northwestern Mutual agent highlighted that most partial disability definitions don't offer an “OR” option, that it's usually loss of income “AND” time and that this is important because it starts the 90 day elimination clock ticking a lot sooner than having to wait to prove a loss of income.
Do you know of other insurance companies with similar language? I've looked at several of “The Big 6” and none of them have this language. Is Northwestern Mutual really that much better or am I getting the wool pulled over my eyes? My agent certainly thinks NML should be considered in the top tier of companies for physician disability insurance.
A.
I replied to the reader that I was surprised that anyone would consider a NML policy superior to the contracts provided by the usual “Big 6” disability providers (Berkshire/Guardian, Standard, Principal, Ameritas, Union Central, Mass Mutual). In fact, as I recalled, their policies were not as good. However, I pointed out that I wasn't really qualified to answer his question. I enlisted the aid of a couple of independent disability insurance agents well-known to regular readers of this blog to provide a more complete answer. Michael Relvas, CFP® , Lawrence B. Keller, CFP®, CLU®, ChFC®, RHU®, LUTCF (paying advertisers) and I have all contributed to this answer. Their comments have been heavily edited, so if something is not clear, it's probably my fault.
General Comments on Northwestern Mutual Disability Insurance Policies
Michael Relvas: I applaud you for doing such thorough research on this issue before making a final decision. Aside from getting informed, you should also be cautious of believing every single thing that an agent tells you. His/her explanation should follow the logic that can be interpreted by reading the contractual provisions yourself. If a definition is worded as such that you need to have it explained, and are still skeptical (as is clear from the fact that you contacted WCI about this), it could be a red flag. To address your original question, NML really isn't any better. While I would not say that you are having the wool pulled over your eyes, I would say that you simply do not have all the facts right.
Lawrence Keller: If the premium for [the NML policy] was very low, I could understand why one might consider it. However, it is often more expensive and less comprehensive compared to other companies in the marketplace.
Northwestern Mutual Partial Disability Wording Not Unique
Northwestern Mutual Definition of Total Disability Is Inferior
You are totally disabled when both unable to perform the principal duties of the regular occupation and not gainfully employed in any occupation. [That seems kind of important, no?] If you can perform one or more of the principal duties of the regular occupation, you will be considered totally disabled if:
-more than 50% of your time in the regular occupation at the time the disability began was devoted to providing direct patient care and services;
–you are not gainfully employed; and
-at the time the disability began, more than 50% of your medical charges came from:
i. a procedure-based medical or dental specialty for which board certification is available and you are unable to perform the principal procedures of the medical or dental specialty; or
ii. a non-procedure-based medical or dental specialty for which board certification is available and you are unable to perform the principal duties of non procedure-based patient care and services.
Michael Relvas: The most favorable definition a physician can own is the True Own Occupation definition which states that you are considered totally disabled when an injury or illness prevents you from performing the material and substantial duties of your occupation. (Your occupation is defined as the occupation that you were performing during the 12 months prior to becoming disabled). This definition does not require that you are not gainfully employed elsewhere and it does not include any marketing mumbo jumbo (“medical occupation definition”, “medical specialty definition”, etc). Very clean and clear, if you can't see/treat patients, you are totally disabled. And just in case you are a motivated individual (you know, the type that is willing to put 8 years of schooling and 4+ years of training behind his/her career), this definition will allow benefits to continue being paid, even if you decide to go work in some other capacity.
Mental/Emotional Condition Limitations on Northwestern Mutual Policy
Other Issues With Northwestern Mutual Disability Insurance
-
The policy is NOT Non-Cancellable and Guaranteed Renewable. This means that the premium rates are not guaranteed and may be subject to change by class. This policy form allows NML agents to lower the rates so, when compared to other companies, they do not look as expensive.
-
The Recovery Benefit (Transition Benefit) is limited to a maximum of 12 months.
-
When you exercise the Additional Purchase Benefit Rider, a NEW policy is issued. This means that your additional coverage may not be priced or have the same contractual provisions as your original policy (some companies like MetLife, Principal and MassMutual amend your original policy to reflect the increased benefit level. Therefore, everything remains the same. The pricing for the new coverage is simply based on your then current age).
-
Dividends are used to show that your premiums will go down over time. Dividends are not guaranteed and can be reduced or eliminated if claims experience is not favorable. This has been done by NML in the “Medical Market” before. A dividend (in disability insurance) is nothing more than a pre-approved rate increase.
- The quotes being shown you for comparison with the NML policy don't include discounts of 10-15% available to you through your local medical society. The Mass Mutual policy shown you has you in their 3P classification when you should be in the much more favorable (i.e. cheaper) 5P classification. The pricing doesn't look nearly as competitive when you compare apples to apples.
White Coat Investor: Certainly this exercise emphasizes the three main points I make to those in the market for individual disability insurance (IDI):
- You need to buy IDI from an independent agent who can sell you policies from any company
- IDI is far more complex than most insurance policies and you need to take some time to understand the product, and
- You generally get what you pay for with IDI. Cheaper policies are usually cheaper for a reason.
Perhaps I'm still soured on the fact that a good friend (who was an inadequately trained sales representative) sold me a completely inappropriate NML whole life insurance policy as a medical student, but based on the above information, it still seems to me that NML is excluded from “The Big 6” by independent agents selling disability insurance to physicians for good reason. The definition of total disability seems much weaker to me, the apparent advantage of their “OR” partial disability definition seems insignificant, and barring a huge discount when compared to a stronger policy, I'd give NML disability insurance a pass.
How does Metlife’s policy compare to those of the big 6?
MetLife is one of the “Big Six”. It is very good. The weakest link to the MetLife policy is that the recovery benefit is limited to a maximum of 24 or 36 months.
However, they do provide full coverage for disabilities related to mental and nervous conditions and, generally, one can collect benefits outside of the United States with no limitation.
If you own the policy already, make certain that it contains the “Your Occupation” defintion of total disability.
Just adding to what Mr. Keller said-
– Regarding the residual benefit, MetLife requires a 20% loss of income, and will require a loss of time/duties as well. The two would generally go hand-in-hand anyway, but not in every case so it should be noted.
