The Money Meets Medicine Podcast

A Comprehensive Guide To Disability Insurance For Physicians

What are your most prominent assets? Your home? Car? Maybe your remarkable jewelry collection or your prized assortment of Bordeaux? Ask your teenage dependent and it’s a phone. You know what these all most likely have in common? 

They are insured. 

Why? Because they are valuable, and it’s usually cheaper to insure these items and let someone else pay for the replacements.

Yet, there are even more valuable assets in life. This list of assets would include intangibles like vacations, education, memories, celebrations, and that one spectacularly dreadful trip to Disney. The list goes on and on. You know what these all require to create? Money. And – for most of us – money requires an income.

My tenth-grade teacher had it right. One time, I asked my teacher when I would ever need to use the Transitive Property of Equality. You know, the one that says, if A = B, and B = C, then A = C. If “A” is your income, “B” is your assets, and “C” is joy and happiness, then isn’t joy and happiness a result of having an income? Is it safe to say that the money itself doesn’t bring us extreme jubilation, but rather what that income allows us to do in creating the assets mentioned above?

Think about it: if we have the assets insured, why would we not have the antecedent (our ability to earn an income) insured since that is clearly our greatest asset? If “A” begins to melt away, is it not plausible that “B” and “C” will soon follow? 

After reading this article, you will have the answers to the following questions:

  1. Why is individual disability insurance needed for most physicians?
  2. What key features need to be included in an individual disability insurance policy?
  3. How do I go about purchasing an individual disability insurance policy?
  4. What happens after I purchase a disability insurance policy?

Before we start . . . 

General Statistics About Disability Insurance for Physicians:

  • Insurance companies predict that one in seven physicians will utilize their individual disability insurance policy at some point in their career
  • The average disability claim (i.e. the amount of time someone receives disability coverage due to a disability) lasts roughly three years 
  • About 62% of claims last just under five years
  • Roughly 9/10 disabilities are caused by illness rather than accidents
  • The leading disablers are back and joint pain (28.6%), cancer (15.1%), injuries and fractures (10.3)
  • It’s been stated that roughly 80% of total disabilities begin as partial disabilities
  • An individual disability insurance claim is about three times more likely to be filed (1/7) than an insured home claim (1/20), and the home is probably worth much less than the lifetime earnings of a physician

Disability Insurance for Physicians

 

Let’s provide some context to those numbers to help us think more clearly about it. A 30-year-old physician making $250,000 annually will potentially earn $9,250,000 working until age 67; if you owned something worth $9.2 million dollars and had a 14% chance of losing it, would you insure it?

Of course, you would, which is just one of the reasons disability insurance is so important for most physicians.

 

Why Is Individual Disability Insurance Needed For Most Physicians?

This is the number one question I get asked during all of my conversations with physicians exploring disability insurance. And it’s a simple response: you have a specialized skill set and you make a lot of money. Period. If you were making $70,000, we most likely wouldn’t be having this conversation.

With the definition of disability, we use in our policy construction – true own occupation specialty-specific, which is discussed below – you are insuring both your skill set and your future income. Let me explain. 

An own-occupation, specialty-specific definition of disability is the strongest, It states

Totally disabled means that, solely due to your injury or sickness, you are not able to perform the material and substantial duties of your occupation, even if you are working in another occupation for wage or profit. If you are a physician and have limited your duties to the performance of the usual and customary functions of a specific, professionally recognized medical specialty, we will consider that specialty your occupation.

An example would be an anesthesiologist losing a thumb. There goes her ability to intubate. Since she can no longer practice her specialty, a claim would most likely be approved, and she would receive her monthly benefit and still be able to work for wage or profit doing something else, even a different type of medicine.

In other words, someone may “double dip” so to speak with a true own occupation definition of disability, and thus the second part of our equation is insured: one’s ability to earn a future income without having it offset or decrease one’s disability payment. However, as you’ll learn below, not all disability insurance policies carry this kind of definition. For example, this is true for many employer-paid group long-term disability (LTD) policies.

Is my employer-paid group LTD coverage enough?

