4 minute read​
4 minute read
Insurance seems simple enough. You pay premiums in exchange for the insurer’s promise to compensate you in the event of a covered loss.
It’s pretty easy to assume that all insurance products are essentially alike and fairly straightforward. But it can be dangerous to assume that physician disability insurance works the same way.
When it comes to physician own-occupation disability insurance things are no longer so simple.
Physician own-occupation disability insurance is unique and works in a way that no other product in the insurance marketplace does.
Here we’ll lay out the ways in which physician disability insurance is unique, and what you should look for if you’re considering obtaining a policy.
Disability insurance insures a worker in case of an injury or illness that prevents them from working. This insurance offers income protection by paying a monthly benefit to individuals who become disabled and cannot work during that time.
The main feature that you should be looking for when it comes to disability insurance is the “own occupation” label. This is compared to “any occupation,” where you do receive benefits only if you are unable to work in any job that is reasonably suitable for you based on education and experience. Own occupation disability is preferable, because it’s more likely to pay you a benefit if you become disabled through injury or illness.
The difficult thing is that not all policies define “own occupation” in the same way. When looking for a disability insurance policy, look for one that is “true own occupation.” This type of policy ensures that if you can’t work in your specialty the benefit is paid, even if you choose to work elsewhere.
Disability insurance is especially important for you if you are just finishing your training or are early in your attending career. At that point your most valuable assets are your education and your ability to earn a future income, which reflects an enormous investment of time, cost of education, and postponed income due to years spent in training.
Anything from a back injury, vision loss, or a hand injury will threaten those assets that you built through years of difficult work in training. You may also have liabilities in the form of student loan debt. If you are injured and can’t work, and even if you declare bankruptcy, your student loans are not discharged.
Statistics show that young workers have a 30% chance of missing out on income because of an unexpected sickness or disability-causing injury in their careers.
Physician disability insurance guards you against this risk, and for that reason is highly recommended.
To say that life as a resident or fellow is busy would be a gross understatement.
You're putting hours of hard work into completing your residency each day and the last thing on your mind could easily be financial planning. It may be difficult to picture what your post-training life will look like, but you will most likely have a large amount of liabilities balanced out by your future earnings potential.
Clearly you'll want to protect the time and cost that you have put into your training, but waiting until you're an attending to get disability insurance means that you won't have access to the large discounts available to those in training.
It may be difficult to picture what your life, post-training, will look like, but by looking at physician disability insurance now you can take advantage of training program discounts that will save you considerable money over the life of your career.
Residents and fellows have a unique opportunity at this stage in their careers to get discounted physician disability insurance. Think about buying physician disability insurance now like buying term life insurance at a young age.
By acting early, you can lock in lower rates while also taking advantage of disability insurance discounts. By contrast, if you wait a few years to buy physician disability insurance, you'll pay exponentially more in premiums, just as you would if you wait until you are older to purchase term life insurance. If you're a resident or fellow, do not allow yourself to fall into the trap of putting off, and paying more for, physician disability insurance.
Residents and fellows have the opportunity to use available training program discounts to get disability insurance at lower rates than at any other point as long as disability insurance is requested before graduation.
If you purchase disability insurance while you are still a resident or fellow, your policy will stack on top of whatever group coverage you receive from your eventual employer. This feature not only makes physician disability insurance unique, but it makes residency or fellowship the best time to buy it.
The thinking behind this feature is to give physicians a valuable benefit at a time when they are most financially vulnerable. If you are like many physicians, you will complete your residency or fellowship with a significant amount of debt, which you acquired in pursuit of your medical degree.
While the income returns that doctors typically make will likely enable you to pay off your loans quickly, in the waning months of your residency or fellowship you are in a somewhat vulnerable position financially.
If you get disability insurance while in training you're saving money that will be extra money in your pocket once you start your new career.
This extra money is not just a one time benefit, but the training program discounts benefit you the life of your career as opposed to spending money to purchase disability insurance once in your new role.
For a hypothetical example, a 29-year-old woman in the fourth year of her residency is able to access discounts that would decrease her monthly premiums by 40 percent. These discounts include a unisex rate discount worth 10 percent, a multi-life discount worth between 10 and 20 percent, and training school discounts available based on your agent's relationship with your training school.
She would then be paying $150 on a monthly premium worth $250! The best part is, your 40 percent discount would follow you throughout your career.
You will still be able to purchase disability insurance after you complete your training but the insurance company underwriting your policy will look at your income and offer only what you are eligible for after accounting for your group disability insurance coverage. This practice often results in less coverage for practicing physicians.
So you've decided to protect your future earnings from illness or injury—but disability insurance policies can be really confusing! The best way to get physician own-occupation disability insurance is by working with an independent agent who can get you policies from the companies that still offer true own-occupation coverage.
By working with an independent agent, you won't have to shop around—someone else will do it for you.
The agent will explain the policies in detail so that you know what you're getting, and as they don't work for the insurance companies they will be able to offer an unbiased professional opinion on the best policy for you.
If you're looking to purchase physician disability insurance and have questions about training program discounts or even things like true own-occupation coverage, make sure to find an unbiased advisor who can help you wade through the maze and find the coverage that best meets your needs.