– They are also one of very few to offer coverage without mental/nervous limitations in states where most carriers do have limitations.
There are obviously other features that differ slightly from one carrier to the next, but generally speaking MetLife offers a very good policy.
As was mentioned in a different post, MetLife made some occupation class upgrades in 2012 that make them very competitively priced for certain specialties.
I am a dentist and have a question about my metlife policy. I have a total disability on my own occupation rider that seems solid, but my residual benefits rider confuses me. The part that confuses me reads:
3. You are not totally disabled, and are gainfully employed, but you are:
a. Prevented from performing one more of the material and substantial duties of your regular occupation, or
b. Peforming the material and substantial duties of your regular occupation, but are not able to perform them for more than 80% of the time normally required, or
c. engaged in another occupation ******
The last part concerns me and there is no other occupations mentioned within the own occupation total disability rider, do I have anything to worry about?
Ryan,
You have nothing to be concerned about with (C).
Residual benefits are benefits paid to an insured who is still working in their “Own-Occupation” albeit at a reduced pay/ time due to injury or sickness.
If you have an “Own-Occ” policy and you are no longer able to work as a dentist but start working elsewhere or “managing” your office, then you have a “Total” disability with full benefits i.e. the residual doesn’t count because you would be eligible for your entire benefit amount.
Does that make sense?
My husband is a 48 year-old emergency physician who purchased a Northwestern disability policy in approximately 1993. He said that he purchased it prior to Northwestern changing their disability policy. Without looking through the paperwork, my husband said that he remembers that the policy he purchased was specialty-specific meaning that even if he worked in a different medical specialty but could not practice as an emergency physician, he would be eligible for benefits. Does anyone know if the Northwestern disability policy for physicians was more favorable to those who purchased the policy in the early 1990s?
Your husband is correct. He most likely has a policy with a true “Own-Occupation” definiton of total disability.
NML stopped offering the “Extended Initial Period” to physicians after September, 1997.
My husband is a 48 year old emergency physician who purchased a Northwestern disability policy in about 1993 — he was told that he purchased his policy when the wording was more favorable to physicians and prior to the policy changing. Without looking at the paperwork, he remembers that the policy he purchased was speciality-specific meaning that even if he worked in another medical specialty but was not practicing as an emergency physician, he would receive benefits. Does anyone know if the Northwestern physician disability policy purchased in the early 1990s was more favorable than the policy being dicussed in the above blog post? Thanks — as a freelance writer and spouse of a physician, I love your blog and read it regularly. The topics you post about are spot-on and I agree with your philosophy that a high income does not equal a high net worth unless you focus on making that happen!
Thank you, Lawrence, for the reply. That makes me feel a bit better! We’ll be looking closely at the policy this weekend to make sure that is the case with the “Own-Occupation” wording.
I apologize for my duplicate posting — I didn’t think the first comment posted!
No problem at all. When you look at the policy’s schedule page (should be page 3), you will want to see that the “Initial Period” and the date associated with it coincides with your husband’s age of 65 or longer.
You can also look at an annual policy statement and it should that the Definition of Total Disability is “Extended Inital Period” if that is the case.
wow i have nml and bought in 2002 and havent thought about it once since then… well before i gave a crap about personal finance.
this subject intimidates me. how do i know if my plan sucks?
Check to see how long the Initial Period is on the policy. If it is not to age 65 or longer, you can get a better defintion of total disability.
Remember, there are also other limitations to the NML policy. However, you did purchase it 10 years ago and are now older so that needs to be taken into consideration.
If you want to fax or email me the schedule pages of your policy or policies (the ones with your name, policy number, monthly benefit, riders selected and premium amount), I would be happy to review it for you.
Policy #1
Full Disability Income Benefit Per Month:
………………………………………………………………..
$
1,768
For qualifying disabilities:
Benefits begin to accrue on the (Beginning Date):
…………………….
91st DAY
The Maximum Benefit Period is:
……………………………………………..
TO AGE 70
The Definition of Total Disability is:
………………………………………….
BASE POLICY DEFINITION
These
Optional Benefits
are also included:
Future Increase
Indexed Income (COLA)
% of Monthly Benefit payable subject to indexing
……
100 %
Policy #2
Full Disability Income Benefit Per Month:
………………………………………………………………..
$
2,495
For qualifying disabilities:
Benefits begin to accrue on the (Beginning Date):
…………………….
91st DAY
The Maximum Benefit Period is:
……………………………………………..
TO AGE 70
The Definition of Total Disability is:
………………………………………….
BASE POLICY DEFINITION
These
Optional Benefits
are also included:
Future Increase
Indexed Income (COLA)
% of Monthly Benefit payable subject to indexing
……
100 %
Neither one of the policies that you describe have the Medical Occupation definition of total disability. They both have the “Base Policy” defintion which is a Modified “Own-Occupation” or “Loss of Earnings” policy.
Is there another increase option included other than the Future Increase Benefit (FIB)? This will not help you much when your income dramatically increases?
Was this illustrated as an ARDI or Level Premium structure?
Remember, the defintion of total disability is only one aspect of a disability policy and NML falls short compared to Guardian and others in many other areas.
You need to compare the above to today’s marketplace. What you have is not bad, it is definitely less than ideal.
my premium gets lower every year due to “dividends” i believe my total bill for both is around 100/mo
Yes. Remember that a policy that isn’t quite as good bought 10 years ago may be half the price of a slightly better policy bought now. There are some better features available now that weren’t available on my policy from The Standard I bought in residency, but no way I’m dropping that policy. It’s dirt cheap compared to what I can get now.
WCI-
Keep in mind that if you were to exercise some or all of your Future Purchase Option (FPO) Rider, any new coverage would be based on the current Protector Platinum policy series and you would be able to take advantage of those better features (at current market pricing, based on your current age but original occupational classification).
By the same token, some companies simply amend the original policy to reflect the increased monthly benefit.
Just something to keep in mind when exercising an increase option or considering which policy to purchase.
Already used up my FPO rider unfortunately.
Great! My comment, although directed to you, was more to make readers aware that when an FIO or FPO Rider is exercised, insureds may or may not get the same contractual provisions and rate book that was originally purchased.