When doctors first hear about individual disability insurance, one of the first questions they have is, “Why can’t I just rely on my employer-paid long-term disability coverage? I have 60% of my salary up to $20,000/mo. I can live on $20,000 a month.”

Money Meets Medicine, Jimmy Turner, Justin Harvey

 

I think Mark Twain might have sold disability insurance because he said it best: “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

In this scenario, our doctor thinks they have $20,000 paid to them each month if they get disabled… but they don’t really get $20,000. 

 

Even if that weren’t true, a group plan is:

  • Tied to an employer and specific job (it often will not come with you if you leave your employer).
  • Has a 180-day “continuous” elimination period, or the amount of time you must be disabled before getting paid.
  • A weaker definition of disability. Many are own occupation NOT ENGAGED definitions or worse own occupation for 24 months then any occupation. We will discuss this more below.
  • You are not the owner of this policy; you are a participant in someone else’s plan. This means that the policy provisions – including the monthly benefit and the definition of disability– can be changed or canceled at any time. 

But, hang on. It gets worse. There is an even bigger reason Group LTD’s are usually insufficient. And it gets at the heart of our doctor thinking they will get $20,000 per month, which is often not the case.

Enter here a section of your employer-paid LTD titled “Income Benefit Offsets” or “Deductible Income.” Your potential monthly benefit is going to be “offset” or reduced by these income items. 

Here are the most common benefit offsets
(Refer to your group plan for the total list of offsets):

  • Social Security disability payments to you and your dependents (and you are required to apply for social security disability; if you do not or don’t do it “in a reasonable and timely manner” the carrier can estimate what you may be paid or they can even withhold your benefit entirely)
  • Workers’ compensation
  • Accumulated sick pay 
  • Unemployment compensation (state and federal)
  • Any other group or association (think AMA) disability insurance plans (I’ve never seen an offset for a true individual disability insurance policy)
  • Any amount of third party liability payments you receive by judgment, settlement or otherwise
  • No-fault insurance payouts 
  • Personal injury settlements
  • Any earnings or compensation you receive

And the list goes on and on. The carriers who run these group plans want to pay you as little as possible, so they have a weaker definition of disability and they will limit their financial responsibility by reducing your benefit by these offsets.

You may think you are getting that $20,000 per month. And you will… right after everything listed above is taken out first.

 

A Benefit Offset Example

Disability Insurance for Physicians

 

We do a ton of these policy reviews each week at Money Meets Medicine Disability Insurance, and when we explain these offsets, clients are shocked at how their group plan operates. 

Here’s an example for an attending dermatologist with an annual income of $480,000.

Her group plan states it will provide 60% of her base income up to $20,000/month. She wasn’t sure she needed more coverage, but she wanted to at least discuss her options. Let’s look at the math and then she can decide.

  1. I asked for her employment contract, and it clearly stated that her base annual salary was $440,000, with “Projected Yr01 Total Compensation of $480,000.” Only her base salary will be used for the 60% calculation for her benefit. So $440,000 x 60% = $264,000/12 = $22,000/mo. 
  2. However, since the benefit is capped at $20,000, that’s $2,000 lopped right off the top. [A $20,000 cap is much higher than the average. 95% of the group plans sold in the last three years have a maximum monthly benefit of $15,000 or less and 81% of Group LTD plans sold in the past three years provide own-occupation coverage for just two years! I’ve seen some group plans as low as $5,000/mo maximum.]
  3. Since she works an average of fifty hours a week at her employer, we hypothesized that’s where she was injured or became ill. Here’s what her hypothetical projection was just using national averages to demonstrate how offsets impact a potential benefit:
    1. Workman’s comp – national average $1,916/mo so we rounded up to $2,000; since she is a very high earner injured while on the job, her compensation may be dramatically underrepresented here
    2. Social Security disability – average $1,200, again hers may be much larger based on her payments into the system, and I assumed no dependent payouts (they usually get 50% of the primary recipient)
  4. So she was now at $16,800. Now comes the tax. Let’s be generous and call it 25% ($4,200), which leaves at the best case scenario $12,600. At this most favorable outcome, that is only 31% income replacement. And can you imagine if she had $15,000 or less maximum benefit as most of my clients do? 

