As a doctor, you understand better than anyone the frailty of the human body – which means you also know that a disability can really happen to anyone at any time, most often when they least expect it. As a medical professional, the need to protect your hard-earned income with physician disability insurance should be evident – but do you really know just how important it is?
Should you at some point become unable to perform your duties as a doctor, you’ll be glad you chose the right type of disability insurance policy. There are several details, riders, stipulations, and options for coverage out there, so you need to make sure you understand every word of the policy you choose. One of the most important features to have is an “own-occupation” definition of disability, as opposed to an “any occupation” definition.
You’ve spent many years, countless hours, and substantial funds to become a physician, and you want to make sure that you are paid the benefits you would need – even if you could work in another field. If you were to become disabled but could still work in another occupation that paid less money, any occupation insurance coverage would not pay out any benefit. However, if you had own-occupation disability insurance, you would be paid benefits.
Your policy should have not only a true “own-occupation” definition of disability but should also define your occupation specifically. Your disability insurance policy should incorporate a very strong definition of your occupation not just as a physician, but your specialty, as well.
You’ll want to make sure there are residual and recovery benefits included in your policy. These vary quite a bit from one company to the next. Residual or partial benefits are going to be either included in your base coverage in a policy or offered as an optional rider, so be sure to look for it.
Be sure that even if you have group coverage through your place of work that you also have an individual plan to cover any gaps. Oftentimes, group coverage benefits are not enough to cover a physician’s income at a level that is adequate enough to maintain his or her family’s standard of living.
Your physician disability insurance should be backed by a well-established company with top financial-strength ratings. You will be continuously paying premiums to this company, and you’re going to want to make sure that it will be around to pay you benefits when needed.
Insurance riders are optional coverages that the applicant can add to a Disability Insurance policy which allows the policyholder to customize their policy to meet specific needs.
The own occupation rider modifies the qualification of your claim that it is specific to your occupation (i.e. specialty). Even if you can do another job, your claim would be valid and benefits paid. Adding this rider allows the policyholder to have a very strong definition of disability.
Student Loan Rider
The student loan rider provides for the insurer to allocate funds to make payments on debt from student loans while the policyholder is on a claim.
Cost of Living Adjustment
The cost of living adjustment (COLA) provides for the insurer to increase your monthly disability benefit based on the Consumer Price Index while the policyholder is on a claim.
Retirement Protection Rider
Since it would be extremely difficult to continue making payments into a retirement fund while the policyholder is on a claim, this rider provides for the insurer to place funds into an irrevocable trust while the policyholder is on a claim the offset the retirement contributions that will likely be missed while you were disabled and unable to work.
Future Purchase Option
The future purchase option allows the policyholder to lock in their insurability at the time of the application and make it possible to purchase more coverage in the future without having to prove medical insurability. This rider is especially important for residents or new practitioners that understand their income will increase substantially in the future.
Many insurers that offer Disability Income insurance allow the applicant to choose between level or graded premium payments. Level simply means that periodic premiums remain level over the life of the policy and graded means the premiums start out at a lower rate and then gradually increase in later years according to a schedule specified by the insurance company.
Residents or young doctors starting out could certainly benefit by a graded premium plan because it makes it possible for them to purchase realistic coverage when money is extremely tight and then will increase over time when the doctor’s income has increased over time.
For doctors who are working in a large practice or hospital, Disability Income insurance is typically offered on a group basis. This is an important benefit because there is typically no medical underwriting and the coverage can be purchased at a significant discount and in many cases, premiums are paid by the employer.
It is important, however, to make certain you completely understand the policy benefits. In most cases, a group disability insurance policy provides “boilerplate” coverage which means you, as the named insured, have very little input when it comes to benefit amount and available riders.
Unless your group policy uses the definition of disability as “own-occupation,” you will likely be very disappointed with the benefits you receive at the time of a claim. It’s also important to point out that group disability insurance is not portable, meaning if you leave or are let go from the employer, your disability insurance will not follow you.
Our firm always recommends having a supplemental individual disability insurance policy even if you are provided with group coverage that is fully or partially paid by your employer. Doing so allows the doctor to make certain their coverage is based on “own occupation,” you can select the optional riders that make sense for your circumstances, and your monthly benefit will be more than the benefit you receive in a group policy.
Individual Disability Insurance policies will typically exclude certain conditions you may have developed prior to applying for your policy. This means if you are already suffering from back or neck pain, your policy will not likely pay benefits for a disability that is related to your back or neck pre-existing condition. This is all the more reason to get a policy in place while you are younger and healthy.
Some hobbies may also be excluded from coverage in your disability insurance policy. For example, if you admit to hazardous hobbies like sky-diving, SCUBA diving, or rock climbing, your insurer will likely place an exclusion for each hazardous hobby you list on the application.
There are also different ways that claims are paid when it comes to benefits, so be sure that you consider them when you are obtaining doctors’ disability insurance quotes. You’ll want a policy that covers income during your recovery, but not one that only defines residual disability as a loss of time or duties.
Intramark Insurance Services can help you understand the various riders, options, and details you’ll want to look for in order to protect what you have worked so hard to achieve. If you are a resident physician or are in your first year of practice, we can help you with special program information also.
If you are considering Disability Income Insurance but aren’t familiar with the best companies that provide the most affordable rates, DO NOT APPROACH A COMPANY OR COMPANY AGENT DIRECTLY.
Just as with life insurance, car insurance, and homeowners’ insurance, your best way to shop for Disability Insurance is by contacting an independent agency that represents multiple highly-rated insurance companies. Many of these independent agencies have insurance professionals who specialize in Disability Insurance and can offer expert and reputable advice. There is more to purchasing this type of insurance than signing an application and sending a check. An independent insurance agent with a background in disability insurance will help with the shopping process, designing a policy that best meets your needs, and then advocating for you during your underwriting process.
You’ll need an independent agent that is familiar with all of the coverage and bells and whistles that the insurers have to offer and understand disability insurance for doctors. And the best part of using an independent agent is you do not pay one nickel more for your policy.