Two examples would be:
1. The Standard Protector+ policy series had no limitation for claims outside of the United States. If an FPO Rider is exercised, with few exceptions, the new policy would have a limiation for those types of cliams.
2. Berkshire’s policies that were purchased with lifetime benefits used to be a great deal (not much more than an age 65 benefit period). Now, the cost of the lifetime benefits rider is the same as the cost of the rest of the policy. As a result, clients must either pay the price if they still want that rider or reduce the benefit period to age 65 or age 67 to better accomodate the amount of premium that they want to pay.
Other companies, however, simply amend the existing policy and, as a result, the rate book and contractual provisions remain the same as those originally purchased.
A good friend and client sent me the link to your site with concerns over his disability coverage. He currently owns both Guardian and Northwestern Mutual. The above comments on the disability policies issued by all the above carriers fails to take into account a couple of significant points, especially as they pertain to doctors. I happen to be a 28 year veteran of the industry and currently have a practice as a wealth management advisor. Since 1987, I have written disability insurance business with EVERY MAJOR CARRIER mentioned and many that have not been mentioned. These include Provident Ife & Accident, Monarch Life, Paul Revere, UNUM, and others. I have successfully paid 146 claims, of which 43 were physicians, dentists, or other paramedical professionals. I have never had a claim denied, but can certainly distinguish from my personal experience between a company who wants to do the right thing for the client/policyholder and one who wants to do the right thing for the company.
The first responsibility we have as advisors is to educate clients on the need for income protection. Whether it is new or old, cheap or expensive, is not the issue. It is having DI when you need it that matters. Too many advisors let this important element of financial security go undiscussed. I have represented Northwestern Mutual for the last 18 years and appreciate that we ARE NOT captive producers and are encouraged to always do the right thing for the client which means not all business will be written with NML. The smoothest and friendliest claims experience, bar none, is with NML. This is true time and again, even when they have a way out, they have paid. I once inherited a client that had not been seen by a terminated agent for over 8 years. When I met with her, I discovered that her income was unusually low given her occupation as a dentist and the geographic region in which she had her dental practice. Upon further fact finding, I learned that she had an accident 11 years earlier that had since limited her ability to see the number of patients because of a severe auto accident and the impact on her spinal cord. She never reported the claim because she did not feel that she was really disabled. Long story short, I presented her 11year old case to the claims department, they underwrote it, paid her a lump sum for all those years, part total and part partial benefits. Her first check was for over $400,000! She is now on a permanent partial claim with no need for additional medical documentation of her claim. She continues seeing patients 3 mornings a week and teaches dentistry 3 days a week. There were many ways NML could have gotten out, but instead they did the right thing. Like this case I have 4 more but wont bore you with how incredibly gentle and responsible they were with “their least fortunate clients” as they are referred to. I will refrain from stating who are the worst because I still represent them and will continue to represent them because I believe in what they stand for.
The contract language is certainly very important but so is the character of the company who backs up the language. Tell me what your claim will be and I’ll tell you what policy to get. We’ve all heard that. What NML does for doctors with the MOD definition is to clearly distinguish between procedural duties, clinical duties , and lay duties (those duties include teaching, chief residency, or representing product lines in conferences and seminars that sometimes account for a significant part, 20% or more of their income). The MOD definition gives the doctor the power of choice at claim time between going all out on total or remaining engaged part time in their profession. Their choice. Remember this, disability income benefits may solve the financial need. But they don’t solve the emotional need to continue being useful and purposeful in their life saving profession. I carefully walk every DI prospect through multiple scenarios to have an idea of how they would respond. Most pick NML because of the choice they have. Some pick other carriers because of peer recommendation, size of company, or pricing, but I am able to give them the choice of ALL carriers.,
When it comes to a total disability, when the individual cant do anything, they usually all pay the same. Every other scenario is gray and dependent on complex granular facts that most agents, reps and advisors don’t understand because we never het all the confidential facts. If you want to see who is doing a good job with clients, look at the product persistency and client retention. Look at the number of law suits for claims denied. Look at the ratings for customer satisfaction. Look at their financial metrics. I won’t disagree with any of the above statements, but I would encourage professional responsibility before embarking on making blanket recommendations based on job description. I have many surgeons who make a lot of money doing non-surgical duties. At claim time, when their billing sheets don’t tell the whole story of their income, the challenges begin. Each individual case should be looked at responsibly with extensive discovery and fact finding before a recommendation is made. The best product out there is the one that pays you when you need it.
Thank you for your lengthy comment. You mention at the end that someone shopping for disability should look at product persistency, client retention, number of lawsuits for claims denied, ratings for customer satisfaction, and financial metrics. Where would a potential applicant find this information for each of the disability insurance companies?
I don’t believe a word you have said. As a consumer, I have been so mistreated by Northwestern Mutual that I can hardly even type this without frothing at the mouth. I had a private disability policy that I purchased with a life insurance policy many years ago. When I became totally disabled in 1999 and then again in the early 2000’s, the company did everything they could to deny payment and coverage. I was so sick that I couldn’t challenge their arcane policies and the myriad obstacles they put in my way to prove my disability. I would urge anyone and everyone to run away from this “coverage” and to not trust anyone trying to sell their “products.” The irony of this is that now that I am doing better and able to bring a lawsuit against the company, the statute of limitations prevents me from doing so. My only recourse is to try and prevent others from experiencing the same hell that they put me through.
I have currently filed a complaint with the California Insurance Commissioner regarding NWM’s horrific business practices. They should not be allowed to do business in this state. If you are considering giving Northwestern Mutual your business or trying to sell a NWM policy I have a few choice words for you: DO NOT BE SO FOOLISH!
There are no fact laid out in this case.
Sorry about the lengthy commentary but its difficult to provide accurate & relevant perspective without employing significant details. Check with Standard & Poor’s, A.M. best, Fitch and Moody’s for ratings and commentary, as well as DI claims ratios. Speak to your peers who have been around for a while. They probably have friends they know who’ve gone through a claim with the various carriers. Check also with local attorneys who specialize in disability claims and have a good reputation. From experience, each claim is its own universe and must be looked at objectively knowing that you never have all the real facts that the claims management team has. The contract language is very important but you must also look at what the claim is and how each individual person handles their own scenario. I have a number of physicians with similar claims, such as back/neck injuries, carpal tunnel, depression, and such scenarios yet not all go on claim when others choose to do so.