Once she understood the implication of offsets, I just stopped right there since these are the two most common,  but the insurance company is going to go right down the list and incorporate maximum reductions. And imagine what her attorney might have gotten from personal injury from 3rd parties or insurance settlements – all used as offsets! Yes, a lot of hypotheticals here, but you know what’s written in stone? Those offset clauses. They are no joke; they really do happen.

Another Example

Carriers understand the tax implications (and the offsets) with group plans; as a result, they apply a “discount factor” when you apply for individual disability insurance and devalue the group plan. Then, they use that reduced dollar amount to calculate your remaining limit of individual coverage that may be purchased. 

For example, a private practice internist making $300,000 ($25,000/mo) and who has no group coverage would be allowed to purchase $13,300/mo in coverage (53% of his income). With a traditional employer-paid group plan of 60% up to $15,000/mo, he would be allowed to purchase ~$6,000 individual benefit.

If we just take those two numbers, that’s $21,000/mo (84% of his income). Carriers aren’t going to allow that because the physician would then be earning more money disabled than when they were working. That’s not the kind of message they want to send.

Insurers know the group plans have offsets like the ones mentioned above, so they then take that $15,000 group and devalue it to about $9,000. Add in the $6,000 individual benefit and that results in $15,000/ month (and now we are at the magical 60% of income, or the amount that an insurer at which the insurer considers you to be fully covered).

However, if this doctor relied on the group policy alone, he would receive only $9,000, or 36% of his income, leaving a substantial income gap. In other words, the group disability coverage would be insufficient.

Final Thoughts About Group Coverage

Disability insurance is meant to replace ~40% to 60% of your annual income, either with individual disability insurance only or a combination of group coverage and individual coverage, i.e., if you don’t have group coverage, you can purchase more individual coverage. 

In fact, I would highly recommend doing this while in residency and fellowship when group coverage is not involved in your benefit calculations. Group policies generally have far inferior terms than individual policies. Notwithstanding, many physicians use this as their primary source of DI.

This should be reversed.

We should lock in as much individual coverage first, which can be done in the year of graduation with new-in-practice limits of $7,500/mo, and then use your group plan as a supplement since the payout calculation of group coverage is curiously cryptic. Unfortunately, many clients wait until they get their group plan, and then do a benefit increase of individual coverage. Most often, they can purchase less individual coverage (or none at all), as group coverage now will play a function in your participation limit.  

In conclusion of group coverage, I tell all of our clients that if your claim is approved, you can hope to bring home 50%-60% of your maximum group benefit after all is said and done. 

As someone married to a physician, I can tell you this. I am not pinning my family’s livelihood on a group policy that (1) I do not own and (2) is going to use other income against me to limit the insurer’s financial responsibility. 

Because of the underprotection and false sense of security a group plan provides, physicians should reach out to an independent agent and at least begin a discussion about supplementing and protecting their income with an individual DI policy. If group coverage was adequate, there would be no need and no market for individual DI coverage

Your plan should be to buy only as much individual coverage to make you sleep well at night, preferably during your residency, increase during your graduation year, and use potential group coverage as a supplement. 

Now that we know why group disability insurance is inadequate, let’s discuss the other option – individual disability insurance for physicians.

What is Individual Disability Insurance?

There are two types of individual policies. Both are worth discussing. Let’s break it down.

Types Of Individual Coverage

Fully Underwritten – this is the “traditional” pathway to coverage where you work with an agent and we build a policy for you. This is geared toward someone who has no or very mild pre-existing conditions and a limited to non-existent prescription medication history.

