Dr. Patel was in her third year of emergency medicine residency when the unthinkable happened. After a long shift in the ER she left the hospital and on her way home was rear ended while waiting to make a left turn. The impact pushed her car into opposing traffic and an oncoming vehicle struck her broadside. The impact caused a compression in her lower back that six months later still causes her excruciating pain. Between medical school and undergrad, she is in debt over $190,000 and because of her injury, can no longer qualify for individual disability insurance.
According to the 1994 Statistical Abstract of the United States, in the course of a year, 1 in 10 people between the ages of 25 and 64 will suffer a disability. When comparing that ratio to the odds of being victim of a house fire (1 in 122); injured in an automobile accident (1 in 160); or even of death (1 in 117), the odds of being out of work due to an injury or illness are very high. These statistics are what make disability insurance for medical residents and fellows so important.
With average salaries that are roughly a quarter that of a physician’s median salary, resident physicians are treading water until their full income potential is realized; insuring the ability to earn that future income is critical for medical residents. Disability insurance provides that important safety net.
According to the Association of American Medical Colleges (AAMC), if medical school tuition continues to increase at its current rate, the projected median indebtedness for 2013 medical school graduates will be over $180,000 for those who went to public school and just shy of $210,000 for private school attendees. While repayment of Stafford loans may be deferred in a case of economic hardship, many residents must begin to repay student loans six months after graduation. Regardless of whether these loans are deferred, an injury or illness to a medical resident with substantial debt could have debilitating long-term financial effects.
Many residency programs offer group disability insurance, but these plans can have major limitations. Group plans can be changed or canceled at any time, and most do not extend past residency. A physician under one of these plans would have to purchase disability insurance again after residency—which is still a wise decision—but would likely miss out on lower premiums that were available as a resident. In addition, by waiting, any medical conditions that emerged as a resident could make the future purchase of an individual disability insurance policy very difficult. Finally, many group plans only offer coverage for a total disability. If a resident or intern under a plan that only offers total disability coverage is partially disabled and still able to perform any type of work, the benefits may not be payable.
The simple solution to protecting future income and eliminating the risk of being unable to repay student loans is purchasing an individual disability insurance policy. Rates are based on age and health status, so it is advantageous to purchase a policy sooner rather than later. A policy purchased by a resident has the flexibility to meet changing needs of the insured after residency and offers significant financial advantages. Buying disability insurance at a younger age and while healthy will get a medical resident or intern the best policy and rate.
With flexible premiums and the benefit of longer coverage at a less expensive rate, there is no reason for a resident physician or intern not to inquire about a disability insurance policy today. Even group discounts are available when three or more doctors from a residency program apply.