Protect Your Income with Disability Insurance
Key ArticleTakeaways
Imagine the peace of mind you’ll experience knowing that your financial stability is secure, even if an unexpected injury or illness prevents you from working.
Disability insurance for physicians is a crucial safety net, especially for healthcare and medical professionals. It protects your income when you’re unable to perform your duties, ensuring that you can focus on recovery without worrying about your income.
With different types of disability insurance available, you can tailor a policy that suits your needs. From benefit and coverage details to optional riders, you can design a policy that’s just right for you. Plus, there are options for group disability insurance, offering protection for your entire practice.
Don’t wait for an unforeseen event to disrupt your income. Secure your financial future today. Learn more about the best policies, why you need them, and the taxability of benefits. Protect your profession, income, and peace of mind – invest in disability insurance today.
- What is Disability insurance?
- Disability Statistics
- Why You Need Disability Insurance for Physicians
- Types of Disability Policies
- Disability Benefit and Coverage Details
- Provisions Physicians Should Have
- Optional Riders
- Best Disability Insurance Companies
- Group Disability Insurance
- Taxability of Benefits
- Frequently Asked Questions
- Disability insurance provides financial stability and peace of mind for physicians and other healthcare professionals in case of unexpected illness or injury.
- There are different types of disability insurance available, including individual and group policies, allowing physicians to tailor a policy to their specific needs.
- True own-specialty disability insurance is recommended for physicians, as it provides coverage for their specific medical specialty.
- Monthly benefit amount, benefit period, elimination period, and cost of living adjustment are essential factors to consider when choosing a disability insurance policy.
Given the medical profession’s high earning potential and demanding nature, disability insurance is an essential safety net for all physicians. This protection provides a financial buffer, giving you peace of mind to focus on recovery without worrying about economic hardship.
What is Disability Insurance?
Disability insurance is a form of insurance that provides financial protection to individuals in the event of an illness or injury that prevents them from working. While social security provides some disability income, it is not enough to cover all the expenses associated with a disease or injury.
Employer-provided disability insurance is often limited, with a maximum benefit amount and a definition of disability that is not as comprehensive as an individual policy with a true own-occupation definition of disability. True own-occupation (specialty-specific) disability insurance is the best option for those who require the highest level of protection, including physicians. This type of insurance provides a definition of disability that applies explicitly to the insured’s occupation (specialty) and generally replaces up to 50-60 percent of the insured’s taxable income.
Social Security Disability benefits may be available in some cases, but purchasing a disability insurance policy is the best way for physicians to ensure their income is protected in the event of a disability.
Disability insurance for physicians is critical, given the cost of education, the physical demands of the job, and the high price of medical treatments. Definitions of disability can vary from policy to policy, but they should be thoroughly reviewed before purchase to ensure that the insurance provides the necessary level of protection.
Disability insurance can be purchased in various forms, including short-term disability insurance and individual and group disability plans. Individual policies offer the greatest flexibility in terms of coverage, although group policies may be more affordable. Physicians need to consider their needs when selecting a policy, as well as the insurer’s financial stability.
Finally, it is essential to recognize that disability insurance is not a one-size-fits-all solution. There are many factors to consider when selecting a policy, such as length of coverage, waiting periods, and cost. Furthermore, disability insurance should be reviewed and updated regularly to ensure that it meets the changing needs of the physician.
Disability Statistics
In 2021, nearly 42.5 million people (13%) among the civilian noninstitutionalized population in the United States had a disability, according to the American Community Survey (ACS) 1-year estimates. Physicians are not immune to this risk. Common causes of disability among physicians include musculoskeletal disorders, cancer, and mental health issues. These statistics illustrate the undeniable reality that disability can strike anyone at any time, even those in high-responsibility professions like medicine. This emphasizes the critical need for disability insurance in a physician’s financial planning strategy.
Why You Need Disability Insurance for Physicians
Receiving financial protection in the event of an illness or injury that renders an individual unable to work is an important consideration, making disability insurance a necessary coverage option for physicians and other healthcare professionals. While Social Security might pay disability benefits, the amount of benefit is not enough to maintain the lifestyle many doctors have achieved. Disability insurance provides income in the event that a physician is unable to work due to disability. Disability insurance can replace a portion of lost income, ensuring that the physician can continue to pay their bills, maintain their lifestyle, and provide for their family.
