As a physician, you’ve made a significant investment of time, energy and money into building a demanding career with the promise of a high income and all of the rewards your profession provides. But, should an injury or illness prevent you from performing your specific duties, that promise can suddenly evaporate. You insure your house, your car, your health and your life; doesn’t it make sense to insure your most valuable asset – you, the physician? Disability insurance protects you by protecting your ability to earn an income.
You buy all forms of insurance to transfer risks that you could not otherwise undertake financially on your own. If you don’t have the money to replace your car, auto insurance will replace it. High medical expenses can be much more than you can afford, so your health insurance will keep you whole. However, with a long-term disability that prevents you from working, you lose the means to pay the premiums on all of the insurance that is protecting your assets, not to mention the means to maintain your assets. What you may not know is that the likelihood of suffering a disability is far greater than losing your car in an accident.
According to disability statistics provided by Cornell University, in 2010, 1 in 9 people between the ages of 21 and 65 will suffer a disability due to an illness or injury, yet the odds of losing your car in an accident is 1 in 160. For another perspective, the chances of dying prematurely are just 1 in 117, yet most adults own a life insurance policy. As you get older, the odds of a disability increase. Between the ages of 35 and 65, you have a 1 in 7 chance of suffering a disability.
The good news is that, as a group, physicians seem to take these statistics to heart. According to a 2007 survey by the McGill Advisory, nearly 100 percent of the physicians surveyed said they were covered by some form of disability insurance. However, the real story revealed in the survey was that most doctors are making big mistakes with their disability coverage, leaving them dangerously underinsured. For instance, nearly 40 percent have group or association sponsored policies instead of privately issued policies. Group plans, as well as many association plans rarely provide the same level of coverage as an individual plan, creating a vulnerable position for physicians. Disability income insurance is a specialty product requiring an expertise beyond what the typical insurance broker has. The stakes are much higher for physicians who have invested significant time and money into their careers.
Important Considerations about Disability Insurance for Physicians
Occupational Specific Benefits
Disability income protection products are somewhat complex, largely driven by specific definitions of what is or isn’t a disability and whether one is considered totally disabled or only partially disabled. The difference in definitions creates widely varying outcomes as far as policy benefits, so they need to be well understood.
Occupational classes are a key determinant in establishing rates, with some specialties requiring a higher premium than others. They can also be a factor in determining which policy features or options are available. It’s advantageous to work with a physician disability insurance specialist who represents many insurance carriers because not all carriers classify physician specialties the same way. We also offer disability insurance for medical residents and fellows.
Group Disability Benefits
Group disability benefits are sometimes available through medical employers and hospital groups, but the decision to rely on them for your income protections should be based on the following considerations:
- Group plans can be subject to change or cancellation which could leave you vulnerable.
- Generally, group plans are not portable. If you change jobs and your new employer doesn’t offer a plan and your health changes it could be difficult to obtain coverage.
- Benefits paid by group plans are generally taxed as ordinary income and they usually don’t cover bonuses – resulting in lower after-tax income.
- Many group plans cap the maximum monthly benefit they will pay. Some plans are capped as low as $5,000/month.
- Group plans are known to have a more limiting definition of disability often requiring that you be totally disabled from any job in order to receive benefits.
- Many plans do not keep pace with inflation during a period of disability.
- Benefits paid by group plans are often reduced by the amount of income you might receive from other sources, such as workers compensation and Social Security.
Business Overhead Expense Disability Policy
If you are a sole practitioner, it would be important to explore how a business overhead expense insurance policy can work to protect your practice in the event you are disabled. Business overhead expense insurance helps cover the business expenses necessary to keep your practice open while you are disabled. Without it, many sole practitioners wouldn’t have a practice to return to should their disability keep them from generating revenue for any length of time
We Can Help!
At Doctor Disability, disability insurance for physicians is our specialty. Our agents have been working with members of the medical community for over 20 years and have a unique understanding of doctors’ needs, schedules, and preferences. We will work with you to design a disability plan specifically tailored to your unique situation.