In a fully underwritten individual policy get to decide on the majority of riders (discussed below) and policy construction; in return, the carrier can also apply exclusion riders to this type of policy to hedge the risk that you pose. Applicants must go through medical underwriting where they will take a deep dive into your medical chart and history. Those out of training will most likely need to submit financial documents as well

Guaranteed Standard Issue (GSI) – this pathway is better for anyone who doesn’t meet the conditions above. A GSI has no medical underwriting. Said differently, you could have a significant medical history and they would not know about it, because they do not look into it. There is one important knockout question for a GSI with the main one being, “Have you been offered a modified policy, withdrawn an application, or been denied?” This is why getting denied on a fully underwritten policy is a potentially catastrophic mistake. 

A GSI is linked to an institution and is only available to residents, fellows, and immediate graduates. Unlike a fully underwritten policy, you do not get to decide what riders are on the policy, hence the “standard” in its name. Likewise, the carriers cannot implement exclusion riders on the policy.

Note: Not all institutions have GSIs available. At Money Meets Medicine Disability Insurance, we can research your institution to see if one is available and help you decide if it is the better pathway forward for your coverage. 

Here are some common conditions that would make you consider pursuing a Guarnateed Standard Issue disability policy:

Why? Because the medical conditions below often result in: (1) Exclusions – medical history that will be “excluded,” or not covered by your policy, (2) Ratings – increased monthly premiums due to your health history, or (3) Declines – an inability to get disability insurance

  • Stress, Anxiety, or Depression
  • Build / BMI
  • Chiropractic History
  • Pregnancy
  • Diabetes
  • Cancer History

Additional Benefits GSI Disability Policies

In addition to pre-existing medical conditions, Special GSI policies can be issued without consideration of potentially dangerous avocational activities such as rock climbing, motor sports, scuba diving, skydiving, and martial arts.

Height and Weight (build) are not taken into consideration.

Limitations Of Most GSI Disability Policies

  • Automatic mental-health coverage of 24 months
  • The maximum benefit amount is usually $15,000/mo (I have seen some at $10,000/mo and $7,500/mo)
  • Generally a higher cost
  • 3/12 Clause (if you file a claim within the first 12 months, the carrier reserves the right to look at medical records and investigate for pre-existing conditions up to 3 months prior to your policy issue date)

 

We will help you decide which pathway is better for you. In fact, one thing we do at Money Meets Medicine Disability Insurance that other agencies do not do is have clients review the medical underwriting questions before an official application is submitted in order to provide the highest likelihood of getting the coverage you need. Why? Because your insurability is the most important thing. We may even suggest getting the GSI locked in first, then applying for a fully underwritten policy so that you do not get denied and prevent yourself from getting any disability insurance at all. This is where an experienced independent agent can help. 

Whichever pathway to coverage you select, there are certain features that are in both policies.

What Are The Most Important Disability Insurance Riders and Features to Include in My Policy? 

Not all policies are made equal, and if you buy the wrong one, you may find yourself paying for a disability insurance policy that doesn’t end up covering you when you need it most. Here are some of the features you should consider when buying a disability insurance policy.

Own-Occupation Definition of Disability Insurance (Must Have #1)

“Your occupation” in the above definitions means the occupation or occupations that you were engaged in when the disability began. The five magic words are “At The Time Of Claim.” Carriers will review the previous twelve months to determine your substandard and material duties of those occupation(s). If you are a surgeon who has moved into a more academic role and only performs one surgery a month as a requirement for your academic position, you would have a hard time having a totally disability claim approved.

Recall that your individual DI policy is not tied to a specific job or employer or income; it’s portable. Say you got bored of interventional cardiology in California and became a rodeo clown in Wyoming for twelve months, continued to pay your premiums, and became disabled, your substantial and material duties “at the time of claim” would be those for a rodeo clown. If your claim was approved, you would get your benefit. And then, however unlikely, you could go back to interventional cardiology and begin practicing medicine again and receive both your new income and your monthly benefit. The occupational class at the time of purchasing your individual policy is really only used for pricing the product. You do not have to be doing that occupation to get paid.