For physicians, disability insurance is critical because of the nature of their work. Long hours, on-call duties, and regular exposure to disease and infection all increase the chance of injury or illness. Furthermore, the high cost of medical school and the need to pay for continued training and certifications make disability insurance particularly important for physicians.
Types of Disability Policies
Individual Disability Insurance (IDI) and Group Disability Insurance (GDI) are the two main types of disability insurance for physicians and other healthcare professionals.
IDI is a private insurance plan that provides benefits to an individual if they become disabled and cannot work.
GDI, on the other hand, is a group coverage plan that provides benefits to a group of people, such as members of a professional organization or employees of a business.
Both types of disability insurance provide crucial financial security for physicians who become disabled and can no longer practice medicine.
Individual Disability Insurance
Physicians may consider acquiring individual disability insurance to protect their income in the event of an unexpected illness or injury. Employer-provided disability policies may not provide enough coverage for healthcare professionals.
Therefore, it is essential to ask questions about disability insurance and investigate options such as disability riders and benefits in employer-provided or organization-provided disability insurance.
Physicians need to understand the differences between these plans and choose the one that best suits their needs.
Group Disability Insurance
Group disability insurance can provide additional security for medical professionals during an unexpected illness or injury. This type of insurance provides a monthly benefit if a disease or injury prevents an individual from working.
Group disability insurance is usually provided through an employer, although private disability insurance policies may also be purchased from an insurance company or broker. These policies provide coverage up to a certain percentage of the individual’s current income. Group policies are typically not as comprehensive as individual policies, so If you have access to a group policy, it might make sense to supplement that plan with an individual disability insurance policy.
Insurance companies and brokers specializing in disability insurance can help medical professionals find the right policies to provide the best protection possible.
Disability Insurance Benefit and Coverage Details
Disability insurance for physicians can provide financial protection if they cannot work. The amount of the monthly benefit, the period during which payments will be made, and the elimination (waiting) period will all impact the disability insurance premiums and are all critical factors in determining the level of protection offered.
In particular, the monthly benefit amount will determine the size of the monthly payments. T The benefit period will determine the length of coverage. And the elimination period will indicate how long the insured will have to wait before benefits are paid.
Monthly Benefit Amount
The Monthly Benefit Amount for disability insurance is calculated as a percentage of your annual income, typically in the 40% – 60% range, depending on the amount of your income.
An automatic increase benefit rider may also be added to individual disability insurance policies, which adjusts the Monthly Benefit Amount for inflation. Physician disability insurance policies are designed to provide a higher Monthly Benefit Amount than other disability insurance policies.
Ultimately, the Monthly Benefit Amount is specified in the disability insurance policy, and the insured will know precisely what they are entitled to receive in the event of a disability.
Benefit Period
The Benefit Period is when a disability insurance policy pays benefits to an insured individual. Level premium policies often provide a benefit period of up to age 65 or 67, depending on the company.
Elimination Period
The elimination period is the amount of time that must pass before the benefits of a disability insurance policy are available, and claims can be made.
This period is typically determined by the specific policy, with individual policies often having different elimination periods than group policies. For instance, an individual policy may require a 90-day elimination period, while a group policy may require a 180-day elimination period. The policy premiums are higher with shorter elimination periods, such as 30 or 60 days. Conversely, longer elimination periods (six months, one or two years) result in lower premiums.
While there are no deductibles like health insurance, the elimination period can similarly bring the premiums more affordable.
Provisions Physicians Should Have
When considering disability insurance for physicians, it is essential to investigate the policy’s provisions. Among the key provisions, physicians should look for:
- Own-occupation coverage
- A policy that is non-cancelable and guaranteed renewable
- Residual or partial disability coverage
- A future benefit increase option
These provisions assure a secure financial future in the event of disability.
Own-Occupation Coverage
Own-Occupation coverage benefits physicians unable to practice in their current occupation (specialty-specific wording is preferable) due to disability. The definition of disability is a significant factor in a disability policy. An independent broker can help explain the different definitions of disability and if a policy with a true own-occupation definition of disability insurance policy is suitable for the physician.
