The medical field has seen a strong surge in female physicians—an increase of a whopping 447% from 1980-2010, according to the American Medical Association. It’s a sharp contrast to 1847, when Harriet Hunt was the first female to apply to Harvard Medical School (her application was summarily rejected). Today, women represent more than 30% of all physicians and more than 45% of all residents and fellows. Ironically, women’s growing presence in medicine means more of them will encounter the inequity of insurance rate premiums they are charged for disability income insurance, with premiums as much as 40% to 50% higher than those for males. The reason for the difference in premium comes down to experience, essentially—historically, insurance companies have found that women tend to file more disability claims than men and are disabled for a longer period of time, so they are charged higher premiums for coverage.
Disability income insurance is available from an employer in a group policy, or can be purchased privately. The coverage replaces a portion of income (usually 50%-70%) lost due to an accident or illness that results in the ability to work. The Social Security Administration also provides disability insurance, but qualifying for benefits can be lengthy and complicated and the benefit payment is fairly small. This is an important coverage to have because physicians, just like other workers, are three times more likely to become disabled than to die before retirement age. Furthermore, the relative youth of female physicians—55.6% of them are under age 45—means they have decades of earning potential at risk that warrants protection.
How to keep disability premiums at a minimum
Buy in bulk. A so-called “multi-life discount” may be available if three or more individual policies are purchased by physicians working at the same medical practice. This can save women up to 50% on the cost of their disability insurance premiums—great if the practice is comprised of many female physicians, however the rates for their male counterparts could increase. The potential savings for the women must be weighed against the makeup of the overall group to determine whether this strategy makes sense for the practice.
Select a longer waiting period before benefits begin—say, three to six months or even longer, which can reduce premiums significantly.
Stay healthy and don’t smoke—those who aren’t in good health will pay more for coverage; the same is true for smokers. Because smoking is one of the basic factors involved in calculating disability insurance premiums, not smoking is good for one’s health and wallet.
Buy coverage early. As people age, the more likely they are to become disabled. There are different policy types and features that make good coverage affordable when young physicians are just getting started and affordability is a particular concern.
Residency and Fellowship is the best time to buy. Rates are lower based on age and most insurance companies offer additional discounts to people in training. Buying a policy as a resident/fellow could save thousands of dollars over the life of the policy.
The disability insurance market is quite complex, with a wide variety of policies whose protection varies greatly. Comparing premium costs is only one consideration—the strength and reputation of the insurance company, the policy definitions, benefit amounts, and options available must also be taken into consideration. A professional insurance agent can provide complete details about disability insurance as well as offer a selection of policies from insurers for comparison purposes, and provide a disability insurance quote.
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