The Good, Bad, and Ugly of Disability Defintions

This is the foundation of any disability insurance policy, and there are three main definitions:

Best: Own Occupation specialty-specific“Totally disabled means that, solely due to your injury or sickness, you are not able to perform the material and substantial duties of your occupation, even if you are working in another occupation for wage or profit. If you are a physician and have limited your duties to the performance of the usual and customary functions of a specific, professionally recognized medical specialty, we will consider that specialty your occupation.”

This is the definition most – if not all – physicians should look for in their individual DI policy. This is the definition we use when we construct policies for our own clients. It allows you to draw both your full monthly benefit if you are totally disabled and still work and earn an income in any other occupation that is not your specialty.

In-the-middle: Own Occupation Not Engaged – Same definition as above with one slight difference. “Totally disabled means that, solely due to your injury or sickness, you are not able to perform the material and substantial duties of your occupation, and you choose not to work in another profession.”

With this definition, if you cannot perform the duties of your specialty, but earn income doing anything else, your disability benefit will be reduced by the amount of income you are making. This reduces the carrier’s liability because they wouldn’t have to pay you (or pay you less) if you chose to work in a different occupation. 

Worst: Any-Occupation – This definition states that you are only considered disabled if you cannot perform the duties of any occupation based on your education, training, and “transferable skills.” Many group plans switch to this definition after a defined period of time being disabled (24 or 36 months being the most common). Some group plans also add a clause that “any” occupation considered needs to fall within a certain percentage of pre-disability income; although, these are not very common. No physician should have this definition on his or her individual policy

Non-cancelable and Guaranteed Renewable (Must Have #2)

With this rider, you can automatically continue this policy to age 65 by paying the premiums. Until you reach 65, your policy cannot be modified, adjusted, or canceled, premiums cannot be increased, and restrictions cannot be added as long as you pay your premium. This rider makes your policy the exact opposite of car insurance, which increases with every ding and dent. If you submit 0 claims or 8 claims, your premium doesn’t change. If your health declines, it will not affect your policy in any way. (The only way your premium increases is if you purchase more benefit.)

One thing to mention is that this policy is not noncancelable for you; you can cancel it at any time by calling your agent or not paying your premium. 

Residual Disability Rider (Must Have #3)

This is your partial disability rider. I could argue that this is the most important rider on your policy.

Imagine an inverted Bell Curve. At the top you are working 100%. At the very bottom, you are totally disabled. 

9/10 disabilities are illnesses. Most of those illnesses have slow on-sets. They are not a lightswitch. They come on gradually – sliding down the Bell Curve. You need to be paid BEFORE you are “at the bottom” and totally disabled. It’s not that you cannot perform your duties, but you can’t perform the volume of those duties. If you have lingering back pain, migraines, dialysis twice a week, or physical therapy, these may prevent you from earning a full income, but may not qualify you as being totally disabled. Often a diagnosis alone is not enough to have a claim approved.

It can be challenging to qualify for total disability. Typically the loss of income or time or both needs to be 80%. With the residual disability rider, you avoid this requirement: as soon as you have a ~20% loss of income or time or both, you can now begin getting paid a proportionate amount of income. If your income drops 20%, you are paid 20% of your monthly benefit.

The next month, if your loss is 30%, you are paid 30% of your monthly benefit. This continues as you slide down the Bell Curve until you get to an 80% loss of income or time, then you are considered totally disabled and will get your full benefit. And when you begin to rehabilitate and are working your way back up to a full schedule, now the residual rider comes into play again, allowing you to supplement your income until you are back at full pre-disability earnings. Many disabilities bounce between total and residual many times, so this rider is critical.

This rider protects your income “on the way down” and also “on the way up” to recovery.

Residual fills the gap, providing financial support for those who can still work but have seen a reduction in their earning due to a disability. Disability is most often on a spectrum and not “pass/fail.” We maximize the ways our policyholders can get paid by adding this rider. 

Each carrier may have slightly different tweaks for this rider, so be sure your independent agent explains them.

Increase Options (Must Have #4)

Many residents ask, “What if I Can’t Afford Disability Insurance In Training?” That’s where the “Increase Option” riders come into play.