A policy with a true own-occupation definition of disability pays a benefit when you become disabled, and you can claim benefits even if you choose to work in another occupation. Own occupation policies are the recommended choice for physicians and healthcare professionals.
The insurance company will describe your occupation in this type of policy as your own occupation, regular occupation, or professional specialty.
Private (individual) disability policies are often preferable to group policies, offering more comprehensive own-occupation coverage. With the help of an independent broker, physicians can find a policy that meets their needs and budget.
Non-Cancelable & Guaranteed Renewable
Non-Cancelable & Guaranteed Renewable disability policies assure the insured that the insurer cannot cancel or modify the policy and will be renewed each year without a rate increase. This type of policy is especially beneficial for physicians, as they often incur significant amounts of student loan debt and depend on their income to pay it off.
An independent agent can help physicians find the right Non-Cancelable and Guaranteed Renewable policy for their specific medical specialty, which will provide the best income protection.
Residual or Partial Disability Coverage
Residual Disability Benefits can be added to most disability policies to provide coverage for partial disabilities. A residual disability rider can benefit physicians in case of an emergency or other serious medical event resulting in a partial disability.
This rider pays partial benefits (a percentage of the benefit based on the percentage of lost income)if you suffer an injury or illness that limits your ability to work (loss of time or duties) but doesn’t cause total disability.
A residual rider that includes recovery benefits is the most comprehensive of this type of benefit. With the recovery benefit, after you fully recover and return to work full-time, the policy continues to pay benefits as long as you continue to have a loss of income of at least 15% or 20% (depending on the company) of your prior income, and the loss is solely the result of the injury or illness that caused the disability.
Future Benefit Increase Option
A Future Benefit Increase Option can be added to a disability insurance policy to provide additional coverage in the event of an increase in income without having to go through medical underwriting again (only financial underwriting is required). An independent insurance agent can assist a physician in determining if this option or rider is appropriate for their long-term disability policy. In most cases, this option is only available for individual disability insurance policies.
This is not to be confused with an automatic increase rider, which is available in policies from most disability insurance companies. This rider offers an annual increase in benefit (typically 4%) without having to show proof of increased income.
Therefore, the Future Benefit Increase and Automatic Increase riders are essential features to consider when selecting a disability insurance policy. It will ensure that the policy remains up to date with a physician’s changing needs and provide additional coverage in the event of an increase in income.
Optional Riders
Additional riders can provide additional protection for physicians.
- Student loan protection is a rider that can help cover the cost of medical school loans in the event of a disability.
- Retirement protection can supplement a physician’s retirement savings.
- A catastrophic rider can provide additional coverage for extreme events such as a significant illness or injury.
- A Family Care benefit can pay benefits if a family member becomes seriously injured or seriously sick. The Family Care Benefit can help you take time for caregiving. This benefit provides cash to
replace lost income due to working fewer hours and earning less income to care for a
family member. At the time of this writing, Only Standard will pay this benefit.
Student Loan Protection
Student loan protection is a feature of disability insurance for physicians that offers financial assistance to those with medical-related student loan debt. True own-occupation coverage is typically included in disability insurance plans for medical professionals, which means that the policyholder can receive benefits even if they cannot work in their own medical profession.
This type of long-term disability policy may also include a student loan rider, which can help policyholders with their student loan debt if they become disabled and unable to work. Policy provisions vary among disability insurance plans, and the insurance premiums may differ depending on the extent of the policy’s coverage.
Therefore, it is crucial for medical professionals to carefully review the policy’s provisions to determine if a student loan rider is included.
Retirement Protection
Retirement protection is an essential consideration for medical professionals due to the potential financial impact of an inability to work. Optional riders can be added to a long-term disability policy to provide true own-occupation coverage, which is designed to protect a policyholder’s ability to stay in the profession. Disability insurance quotes can help to determine the best coverage options.
A Retirement Protection rider ensures your retirement savings stay safe by covering the contributions you would have added to your retirement plan if you were fully capable of working in case you become completely disabled. Some insurance carriers also compensate you for matching contributions that would have come from your employer.
Catastrophic Disability Rider
Catastrophic riders may be added to long-term disability policies to provide additional coverage beyond a standard policy.
