3 minute read
Chew on this. Does disability insurance benefit you while or after you are benefitting your employer?
If you said after, you’re right. Your employer is paying for a benefit that will only kick in and be advantageous to you after you are no longer working for them. So, what do you think they’ll do if they have the option to buy the absolute cheapest, most minimal disability insurance policy for their employees?
Odds are, they’re going to go cheap and get a plan near the bottom of the barrel, which will leave you high and dry if you ever get disabled. We don’t want that for you! So here are…
🚩 #1. Your employer’s policy is not portable.
If you plan to switch employers, or perhaps transition to private-practice and become self-employed, you will not be able to take your employer’s plan with you. The coverage provided is only good as long as you are still with that employer. Once you leave, you can’t take your coverage with you, as your employer pays for the policy, not you! If you don’t expect to stay in one position forever, you’re going to need your own individual disability insurance policy. Otherwise, you’ll go uninsured from one job to the next, or have to sign up for another policy later in life, which is guaranteed to be more expensive.
🚩 #2. If your employer pays for your coverage, your benefits are taxable.
If you opt in to your employer’s group policy, they pay the premiums and write them off as a business expense, making them deductible. Since your employer isn’t paying the taxes on the policy, that means you get to! If your employer pays for you to have a benefit of $5,000 a month post-disability, which is supposed to make up for 60% of your income, after taxes you’ll only see a portion of that benefit. You can expect as much as half of your remaining benefit to be taken out with taxes!
If you own an individual policy, you pay for the premiums with after-tax money, allowing you to receive your full benefit tax-free once you’re disabled. When you’re paying for the same benefit of $5,000, once you get disabled and the elimination period has ended, you’ll see $5,000 pop up in your bank account each month for the duration of your disability.
🚩#3. Your employer isn’t offering true own-occupation disability insurance.
They might say they offer something that is similar to own-occupation, but trust us, they don’t. In most cases, your employer will be offering any-occupation disability insurance. Any-occupation is not what you want because the definition of disability is extremely restrictive, especially if you’re a doctor. See red flag #6 for a more in-depth explanation for why this is so important.
🚩 #4. Your employer can cancel or make changes to your policy at any point in time.
How? Well, to be frank, they own it and you don’t. They could decrease your benefit or cancel it altogether, at any time, without your consent. When it comes to income protection, you don’t want to let someone else call the shots. You should be in control of your own financial stability!
🚩 #5. With group plans, you can’t add riders.
While riders add to your overall premium costs, there’s a few that you don’t want to miss out on. The most common riders added to physician disability insurance policies are Residual, Future Increase, and Cost of Living Adjustment (COLA). Two non-negotiable riders are called Guaranteed Renewable and Non-Cancelable. If you sign up for a group policy, you aren’t going to have access to these riders. To learn more about each rider, click here. If you partner with us to get your disability insurance, we’ll make sure your plan is non-cancelable, guaranteed-renewable, and own-occupation, no questions asked.
🚩 #6. You’re de-incentivized to do something with your life post-disability.
If you’re still seeing through rose-colored glasses after the first five red flags, I hope this one does it for you. There’s a plethora of definitions for “disability” out there, but only the true own-occupation definition protects your specialty. You may be able to live off the income you receive from your employer’s disability plan, but if you ever want to work again in your life - even just at Walmart - those disability checks will come to a screeching halt. This leaves you with a tough decision to make: sit at home and collect disability checks, or give up the checks so that you can still contribute to society.
There’s a certain moral injury that comes from not actualizing yourself in the world, and no one should be put in that position. True own-occupation insures your income within your specialty, so that you can still apply your wisdom to other fields such as academia while collecting your benefit.
Now that all the red flags are exposed, let’s debrief. You understand the differences between a physician group policy and an individual policy. Rose-colored glasses are off, and you can see the red flags much easier now.
Below is a demonstration of the income covered by group insurance vs a true own-occupation policy, something you’d see if you sign up to talk with one of our agents. If you watch the video, you’ll notice how much your income could decrease if you chose to go with a group policy alone.
We say “alone” because there are some scenarios where it may still be advisable to sign up for the physician group policy, but only in conjunction with your own individual plan. If your employer pays for everything so that it’s completely free to you, no brainer! Sign up! You always have the option to stack policies, but you don’t have the option to sign up for your own policy after you get disabled and realize you’re going to need more money.
Once you’re disabled, your story is written. It’s up for you to decide: do you want the tragic ending or a happily-ever-after? If you chose the latter, visit patternlife.com/disability-insurance and request your quote today.