The rider allows you to purchase more benefit throughout your career without having to go through medical underwriting. This is what allows you to have a lower amount of coverage while you are in training so that you can afford it, yet increase to the amount of coverage you will need when you become an attending without going through the whole process all over again.

 

 

Your ability to purchase more benefits will be based on income review only. This rider comes in two forms:

Benefit Increase Rider/Benefit Purchase Option – with this rider, you generally must apply every three years for more benefit, and if you are offered an increase, you must accept at least 50% of the offer or the rider is removed. There is also an accelerated option available one time within each three-year window if you have a large increase in sustainable income (think resident to attending) or have an involuntary loss of group coverage.

Since the carriers control when to apply and how much to accept, this rider is free. If you do not apply for more benefit every three years or do not accept at least 50% of the increase, this rider is removed. (Principal’s new Maximize Your Benefit Rider is a variation of this type of rider that your independent agent should fully explain.)

Future Increase Option Rider – with this rider, you have the control. You can apply annually for more benefit at your policy anniversary or not apply – it’s your choice. You can also decide how much benefit to accept (no 50% rule). Some policies do put restrictions on how much benefit can be purchased, 50% of the base monthly benefit each year is typical. Since you control the terms and not the carrier, this rider is not free.

However, as you purchase more of the “future increase” the cost of the rider comes down. Once you purchase the full amount, the total cost of the rider is removed. This brings up a concern with this rider: you potentially could be paying for something that you cannot use. If you are in a lower-earning specialty, have $5,000/mo of individual benefit (with $10,000 in future increase option), and have group coverage, you may already be at your maximum participation limit. In this case, you could not tap into that future increase option and, consequently, be paying for something you no longer can use.

Note: At Money Meets Medicine, we recommend the Benefit Increase Rider as the more favorable of the two options. Also, if you do not have this rider on your policy, it doesn’t mean you can’t purchase more benefit; it just means that you will be subject to medical underwriting at the time of your increase (adjustment) application.

Recovery Benefit Rider

This pays out following a period for which monthly disability benefits have been paid, upon recovery and return to your occupation on a full-time basis but still have a loss of income of at least 20%. This is usually for a defined period of time, not for the entire benefit period. You may see this rider as a subset of your Residual Disability Rider.

This is a benefit for those specialties who have patients who may have found an alternative provider during your disability. You may return to work full-time, yet face an income deficit as you build back up your client base. 

Cost-Of-Living-Adjustment (COLA) Rider

This is your inflation protection. Once you are on claim for 12 months, this rider kicks in and is based on the Consumer Price Index. This is not an automatic increase to your monthly benefit. Up to 3% is common for the COLA rider. You will receive the lesser of CPI or 3%, but never negative. This means that once you are on claim for 12 months, if inflation went up 6%, your increase in monthly benefit would be 3%. If inflation was 2%, your increase would be 2%. If inflation was -1%, your increase would be 0%. 

Once you have recovered from your disability, you can “purchase” the COLA increased benefit or let it reset to what it was originally. (Guardian allows you to keep the COLA increase benefit at no additional cost as long as the increase is $300/mo or more.) Guardian also has a new 4-year delayed COLA rider that is a good hedge for those who are waffling on adding this rider to their policy. 

If we are looking to make DI more affordable, this is the first rider removed. In fact, we suggest removing this rider before lowering the benefit amount, and we do not even include it on quotes for clients 45 or older. 

Mental-Health Coverage
(AKA Mental/Nervous in insurance-speak)

This topic always comes up on consultations. Mental-health exclusions are by far the most common exclusion rider (i.e. when an insurer excludes a medical problem that they will not pay you for if it disables you) put on policies. Mental/nervous conditions classified in the most current edition of the Diagnostic and Statistical Manual of Mental Disorders published by the American Psychiatric Association make up this category of health.

As an example, if there is any history of SSRIs or ADHD documented in your medical records or prescription medication history in the last three to five years, you can anticipate a mental-health exclusion rider. Sometimes the carriers will allow for a “review” of this rider when the policyholder is “treatment and therapy free for X years.”