Where do I get the claims ratios? Trust me when I say my peers don’t know squat about disability insurance. You really think doctors should call a few attorneys prior to purchasing disability insurance? Not to be negative, but I’m saying the information you suggest everyone should have prior to purchasing is fairly hidden for anyone other than those selling the policies.
By the way, just as an aside, someone suggested that you should purchase DI form an independent agent who represents ALL the carriers, not just the artificially selected “Big 6.” Northwestern reps have the ability that “independent agents” don’t have. That is, to represent the companies independent agents sell, as well as, Northwestern Mutual. How can objectivity be achieved when one lacks representation of the #1 carrier in market share, and #2 carrier based on premium?
Oh, please.Northwestern Mutual agents don’t represent squat,my friend. They have no ability nor any clout to address the horrific and probably illegal practices of their parent company. The only time I had a decent NWM agent try and help me, that person was not around for long. The turnover among agents is high. What decent would want to work for such a rip-off company? This is a horrible company with bad,bad business practices. See my comment above.
Frankly NWM agents are some of the least objective and they will only show you another policy after you reject a NWM policy. Ive met NWM agents on several occasions and its pretty darn hard to get anything but a NWM policy from them. Given that based on contract wording, they dont have as good a policy as other companies, it really isnt a big deal for a physician not to be shown a NWM policy. While i dont know their market share, the premium is difficult to compare since it isnt a true own occ policy. Might want to tell your higher ups to change the wording to true own occ or they probably are going to start losing more business from physicians.
Nearly three decades of experience in the disability insurance market can certainly help validate a person’s opinion on certain issues. With 146 paid claims, it is very clear that you have sold an enormous number of disability insurance policies, which as mentioned include policies from older companies like Paul Revere, Provident and UNUM (companies that aren’t even offering individual policies any longer). If I remember correctly though, many of these companies were the leading providers of Own-Occupation coverage back in the 80s-90s. So what has changed since then, that now makes Own-Occupation inadequate for physician clients? Perhaps you can clarify – of the 146 claims that were paid, what percentage of these claims were through NML’s new MOD program opposed to True Own-Occupation policies?
A great deal of emphasis has been placed on a company’s financial ratings (perhaps influenced by the fact that this is one of NML’s main selling points). So does this mean that a company with a Comdex ranking of 100 is more likely to pay my claim than a company with a Comdex ranking of 99, or how about 95? I’m not sure I can buy into that philosophy. Insurance companies are all equally cautious to avoid paying benefits on claims that should not be paid.
Following the recommendation to review financial ratings and even check with local attorneys who specialize in disability claims, one can quickly find complaints against many of the leading insurance companies, including NML. The more policies a company sells, the more complaints they are going to get – that’s just inevitable. What I have found to be interesting however, are the opinions that can be read on attorney websites regarding NML’s new MOD wording.
Having the ability to show/sell multiple companies and actually doing so, are two completely different things.
Robert is right. If you want get the claims number ask anyone that has access to Lexis Nexis or westlaw and can print you the record or go to any law library and get the company claim record. Is easy even a non NWM can do it.
In general, what is the best DI policy for a plastic surgeon practicing in NY? Thanks.
It really depends upon the individual but, generally, Berkshire (Guardian), MetLife or Principal. Discounts are also typically available with all of them.
I am fascinated by the activity on this site. I am not one to go to the cyberworld. The questions are good and the content appears relevant to all involved, so I will continue since I do feel that I can provide meaningful value.
First, the question about “best contract” for the surgeon. Would you agree that prescription without diagnosis is malpractice? So first a diagnostic: 1) what is your total “at risk” compensation (w-2, 1099, pension contributions, car allowances, etc?); 2) how much of your income (billings) is attributable to the specific function/duty of surgical PROCEDURES?; 3) how much of your income (billings) is derived from NON- surgical CLINICAL functions/duties (pre-op, post op, follow ups, check ups, shots, non-invasive medical care)? 4) how much of your income is derived from lay duties (practice ownership/management, teaching, promoting/representing products)? 5) How old are you (in order to determine at risk human life value, statutory income potential, the need for guaranteed insurability options & the potential need for combinations with long term care insurance); 6) what is your behavioral economics given a situation of incapacity (some doctors stop cold when trouble strikes, some fight like hell to maintain their identity and their self worth). What is your personal situation and what is your plan B (are you married to a breadwinner? Do you have a sufficient net worth to adapt your lifestyle and get out of the rat race? Do you have a burning desire to do something that you feel is more meaningful to you? Did you just have a divorce? New child? New marriage?
Each individual person is a world on their own. Depending on your answers, any of the above stated companies could be the right match for you. I would encourage you to meet one on one with an “advisor” who assesses your situation thoroughly and doesn’t just do patch work and sell you a product because its “own occ.” There is a lot more to design and selection than that. Make your advisor work. There is a huge difference between an agent and an advisor. The difference is in the process, not just the products or companies that they represent. Is he/she coming to you with a menu of products they represent or are they asking questions. Take the time to ask questions about their experience, not just their education. I know many “professionals with half the alphabet after their name, and while they are “certified”, they aren’t qualified to take on the fiduciary responsibility of someone’s financial security.
I must run now but will reconnect later. I hope my monologue was helpful in some way. Have a nice day!
A lot of talk on this blog about which companies are good and which are bad from a claims perspective. As a disability insurance attorney that represents claimants nationally I can tell you that none of the companies publicly share any accurate data about the number of claims they approve and for how long they usually pay a claim. In congressional hearings and in numerous depositions I have taken, I can tell you that most disability carriers claim a greater than 70% claim approval rate. A claim approval rate is misleading, because a carrier can pay for 30 days and then deny the claim. Once a claimant seeks benefits, the approval of benefits each month is a moving target which constantly requires claim approval. Disability companies use their own industry books which provide Return TO Work durations. After a certain period of time, most disability companies expect a person to recover and then be able to return to work.
