As a physician, you have made a significant investment of time, energy and money into building a career with the promise of being rewarded financially for your efforts. But, should an accident or sickness prevent you from performing one or more of your duties, your income decreases or disappears. You insure your home, your car, your health and maybe your life. But what about your most value asset? Your ability to earn an income. Disability Insurance solves this need. Disability Insurance is the foundation of any good financial plan.
Disability Features and Benefits
How is Disability defined? A physician always should have “Specialty Specific” or “Occupation Specific” coverage. This means if you can’t perform in your specialty, but can or want to work elsewhere, your monthly benefit is still paid.
How much is available? This is based on your earned income and issue limits by the insurance companies.
When does your benefit start? You get to decide how many days you can wait before the benefit starts. 30, 60, 90, 180, 365 and 730 days are the options available. Roughly 90% of all physicians elect the 90-day waiting period.
How long will my benefit last? You get to decide when the insurance is purchased how long the coverage will last. Not all insurance companies offer all the variations. But, the options include: 2, 5 and 10 years, to age 65, to age 67 and to age 70. A lifetime benefit is still available as a rider and limited to $10,000 per month in benefit.
Are partial disabilities covered? They are if you selected the residual rider or enhanced residual rider.
Can the insurance company increase the rates? The cost is determined during the initial underwriting. We recommend for physician’s contracts that are non-cancellable and guaranteed renewable. This means your rates stay the same unless you increase the coverage.
However, some younger Residents and Fellows sometimes choose the Graded Premium coverage. This means the premium increases each year, contractually, until they convert it to a level premium. The conversion cost will be based on your attained age.
What happens if I return to work but my income still is not what is was pre-disability? If your contract contains the recovery benefit, and you have at least a 15% – 20% (based on the company), you are eligible.
Are Dividends paid? Currently only one company pays dividends. Dividends are not guaranteed. Dividends could reduce your premium by up to 10% a year after five years.
What if I have health problems? Depending on the health issue, the insurance might accept your health risk. Or, they could increase your rate, exclude the problem, shorten the benefit period, all of the above or in some cases they decline the risk.
Optional Riders and What They Do
Residual – This is your partial disability coverage. You would need to suffer a 15% loss of income due to a sickness or injury. A 75% loss is deemed totally disabled even though you are still working.
Your Occupation, Own Occupation or True Own Occupation – Every company calls it something different. This is the rider that protects you in your specialty.
COLA – Cost of Living Adjustment – After one year of Total disability, your benefit will increase based on the rider you selected at issue. Most companies offer a 3 % or 6% compounded adjustment.
Future Increase Option – Also know Guaranteed Insurability Option. This allows you to increase your monthly benefit at some point in the future regardless of your health status. You cannot be disabled and your income needs to have increased
ABI – Automatic Benefit Indexing – Your monthly benefit increases each year by 3% – 5% depending on the company. Typically, the rider has no cost.
Student Loan Rider – This pays a set amount over and above your basic monthly benefit for to repay your student loans. 10 year and 15 year benefit periods are available
Retirement Income Rider – Covers your contribution into your retirement account.
Catastrophic Benefit – If you suffer a catastrophic disability (both eyes, both arms, both legs, one arm and one leg) an additional benefit of up to $10,000 a month is available.
As with all of these riders, each company has different variations for everything. Please refer to the actual contract for details.
Scureman & Associates Insurance offers free, comparative quotes on disability income for physicians from multiple insurance carriers so you can get the best possible rate.
Want to see how much we can save you? Just request a quote to find out.