Some specialties have an automatic 24-month mental-health limitation applied on their policies. Guaranteed Standard Issue (GSI) policies also have a 24-month limitation for mental health built in as well.

The reason to mention this is that mental health is a serious concern in the medical profession given the stressful environment at work and how that can potentially bleed into other aspects of a physician’s life. If a client is considering options for coverage and has one fully underwritten with a mental-health exclusion rider and an alternative GSI with a 24-month mental health limitation, I usually push for the latter, even with its limitations. 

In general, nothing is going to beat a policy with a strong definition of disability, a residual disability rider, and as much mental-health coverage as one can get

Catastrophic Disability Rider

We don’t put this on our policies, but it can be added per client request. This rider is dirt cheap (for a reason), and very rarely, if ever, pays out. This has its own definition of disability (you need to be unable to do two of the six activities of daily living) and it has its own elimination period. Some clients think this is simply added benefit if you cannot perform the material and substantial duties of your occupation, but it is not. It’s meant to help subsidize in-home or facility care. Unless you are up against your maximum monthly benefit, skip it. In terms of cost, we did put this on one policy this month and for $10,000 CAT benefit it was an additional $22/mo. There are certainly worse ways to spend your money.

Student Loan Rider

You should pass. Use the that would-be additional premium to pay down loans or put in your IRA or any interest-earning vehicle. 

How Do I Go About Purchasing Individual Disability Insurance?

The first step is to visit a reputable independent disability insurance agent who will show you quotes from the “Big 5” that provide true own-occupation, speciality-specific disability insurance in the medical marketplace (an example of our quotes at Money Meets Medicine is shown below). An independent agent means they are not employed by one of the 5 companies. In other words, they don’t have a dog in the fight. They simply want what’s best for you. 

 

An independent agent should also complete an informal pre-screening of all shared health conditions to “clear the way” for a potential application. If an agent doesn’t ask about or spends only 15 minutes with you going over your health, it’s a red flag. 

If you are our client, we build all five of the disability contracts with the same terms and then see which one has the most competitive pricing. Some agents are captive to a single company, which is why they tout their policy as best. The truth is that there is no one carrier that is “better” than the other. All five companies are great. A good agent will explain to you the nuances of each company’s plan so that you can make the best choice.

The independent agent should help you compare all carrier options, walk you through the nuances of the features, and answer all of your questions. Additionally, the agent should provide the actual quotes themselves for your review. 

At Money Meets Medicine Disability Insurance, we do all of the above. Furthermore, since we are a nationally licensed agency, we have access to national discounts as well as GSI options for our clients

As part of the medical community, we understand the complexity and uncertainty of your schedule. As a result, we streamline every part of the process for you, and it’s built around one concept: convenience for the client. 

 

 

Disability Insurance for Physicians

 

When Should I Purchase My Policy?

Now. Especially if you are in training. Why? Because if you purchase disability insurance in training, you:

  • Lock in lower pricing for the life of the policy — for every year you age, the price will go up ~5%; even more so if you lose the residency discount, which is not guaranteed year to year
  • Lock in coverage while you know you are healthy — everyone hopes and expects to stay healthy, but unfortunately changes in healthy are never anticipated; once pre-existing conditions enter the picture, securing any coverage becomes much more difficult, if not impossible in certain cases
  • Lock in the ability to increase coverage in the future without regard for your health — once you have a policy in place, however small it is, you retain the ability to increase your coverage as an attending, even if your health declines after purchase of the policy
  • You are not purchasing the policy for your initial benefit amount as a resident – you move on it now to protect your insurability and your future income; your greatest threat in residency is not becoming disabled, it’s becoming uninsurable 
  • And… this is an important one … you still have access to a GSI plan, if you need it. The GSI plan is only available during training and for a very short period after training. Those with a significant medical history could find themselves without any options if they don’t purchase disability insurance through the GSI while it is available to them.

 

What Happens After I Purchase A Disability Insurance Policy?