The defintiion of disability in any long term disability policy is essential. The best definition that a person can get is a “TRUE OWN-OCCUPATION” definition of disability. This definition usually states that a person is disabled if they are unable to perform the substantial and material duties of their regular occupation. With a TRUE OWN-OCC definition, if a person qualifies for disability, then they shoudl be able to have an alternative career that require a different set of skills and still collect their full total disability benefits. A surgeon should only want a policy with a TRUE-OWN OCC. In most cases of disability for a surgeon, the surgeon’s disability prevents the ability to perform surgery, but they can still work in a non-surgical practice or teach. A surgeon that has substantial and material duties of surgery pre-disability, probably had an office practice that was exclusively for post surgery consults and to evaluate surgical candidates. Under the Northwestern MOD program, if this surgeon wanted to continue an office practice post disability, then they would not be considerd totally disabled. This is a huge disadvantage for a surgeon.
Even if you have a TRUE-OWN OCC policy and think you are a Surgeon, this does not mean that inability to perform surgery makes you disabled. The amount of time and dollars generated peforming surgery pre-disability will be a significant factor in determining whether or surgery was the substantial and material duties of your occupation pre-disability. Many carriers will attempt to argue a Surgeon is Resdiual/Partially disabled and not totally disabled. In my opinion NorthWestern created the MOD product, which is really nothing more than a Residual Disability defintiion of disability in disquise. You may find my video presentation on a Residual Disability Claims informative at http://www.diattorney.com/total-vs-residual-disability-analysis/ . Another example of a situation dealing with Total v. Residual Disability can viewed at http://www.diattorney.com/attorney-dell-schaefer-prove-dentist-is-totally-disabled-and-not-residually-disabled/
I am not saying that Northwestern Mutual is a bad company or sells a bad product, rather I am saying that you need consider your daily occupation duties and then determine if the NWM will actually provide you the protection you need. A claimant never has to worry about an MOD type definition if they can buy a True Own Occupation. Bottom-line is that almost all of the companies will pay claims and disability insurance is a necessity, but when buying a disability policy you truly get what you pay for. You can visit my website at http://www.diattorney.com/ and learn an extensive amount of information about every Major Disability Company from a legal and claim denial point of view.
Thank you for sharing your valuable perspective, as well as the links.
Everything you hear on the Internet is true right? Next time I need a diagnosis I think I will go to the Internet find out what’s wrong with me and perform the surgery myself. I mean that’s what it sounds like on here you know it may seem like an odd request before you buy disability but ask for the contract and try and talk to a claims analyst from that company to see whether they would pay a claim in certain situations. I can guarantee you that you will have a problem even reaching one. There is a reason why Lawrence is bashing NML policies and the company,he can’t sell the product period. He claims he knows the contracts and how they pay but when was the last time he sold an NML policy or talked to an underwriter or claims specialist at the home office, oh wait never. Also he probably has no idea about about actually claims statistics in the 80’s and 90’s and 00’s and this decade and how own occupation has affected the industry. There is a reason why NML 18.6 percent market share last year in the disability market and collected 991 mill in premiums. Oh by the way is # 2 in the industry and the only reason that UNUM is ahead is because they bought up all the crappy policies from paul revere and provident who by the way had different underwriting standards. three different philosophies all working together, no wonder they didn’t pay claims and lost a class action lawsuit back in 2000’s. How many are doctors I don’t know but own occupation is a thing of the past in the future you will probably not see it just like lifetime benefits that use to be sold back in the day. It may not be next year or 5 years but it will happen because of bad claims experience. Physicians have been brainwashed to buy that definition for years no wonder its hard for them to change. Personally I look at the comments and I think to myself it is very important how strong a company is when it comes to claims time and also in a time of bad claims like the 80’s and 90’s. Instead of raising rates during that time the dividend that continued to be paid helped offset that. A Rating of 100 to a 95 could me 2 or 3 bad claims which could have a huge impact on pricing and how claims are paid in the future. It’s amazing to me that you can say that true- own occ will pay if a surgeon can’t perform surgery but that is not true they are considered partially disabled under true own occ. Give me a scenario have you ever been disabled because most people that are sick or injured are going to have a hard enough time trying to get better rather than getting trained to become something else. I know plenty of people have become fully disabled and they can’t even work they can hardly get better especially with all of the visits to the doctors office. Physicians go through 13 years of school to become a specialist and then they get a nervous twitch and they can’t perform surgery but can still do consultations and they are partially disabled and let’s assume that one of these so called big 6 which is ridiculous by the way when there were 54 companies about 20 years ago and now there are only about 12 companies that are really selling disability and a company that brought just under 1 billion in premiums in last year is not considered one of them baffles me. Since NML is #2 in non-can premium amounts. But anyway let’s assume they are fully disabled tell me what can they do with their education and makes that much money not in the specialty because I don’t see many disabled physicians running around teaching residents how to perform surgery with a nervous twitch or for that matter doing anything. Good luck with the brainwashing that you are getting about own occ I have talked to claims analyst from about 5 companies and everyone including NML have told me that it is 1 in 500,000 that double dip and they are rare cases but go pay some cheap premium from principal and next year it will be a new company with a new gimmick and new pricing and the year after that a new company, it was Met Life the year before and the year before that it was standard that had the cheapest rates whereas NML has gone about its business paying claims, pricing there products to pay, paying dividends when we have collected too much, lowering expenses, underwriting the best, easy claims process where Reps are encouraged to be involved with the clients and the list goes on. When you have a claim you don’t want to have to cross your fingers and hope your claim goes smoothly and I didn’t say get paid because I wont assume that other companies wont pay but that it will not be a pleasant experience but choose whatever you like but when a patient comes into a physicians office does a physician give them 6 options to treat a diagnosis maybe 1 or 2 but they make a recommendation they don’t display those 6 options like they are choosing off a menu like the disability brokers in the industry. I want a physician that is precise and confident in his diagnosis. There are always common misconceptions about products and this is where you are totally off base and need to be honest about what your doing. Keep bashing NML and keep chasing them because you will always be a step behind always. I have plenty,more statistics that are well documented about all of the companies in mention in this blog by the way so physicians go ahead and ask and I will see if I can provide.
Now THAT is a a paragraph!
That made me much MORE skeptical about meeting with a NW mutual rep today.