True own-occupation coverage is a feature of a long-term disability policy that pays benefits until the doctor reaches retirement age, regardless of whether they can work in another profession. This type of disability income insurance is vital for physicians to consider, as it will provide a steady income in retirement.
Additionally, a catastrophic rider may be added to a policy to provide disability income protection for residual disability. The Catastrophic rider will provide extra funds (up to 100% income replacement) if you are functionally impaired or irrevocably disabled. Some policies will also add a cost-of-living adjustment while this benefit is being paid.
Physicians need to consider a family care benefit as part of a catastrophic rider, as this will provide coverage for family members in the event of a disability.
Family Care Benefit
Most income protection policies pay benefits only when you can’t work due to injury or sickness. But what if a family member becomes seriously injured or seriously sick? The Family Care Benefit in Standard’s Platinum Advantage policy can help you take time for caregiving. This benefit provides cash to
replace lost income due to working fewer hours and earning less income to care for a family member.
Best Disability Insurance Companies
When searching for the best disability insurance policies, there are various options to consider.
Ameritas Insurance, Guardian Life Insurance, Mass Mutual Life Insurance, Principal Life Insurance, and Standard Life Insurance all offer disability insurance policies with unique features and benefits.
It is essential to understand the differences between each company and the policies they offer to make an informed decision. As an independent insurance broker, we work on behalf of our clients and are not beholden to any one insurance company. As such, we will assist you in choosing the right company for your particular situation,
Ameritas Insurance
Ameritas Life Insurance Company, a UNIFI Company, offers life insurance, disability income insurance, and annuities tailored to meet your insurance and investment needs.
Within the mutual holding company structure, UNIFI Companies is comprised of diversified businesses that enable a single mission for UNIFI – to protect and enhance the financial security and quality of life of individuals, families, and businesses through insurance and financial products and services.
Overall, Ameritas Insurance offers physicians comprehensive disability insurance options that can help protect their income and provide financial security. Ameritas offers total own-occupation disability – ensuring you receive the full benefits even if you choose to work in a new occupation post-recovery.
Financial Ratings
| A.M. Best | Standard & Poor’s | Moody’s | Fitch | Weiss Safety |
| A | AA+ | N/A | N/A | B |
Guardian Life Insurance
Founded in 1860, The Guardian Life Insurance Company of America, New York, NY (Guardian) is one of the largest mutual life insurance companies in the United States. As of December 31, 2018, Guardian and its subsidiaries (including Berkshire Life Insurance Company of America) had $73.9 billion in assets (on a consolidated statutory basis), all the while providing outstanding customer service to over 27 million customers. With close to 3,000 financial representatives and 80 agencies nationwide, Guardian and its subsidiaries protect individuals, small business owners, and their employees with life, disability, health, long-term care, and dental insurance products and offer 401(k), annuities, and other financial products and trust services.
Guardian’s individual coverage has long been considered one of the best policies in the industry. As an independent agent, we have helped many physicians and dentists with their Guardian own occupation disability insurance policies.
Financial Ratings
| A.M. Best | Standard & Poor’s | Moody’s | Fitch | Weiss Safety |
| A++ | AA+ | Aa1 | N/A | A |
Mass Mutual Life Insurance
MassMutual (the Massachusetts Mutual Life Insurance Company) was founded in 1851. For over 160 years, they have been one of the nation’s leading insurance providers.
MassMutual is different from other big providers because they are a mutual company. They don’t answer to Wall Street or shareholders.
Instead, the company offers shares in ownership to its policy owners. In some cases, policy owners can also share a portion of the company’s dividends.
Physicians can benefit from these policies, as they can help them maintain their financial security if they have a disability that prevents them from working.
Financial Ratings
| A.M. Best | Standard & Poor’s | Moody’s | Fitch | Weiss Safety |
| AA+ | AA+ | Aa3 | AA+ | B- |
Principal Life Insurance
It was a modest proposal that Edward Temple, a banker from Chariton, Iowa, presented to his colleagues in 1879 when they formed Bankers Life Association – “to establish an association which provides inexpensive and dependable life insurance protection for bankers and their employees…
Now, 132 years later, the little association has grown to become the Principal Financial Group – an industry leader with 15,000 employees, 15 million customers, and more than $144.9 billion of assets under management. They are one of the largest employers in Iowa, one of Fortune’s 100 Best Companies to Work for, and a Fortune 500 Company.
