Chapter 6: Employer vs Individual Disability Insurance Policies

A question that we get asked all of the time is “why do I need to get an individual disability insurance policy if my employer offers a physician group disability insurance policy?”

Employer disability insurance policies, also known as group policies, and individual disability insurance policies are very different for doctors.

In this chapter, we’ll discuss the four problems you might run into if you only rely on medical professional group disability insurance.

CONS

There are four major downsides to relying only on your medical professional employer's group coverage:

1. Employer policies are typically NOT true own-occupation.

This is a must for physician disability insurance policies.

If you missed chapter two where we covered what own-occupation is and why it’s so important for doctors’ financial security, go back and read it here.

Most of the time, employer policies are going to be any-occupation.

As we talked about in Chapter Two, any occupation policies are completely unreliable because the definition is extremely restrictive to doctors.

That means if you are able to work in any other position, you won’t meet the definition of disabled and won’t receive your benefit.

Under an any-occupation policy, you’re only considered disabled if you can’t work in any occupation that you could be considered reasonably suited for based on education, training, or experience.

This means if you break your hand and are unable to perform your duties you would not be considered disabled because you could still work as a librarian or receptionist.

2. Employer policies are non-transferable.

Which means that you can’t take them with you if you decide to leave your employer.

If you’re early in your career, chances are that you will move to a different employer before the end of your medical career.

If you do, you won’t be able to guarantee that you’ll have disability insurance at your new position.

If you opt-out of getting an individual policy and switch employers, this could leave you in a bad position.

You’d no longer be insured through the employer policy and chances are your rates would have gone up over time, leaving you with an expensive premium.

3. The Employer policy is taxable!

As we discussed in chapter five, your individual disability benefit is not taxable, but your employer benefit is!

This means that if you should have to use your employer policy, the money you’d receive would be taxed, leaving you with way less than your current take-home pay.

This would impact your current lifestyle as you’d have to adjust to a much lower take-home pay if relying only on employer disability coverage.

4. Your employer can cancel or change it at any time.

It is important to remember that an employer policy is not owned by you, meaning your employer has complete control over the policy.

If they wanted to cancel or change it at any time, there is nothing you would be able to do.

If in the future your employer cancels the physician group policy, and you were relying on that policy, it could leave you in a bad situation for getting your own policy if your health has changed.

Employer Disability Insurance Policy

When you are talking about your financial stability, you never want to leave that in someone else's hands.

For all the reasons above, we strongly recommend that you get your own individual policy to better protect yourself and your finances as well as save you from the grief of being caught in a situation unprepared.

PROS

Although there are some major downfalls to group policies, there can be some benefits to them in certain situations!

There are three common situations where it can be beneficial to take advantage of your employer’s policy.

These three situations are:

1. If your employer’s policy is free.

If your employer is offering you group disability insurance free of charge, it is great to take advantage of that policy in addition to your own.

2. If your employer coverage does not have any medical underwriting.

If you have a serious medical condition and cannot qualify for individual disability insurance, an employer plan at least gives you an option for coverage, even if it’s not as comprehensive.

3. If your employer policy has no exclusions.

Occasionally employer policies do not come with exclusions for pre-existing conditions or extreme sports/activities such as rock climbing, scuba diving, or flying.

If you have issues getting an individual policy from the insurance companies as an individual due to health conditions or extreme hobbies, the group policy could be a great option to get coverage for yourself.

Individual Disability Insurance Policy

Although there are occasions where medical professional group policies can assist in your financial stability, for the most part, they’re highly unreliable and can leave you in a bad position if you become disabled in the future.

Getting your own individual policy will better protect yourself and your finances as well as save you from the grief of being caught in a situation unprepared.

If you want to see your quotes, you can fill out our simple quote request form on our website.
If you’re interested in knowing which six companies provide the best policies for individuals, check out chapter four. Let's move on to Chapter 7.