This guy is right on, own occ is a thing of the past… @NML that is.
[Northwestern agents] sell this MOD to residents who only make 45-50k, sometimes they try to sell whole life policies to these same people. Tell me, how does a resident who develops a disability in residency/fellowship while they are making $50k per year benefit from the MOD? That’s right, they don’t.
When NML agents start providing the best solutions for their clients as opposed to themselves, then my opinion may change. For now, I can only base my opinion on the recommendations I have seen from my new clients that have spoken to NML agents.
Does McDonalds have the best burger because their financial ratings?
Dividends in the insurance world are solely a return of overcharging clients.
It doesn’t surprise me that other NML agents came to the “rescue” here. They pull the same crap on the DI forums. Independent agents don’t like you for a reason, and it surely isn’t jealousy or not being able to offer NML product. Its because the company products and sales pitches are garbage, especially for MDs.
For those physicians that have been told of the “Medical Occupation” definition of total disability and how it provides them with the flexibility to decide to continue gainful employment and be eligible for a proportionate benefit OR cease gainful employment and be eligible for the full benefit, how about a definition that is even clearer and more concise?
Berkshire (Guardian’s) new ProVider Choice policy states that “Total Disability or Totally Disabled means that, solely due to injury or sickness, you are not able to perform the material and substantial duties of your occupation. You will be totally disabled if you are gainfully employed in another occupation so long as, solely due to injury or sickness, you are not able to work in your occupation.
If your occupation is limited to a Medical Doctor or Doctor of Osteopathy and more than 50% of your income is earned from hands-on patient care, you will be considered 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.
If your occupation is limited to a Medical Doctor or Doctor of Osteopathy and more than 50% of your income is earned from performing surgical procedures, you will be considered totally disabled, even if you are gainfully employed in YOUR PRACTICE or another occupation so long as, solely due to injury or sickness, you are not able to perform surgical procedures”.
This definition really allows physicians with the flexibility to be gainfully employed and, in some instances continue to work in their own practice, and continue to receive total disability benefits.
*Note that this policy series is not approved in all states and is not available for policies with a Graded Lifetime Rider or that do not include a partial disability rider.
I’m going to be a Hospitalist. I can see how True Own Occ vs. Med Occ definition applies to Surgeons. Can someone please explain how these definitions would affect a Hospitalist? Is there a Own occupation definition for a Hospitalist? If a hospitalist were to get disabled where he/she cannot go all around the hospital due to amputation for example, but is still able to see patients in a room in an outpatient clinic, would he/she be considered totally disabled per Own occ definition?
I don’t know if insurance companies consider hospitalists and outpatient internists to be different jobs. Perhaps one of the agents can answer that.
Looking at individual scenarios like this one is too vague and ambiguous. It would be like me saying I have pain in my right abdomen – Do I have appendicitis? I might, but there are a number of other conditions that quickly come to mind as well.
The question is, given a situation where you were no longer able to work as a hospitalist but were able to work in a different capacity, would you want to? If your answer is yes, you should go with Own-Occupation.
Thank you for your responses. In a setting of a surgeon, the same scenario is not vague and ambiguous. The surgeon would’ve been granted disability.
Hospitalist medicine is a relatively new profession and gaining more popularity. So, I’m trying to understand how insurance companies define “Own Occupation” for a Hospitalist. The following is from the Society of Hospital Medicine: http://www.hospitalmedicine.org/AM/Template.cfm?Section=Hospitalist_Definition
Definition of a Hospitalist and Hospital Medicine
Hospital medicine: A medical specialty dedicated to the delivery of comprehensive medical care to hospitalized patients. Practitioners of hospital medicine include physicians (“hospitalists”) and non-physician providers who engage in clinical care, teaching, research, or leadership in the field of general hospital medicine. In addition to their core expertise managing the clinical problems of acutely ill, hospitalized patients, hospital medicine practitioners work to enhance the performance of hospitals and healthcare systems by:
Prompt and complete attention to all patient care needs including diagnosis, treatment, and the performance of medical procedures (within their scope of practice).
Employing quality and process improvement techniques
Collaboration, communication, and coordination with all physicians and healthcare personnel caring for hospitalized patients
Safe transitioning of patient care within the hospital, and from the hospital to the community, which may include oversight of care in post-acute care facilities.
Efficient use of hospital and healthcare resources
Hospitalist: A physician who specializes in the practice of hospital medicine. Following medical school, hospitalists typically undergo residency training in general internal medicine, general pediatrics, or family practice, but may also receive training in other medical disciplines. Some hospitalists undergo additional post residency training specifically focused on hospital medicine, or acquire other indicators of expertise in the field, such as the Society of Hospital Medicine’s Fellowship in Hospital Medicine (FHM) or the American Board of Internal Medicine’s Recognition of Focused Practice (RFP) in Hospital Medicine.
Have another scenario which is quite possible. Let’s say a physician has become completely disabled but has another source of income from another business like rental property or owns a company. I would assume the physician would be paid disability under “Own occupation” clause. Would the physician be paid under “Medical Occupation”?
I would certainly argue that the duties of a Hospitalist may differ compared to a practicing Internal Medicine Physician. Hospitalists typically work shifts and perform certain procedures that would not be done in the office of a PCP.
The best case scenario is that the insurance company looks at your duties and your medical condition and deems you to be totally disabled out of your occupation as a Hospitalist. You can now work in another capacity and earn the same or more income doing something else while still receiving your full disability benefit. If the carrier deems your disability to be Residual, you will be paid benefits proportionately to your loss of income. At that point, you would want to make sure that you purchased a policy that has a strong Residual Disability Rider attached to it.
If you have another source of income that is considered to be unearned such as investment income or rental property income, that will not be used against you. However, if at the time of claim, you were actively managing real estate or managing an investment portfolio for more than just you or your family as a business that you actively participate in, that would be taken into consideration.