Principal Life Insurance offers a variety of life and financial solutions for individuals and businesses, providing financial stability and supplemental benefits. These include disability insurance, which can be an essential consideration for physicians. It can increase their option to receive a base salary should they become disabled without any extra cost.
Physician disability insurance usually includes contractual provisions that provide coverage for physicians who cannot work due to an illness or injury.
Financial Ratings
| A.M. Best | Standard & Poor’s | Moody’s | Fitch | Weiss Safety |
| A+ | A+ | A1 | AA- | B |
Standard Insurance Company
For more than 100 years, StanCorp Financial Group, Inc., through its subsidiaries marketed as The Standard — Standard Insurance Company, The Standard Life Insurance Company of New York, Standard Retirement Services, StanCorp Mortgage Investors, StanCorp Investment Advisers, StanCorp Equities, StanCorp Real Estate, and StanCorp Trust Company — has helped people achieve financial security so they can confidently pursue their dreams.
StanCorp’s subsidiaries serve approximately 7.5 million unique customers nationwide as of June 30, 2011, with group and individual disability insurance, group life, AD&D and dental insurance, retirement plans products and services, individual annuities, and investment advice.
Standard Insurance is a popular disability insurance option for physicians and medical professionals. This type of coverage offers a range of benefits that can help protect a medical practice’s income from a disability. It is designed to protect physicians if they become disabled and cannot work or practice medicine for a period of time.
Financial Ratings
| A.M. Best | Standard & Poor’s | Moody’s | Fitch | Weiss Safety |
| A | A+ | A1 | N/A | B+ |
Group Disability Insurance
Group disability insurance is a form of coverage that provides financial protection to physicians in the event of an illness or injury that renders them unable to work. This type of insurance is usually offered through an employer or a professional association. It aims to replace a portion of a physician’s lost income if they become unable to work. This type of coverage can be short-term or long-term, with short-term coverage usually covering up to two years and long-term coverage covering up to five years or more.
Group disability insurance is typically cheaper than individual disability insurance since the risk of disability is spread among a larger group. This makes group disability insurance a more cost-effective option than separate policies since the cost of premiums is lower for each individual. However, group disability insurance typically has more restrictions than individual policies, such as limits on the amount of coverage that can be purchased and the length of time benefits can be paid out.
Overall, group disability insurance provides an essential financial protection source for physicians who cannot work due to illness or injury. It can help protect them from the financial hardship of lost income and provide additional benefits such as coverage for medical expenses and retraining. However, it is essential to understand the restrictions and limitations of the coverage to ensure that it meets the individual needs of the physician.
Taxability of Benefits
The taxability of disability benefits may vary depending on the type of coverage. You should always consult your accountant or tax professional when considering the tax implications of a policy. Still, the rule of thumb is if you pay the premiums (with after-tax dollars), the benefits are not taxable. Conversely, if your employer pays the premiums, your disability benefits (when claimed) will be taxable.
It is important for physicians to understand the taxability of disability benefits in their country before purchasing a disability insurance policy.
Frequently Asked Questions
Conclusion
Have you considered the financial implications if an unexpected illness or injury prevents you from working? Disability insurance is a type of insurance designed specifically to provide a financial safety net under these circumstances. Its unique coverage and benefit details, including optional riders, are structured to meet your unique needs as a physician.
Imagine the peace of mind you’ll have knowing you’re adequately covered in case of unforeseen events. Plus, you have an alternative option of group disability insurance, which could provide you with more affordable coverage and enhanced benefits.
Don’t leave your financial protection to chance. Secure your future now with disability insurance tailored for physicians. Ensure you’re adequately covered. As an independent disability insurance broker, we can assist you in finding the policy that is right for your needs.
Take the first step toward financial security today. For more information or to start your journey with disability insurance, reach out to our dedicated team at 866-868-0099. We’re here to guide you, answer your questions, and help you choose the coverage that suits your needs.
Protect Your Income with Disability Insurance
Last Updated on July 13, 2024 by Richard Reich
