Personalized Disability Insurance Proposals
To start this journey, fill out the short form for a custom quote. Let us help you create a safety net that lets you focus on your patients, knowing that your financial future is in safe hands.
Disability insurance is essential for medical students and residents, protecting their future income against unforeseen disabilities. This guide will explain what physician disability insurance is, why it’s crucial for medical trainees, and how it differs from general disability insurance. We'll also cover costs, necessary coverage, and essential terms to help you make informed decisions.
Disability insurance provides income replacement for someone who cannot work due to a disability. Physician insurance has unique benefits because of your high investment in medical education and the physical demands of medical training.
Becoming a physician requires many years of rigorous and expensive schooling followed by years of hard work. Those student loans and your mortgage don't care that you developed a disability.
Let’s say you get into an accident or experience an illness that makes it impossible for you to work and receive your regular income. If you have a disability insurance policy, you can receive income through your policy benefits each month.
You can purchase disability insurance through an insurance company, or get it through your employers' group plan. The Social Security office also offer disability insurance but they're much lower than most doctors are used to.
Medical trainees face unique risks and financial responsibilities, making disability insurance essential. Long hours, physical demands, and high stress increase the likelihood of disabilities that can disrupt their careers and financial stability.
Despite having some coverage through their employer, many trainees are unprepared for the financial impact of a disability. Group plans often have narrow definitions of disability and a 2 year limit on benefits. Owning your own insurance policy provides real financial security.
"My first recommendation would be to seek out an independent agent who can present you with a comparison of several companies to make sure you are getting the best deal. If their business card has the same logo as the policy they are presenting you, they have a conflict of interest." - Chris Gure, PPC
Buying disability insurance early in your medical career can save you money and ensure coverage before health issues arise. Here’s why getting insurance as a medical student or resident is a smart financial move.
Premiums are generally lower when you are younger and healthier. By securing a policy early, you lock in a more affordable rate for the duration of the policy.
Purchasing disability insurance before any health issues develop means you can obtain coverage without exclusions for pre-existing conditions. If you wait until later in your career, any medical issues that arise could lead to higher premiums or denial of coverage for certain conditions.
Early coverage ensures that you are protected from the start of your career, providing peace of mind and financial stability. In case of an unexpected disability, you won’t have to worry about your income or student loan repayments. Misfortune doesn't wait for a convenient time.
Own-occupation insurance pays benefits if a physician cannot perform their specific job, while any-occupation insurance requires inability to perform any job. For physicians, own-occupation policies offer crucial protection.
Don't be fooled by "Modified Own-Occupation" or "Two Year True Own-Occupation". "Modified" is much more vague and you're less likely to be able to receive disability benefits. "Two Year" policies often become much less inclusive after two years and you'll likely have to go back to work.
Physician disability insurance can be specifically designed for physicians of a specific specialty; cardiologists, OB/GYN, surgeon, etc. Own-occupation policies are particularly vital for physicians due to their specialized skills. If a surgeon can no longer perform surgeries (or see patients) but can still work in a support role, they will still receive disability benefits under an own-occupation policy.
Have you been offered a disability policy and want a second opinion? Text "second opinion" to 919-504-5220 so I can verify if your policy is a True Own Occupation policy.
The cost of disability insurance depends on factors like age, health, occupation, and coverage amount. Premiums typically range from 2%-6% of the monthly benefit.
Several factors affect premiums, including:
- Age and Health: Younger, healthier individuals pay less.
- Specialty: High-risk specialties like surgery have higher premiums.
- Coverage Amount: Higher payout amount increases cost.
- Policy Features: Riders like cost-of-living adjustments (COLA) add to premiums.
Determining how much disability coverage you'll need involves assessing your financial obligations (mortgage, med school loans, family) and future goals (retirement, vacation, college fund, etc). Disability insurance typically covers 45%-65% of your gross income.
To maintain financial stability, aim for coverage that exceeds your monthly expenses.
Here's an example of appropriate coverage:
Consider a hypothetical medical resident named Angie O'Gram. She makes $60,000 right now but expects to make $300k as an attending. Angie also expects to buy a house and have kids in the next 5 years. Angie's forecasted expenses might look like this:
Monthly Expenses:
The total monthly expenses are $4,850. To cover these costs and future expenses, she might need a policy providing at least $5,000/month or $60,000/year. But isn't 60-65% the maximum amount of your income you can insure? Not when you're a med student or resident!
Luckily, Angie talked with an independent insurance broker who specializes in physicians. This insurance agent wrote her a policy that recognizes she'll make $300k as an attending in her specialty. Angie can insure up to 60-65% of that $300k salary.
Disability insurance can insure up to 65% of a resident's or medical student's future physician income. If your future specialty is expected to earn $350,000/year, then the maximum amount of disability coverage you could get would be around $227,000/year.
For high earners like physicians, you often don't need to insure the full 60% of your income. If you can cover your future expenses and save for your future life goals on $120,000/yr, then it's cheaper to insure the lower disability coverage amount. Having a lower coverage amount results in a lower monthly premium.
To start this journey, fill out the short form for a custom quote. Let us help you create a safety net that lets you focus on your patients, knowing that your financial future is in safe hands.