For these reasons, you need to do your homework and compare the cost vs. benefits of each policy. For better or worse, you essentially have up to 6 choices (7 if you consider NML). Unfortunately, for the reasons listed previously, I don’t believe NML to be a good option. The “Medical Occupation” defintion of total disability was built and is marketed towards surgeons, the other non-invasive, non-surgical specialties were simply an afterthought.
via email:
It depends more on specific duties and the time performing them than on job title. Begin with the anatomy of the claim from the analyst’s perspective: what were you able to do before that you can’t do now? How does it affect your earnings? Is this forever or temporary…? In a TOTAL disability, they all pay. In a PARTIAL/RESIDUAL the differences are more pronounced.
Following on the WCI’s comment “In a TOTAL disability, they all pay”…
Once it has been deemed that TOTAL disability applies, the next issue is whether or not you are able to go work in a different capacity without having a negative impact on the benefit that will be paid.
As long as you are certain that your policy includes the “Your Occupation Rider”, you do not need to worry. This wording is there for those policies that do not include a Your Occupation rider.
Thanks for all of the info provided on this site. I’ll be graduating from dental school in a month, and I’m trying to get my DI in order before then.
I’ve met with two reps. One sells Guardian. The other sells Northwestern Mutual but is also licensed to sell Guardian.
The agent who sells both claims that the MOD is better than True Own-Occ for dentists. His argument is that if something happened to my hands that prevented me from performing dental procedures, NWM would give me the option to walk away with total disability, but Guardian would require me to work in a dental school, do consulting work, etc.
The way I see it, if I couldn’t perform any dental procedures, I’d prefer to collect full disability and go do something else in another profession. This is how the “True Own Occ” definition is typically presented, but it seems that Guardian would force me to do non-procedural dental work, and NWM would prevent me from working elsewhere. Am I understanding this correctly?
For what it’s worth, the NWM policy is significantly more expensive than the Guardian policy. With the possible dividend payouts, it is possible that NWM would actually be cheaper, but I’m not a huge fan of gambling on that.
I like NWM a lot as a company, especially how financially solid they are. But I want to make sure I make the right decision for my situation.
Thanks in advance for your guidance!
I would potentially be hesitant with the NML agent that you are speaking with, he sounds a bit inexperienced. The argument or sales pitch that he provided you: “if something happened to my hands that prevented me from performing dental procedures, NWM would give me the option to walk away with total disability, but Guardian would require me to work in a dental school, do consulting work, etc.” is not only inaccurate but doesn’t even follow the typical NML sales pitch used to sell the MOD policy. He is borderline telling you that an Own-Occupation policy would work similarly to an Any-Occupation policy which is simply not true. In no way would the insurance company require you to go work in a different profession under the Own-Occupation wording.
Just because an agent is able to sell other company products does not mean that he actually does. Making such claim is certainly a great way for him to convince a potential client that he is unbiased, but does not necessarily mean that his business model truly follows that philosophy. Were you shown anything other than NML?
You may not be getting the full story from the Guardian agent either, who is also able to sell other companies by the way. Guardian now offers two different policies in most states. If the pricing is much lower with Guardian, I would question whether you were shown the ProVider Plus policy or ProVider Plus Limited. The ProVider Plus Limited policy can still be “Own-Occupation” and is a fine policy, but comparatively has some limitations such as a 24-month limitation on claims related to mental/emotional conditions.
Even if you end up buying Guardian or NML, I still believe that you should review more options (MetLife, Standard, Principal) just to make sure they are truly the two best options for you.
Thanks for your replies, Michael & Lawrence. I really appreciate your opinions. I read Gregory Dell’s article and every other linked article on this thread.
To be fair, the NWM agent was not saying that I would have to work in another profession, but rather a different area within my profession. Things like working as a dentist teaching in a dental school, or working as a dentist doing consulting work for dental offices, etc.
Say I’m a dentist who spends ~70% of his time doing procedures, which make ~80% of my revenue, and the other 30% of my time is spent doing things like consults, reading radiographs, managing staff, etc. If I lose the ability to do procedures, am I totally disabled? Or would I be considered partially disabled and be expected to continue those duties that I could perform – consults, reading radiographs, managing staff, etc.
I guess I want to better understand what my occupation is defined as under an Own-Occ policy. I read about the landmark case of the surgeon who was eventually considered fully disabled, even though he could still do consults – is that considered the accepted standard now?
There are a bunch of dentists at the dental school who were in private practice, but they now teach because they can’t use their hands – biking accident, skiing accident, etc. Generally speaking, under an Own-Occ definition, would you expect these dentists to be collecting full disability?
Thanks!
At the time of claim the insurance company will review the job duties that you were performing prior to your disability. If you were performing the duties typically associated with those of a General Dentist, the insurance company is not going to tell you that you can perform related duties simply because you have the education, training and experience that would allow you to do so.
Insurance companies also understand that you will have duties that are secondary or incidental to the fact that you are a practicing Dentist.
Using your example as a disabled Dentist turned teacher, generally, they would be considered totally disabled if they had had a true “Own-Occupation” policy and had not had teaching as a prior “material and substantial” duty.
Again, you might want to go to Gregory Dell’s website and do some reading or view some of his videos. He has a lot of great information at http://www.diattorney.com.
Via email:
There is no golden rule in order to determine what percentage of your work needs to be surgery pre disability in order to consider doing consults and still be totally disabled. The reality is that the carrier will evaluate your duties during the 3-6 months prior to filing a claim. From my perspective you need to evaluate not only time spent doing duties, but also income generated. If you spend 25 percent of your time doing duties that generate 75 percent of your income, then are the substantial and material duties defined by time spent or income? The argument can be made both ways. I always argue that working as dentist involves generating income and the substantial and material duties are the ability to do procedures. Everything else is a skill similar to a hygenist. If you get disabled, then you will only stop working if you can’t do the duties that were making you the most money. You are not going to work to breakeven, which means that you need a true own occupation definition of disability which will usually allow you to collect your full disability benefit and continue working in a different capacity in the field of dentistry or something else. Sorry for typos, sent from my phone! G
That’s a huge help and I appreciate your time in explaining that. It seems the NWM agent’s suggestions were a bit misleading.
I’ve been reading over Gregory Dell’s website. Lots of good information there.
Thanks again!
The MOD is certainly NOT better than a true “Own-Occupation” defintion of total disability. NML stopped selling the Extended Initial Period (true “Own-Occ) to the “medical market” in September, 1997. The MOD defintion was created by NML to re-enter the “medical market” with less risk to their book of business.