After you accept your policy and if we are your servicing agency, your important policy information is uploaded to our system, and we begin watching over all aspects of your contract. You want someone who can assuage, if not resolve, any of your issues, who is a valuable asset navigating claims, policy adjustments, benefit increases/decreases, and who provides insight about the decreasing role of DI as your financial foundation becomes more stable.

Moreover, our clients receive quarterly check-in emails to ensure all information and policy features are up to date. We also consider ourselves “on call” if any immediate needs surface. 

Although we will not be the one’s deciding whether you get paid or not if you become disabled, this is where we can provide tremendous value. We not only help you file a claim and offer suggestions on how to work with your assigned claims consultant, but will walk you through every step of the claims packet and offer insight into additional strategies and protocols to make your claim as strong as possible. 

The hardest part is getting started. All you have to do is click “Get a Quote” on the Disability Insurance Page and fill out our intake form. The process is entirely free and you are under no obligation to purchase a policy – even after it’s offered. 

At Money Meets Medicine Disability Insurance, we are here to help in any way!

Frequently Asked Questions:

What is an Elimination Period?

Consider this the waiting period. 90 days is standard. These days begin to “check off” on your first day of disability, not when you file a claim. Unlike your group plan, the 90 days do not have to be “continuous”; they may be interrupted by periods of recovery when you do indeed go back to work to “test the waters.” 90 days must be reached within the accumulation period (typically 180 days; Guardian allows 210 days). Once the elimination period is satisfied, payments generally begin the month after. 

Extending to a 180-day elimination period is something we discuss down the road as it could save about 15% in premium cost. We do not recommend this until you have substantial savings to “carry you” through the six months.

The definition of disability is usually amended with the Residual Disability Rider to allow the elimination period days to be satisfied either totally disabled or residually disabled (you have lost income or time or both).

How Long Will Disability Insurance Pay Me If I am Disabled?

The “benefit period” defines the maximum period of time disability benefits will be payable. To age 65 is standard. Extending the benefit period to age 67 results in ~11% premium increase, and we can do that, but we do not recommend it. 

Sometimes carriers will limit the benefit period, based on an applicant’s health. This is to reduce the carrier’s risk, but still allow for a benefit to be paid out. Other benefit periods are 2 years, 5 years, and 10 years. Since 62% of disabilities last a shade under five years, even a 5-year benefit period can provide great comfort, especially at about a 40% discount. Any coverage is better than no coverage. If you are purchasing later in your career, a limited benefit period can be a great option for you.

How Much Will Disability Insurance Pay Me Each Month?

This is the amount of disability coverage you can purchase. Benefits from an individual policy are tax free when premiums are paid with after-tax money (most clients set up an automatic draft from their checking account). The amount will generally replace 40%-60% of your annual income. The amount you may purchase is based on (1) your annual income and (2) your existing group or individual coverage or both. All carriers play by the same set of rules known as Issue and Participation Limits. Monthly benefits may be increased as your earnings rise and may also be lowered as you get closer to financial independence. 

How Much Does Disability Insurance Cost? 

Your premium is how much you pay for your policy. Rates are a function of (1) age, (2) occupational class, (3) state of residence, (4) gender, and (5) health (if applicable). Most clients pay monthly, but paying quarterly, semi-annually, or annually are options that usually come with a slight discount. The payment method you select at purchase may be switched at any time. Given all of these variables, be very careful about comparing pricing to that of your colleagues. On average, you should expect to pay between $25-$45 per $1,000 dollars of benefit, with females much closer to the $45 dollar figure. 

General rates usually reset annually and an age increase of 3%-5% is typical for each year you age. These increases become more substantial as you are older, i.e., an increase from 39 to 40 would be higher than 29 to 30. The general rule is the earlier you can purchase your policy, the more you will save

Mike Kittner

 

Author Bio:Michael Kittner is the President and Chief Insurance Officer at Money Meets Medicine Disability Insurance. When he’s not helping physicians navigate their DI coverage, he enjoys spending time with Sarah, his wife of twenty years and a practicing anesthesiologist, his two daughters, and his two golden retrievers. 

Have questions? Feel free to reach out to Mike at michael@moneymeetsmedicine.com

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