I would suggest that you re-read the post by disability insurance attorney, Gregory Dell, or call his office (or any other disability insurance attorney for that matter) and discuss your concerns.
Since none of them will have any “skin in the game”, they will provide you with nothing but an objective opinion based on their education, training and experience.
One more question! After spending a bunch of time reading over the website of Gregory Dell, and doing a little more Googling, I am leaning heavily toward Guardian.
But would you please be willing to share with me what it is about NWM’s MOD that limits their risk compared to a true Own-Occ definition? This is the one thing that continues to confuse me.
Thanks again!
Sure. The “Medical Occupation” defintion of total disability takes any claim that you might have and turns the focus on your loss of income (and not inability to perform the duties of your occupation).
As a result, if you choose to work in any capacity, and earn more than 20% of what you were earning previously (don’t have a loss of income of 80% or more which would trigger full benefits), your disability insurance benefits would be reduced or eliminated entirely.
This is not the case with a policy that has a true “Own-Occupation” definiton of total disabilty.
I see. So because most dentists/doctors are likely to want to work in another capacity (vs sitting around all day), it’s likely NWM’s insurance payouts would decrease? Interesting.
NWM’s main selling point seems to be the ability to “walk away” more easily than with other policies. But if I *could* work another job, I think I would prefer the ability to do so.
Thanks again for all of your help. Really got me thinking.
You are very welcome.
That is exactly my point. You can only watch Dr. Oz and Oprah so many days without the urge to contribute positively to society and use your education training and experience to earn an income in another capacity if you wanted to … all without being penalized because your are motivated, resourceful and intelligent enough to do so.
Also don’t forget to ask about discounts on the Guardian policy (or any others that you are considering) as, in many cases, they are available.
Hi Lawrence,
I wonder if you have ever gotten a Gurdian policy provision and sheperdised statute provisions also clause provisions and read them carefully. You are right though because they do not teach you this subject when you study for your CLU or CFP. It is all black law letter and I as an attorney have read them carefully and I will be happy to share with you, just in case if you have a lawsuit filed against you. NWM language is plain and simple where other insurance companies use adhession contract clauses. Is it making sense? ofcourse not-because I haven’t told you that non-of the other insurance companies use the reasonability clause within the contract but Northwestern mutual does. Odd? yes! is it making sense? ofcoure not. I haven’t told you that Fitch, S&P, Moody take consumer rating into their calculations because it is required by federal statude to be part of company rating besides of that being financial streingth. Like Robert said, you do not represent NWM and don’t know the benefits of its product other then what you like to say.
As the casual reader might guess, TT’s Linked In profile includes this job description: Insurance/Financial Representative at NorthWestern Mutual Financial Network.
Was wondering if I can seek any advice about my, and many of my coworker’s, situation. I am a derm resident about to graduate. Does it make sense for Derm residents or Dermatologists to go for NML? Actually, a friend of mine actually even argued if a derm needs a policy that says “true own occupation.” If you are not a Moh’s person, most derms just see patients in an outpatient setting and occasionally perform minor skin surgeries like excision of skin cancer or cysts. My friend’s argument is that for derms, we only use our eyes and then make diagnoses (hence the rise of teledermatology) and that skin surgeries only comprise a very small portion of our duties usually. He argues that there is no way you can justify a totally disabled case for non-Moh’s dermatologists until we loose our eyes, which will be catastrophic anyway so it makes no sense for a derm to spend more money and to purchase “you own occupation.”
It’s a reasonable argument. You generally get what you pay for with disability insurance.
Using your logic, I would then focus on the Residual Disability Rider and the other aspects of a disability insurance policy when making my decision.
For example, NML requires a loss of income of 20% compared to your pre-disability income in order to trigger residual disability benefits. Some other companies require only a 15% loss of income.
Berkshire and MassMutual’s policies will pay dollar for dollar benefits for the first 12 months of a Residual Disability claim. Meaning, if your income was $20,000 month prior to your disability and now it has been reduced to $10,000 month, as long as that loss remained constant (in this example), a $10,000 month benefit (or up to your policy’s full monthly benefit if lower) would be paid for the first 12 months of your claim. NML’s policy (and that of most companies) would pay 50% of your monthly benefit as that would be proportionate to your loss of income. Additionally, NML requires a loss of income of 80% or more compared to your pre-disability income in order for full benefits to be paid for the month. Most other carriers require a loss of 75% or more.
NML’s policy has a limited Recovery Benefit (they call it the Transition Benefit) of 12 months. Meaning, if you return to work on a full-time basis, after a total disability, and can perform all of your duties but still have a loss of income due to your prior disability (let’s assume your patients have left you or the physicians that were referring to you prior to your disability are now referring elsewhere), you will not receive benefits for more than 12 months – even if your income loss continues. Most companies will continue to pay these benefits as long as the required minimum income loss is met as you rebuild your practice.
NML’s policy limits claims due to mental and nervous conditions to a lifetime maximum of 24 months (there are some exceptions). Some companies treat these types of claims in the same fashion as any other accident or illness.
NML’s policy will not pay benefits outside of the United States for more than 6 months over your lifetime. Some companies are either more liberal than this or have no limitation at all for these types of claims.
The amount of coverage that can be purchased using the Additional Purchase Benefit (APB) Rider is usually very limited. Other companies will allow for you to purchase an additional 2-4 times the base policy amount, up to the company’s maximum issue limit, regardless of your health, as your income rises.
Very often, I also see the NML policy being illustrated as Guaranteed Renewable. While the policy cannot be cancelled, this allows NML to change the premium rate by class. Most other companies illustrated their policies as both Non-Cancellable and Guaranteed Renewable. This also guarantees that your policy’s premium cannot change.
Obviously, I have not illustrated all of the differences in how the NML policy compares to others but, hopefully, I have given you a few things to consider. So, do your homework, find an agent that you trust and then make a well-educated decision that you feel good about based on your individual needs and goals. Very often, you can purchase a more comprehensive policy elsewhere for a lower premium amount (that may even include a true “Own-Occupation” definition of total disability if you want it).
Hope this helps.
Great thanks!