What Every Physician Should Know About Disability Insurance
Traditionally, physicians are a financially conservative group. You manage investments wisely, ensure that life and health insurance are securely in place and plan for a golden retirement. However, more often than not, you may unwittingly put yourself in harm’s way by overlooking or under-planning for the ramifications of a disabling illness or injury.
What if you could no longer perform surgery due to a freak accident, or carpal tunnel? What if your eyesight started to fade or you became confined to a wheelchair?
Statistics show that 1 out of every 3 people will be disabled for 90 days or longer, and one year of disability could wipe out 10 years of savings. Disability doesn’t just happen to “other” people – a disability is simply defined as a sickness or injury that interferes with your ability to work.
Purchasing good individual disability coverage is important in protecting your most valuable asset: your ability to practice medicine and earn an income. You should be looking at products with contracts that truly cover you in the event you are disabled, that can never be changed and premiums that can never be increased. The definition in a good contract will read; if you can not perform the material and substantial duties of your specialty, benefits will be paid.
With good disability insurance contracts, if you couldn’t perform your specialty because of an injury or sickness, you can still engage in another occupation and still receive your monthly benefit. Even if you were making a higher income in your new occupation, you would still receive your monthly disability benefit. Most good disability contracts will have extra policy riders you can purchase. Riders that would allow you to increase your coverage later in life regardless of your health. A residual rider that would pay benefits in the most realistic claim scenario of being partially disabled but still working in your own occupation. A cost of living rider ensures that if you were to go on claim your benefit would increase every year to keep pace with inflation.
Don’t rely on Social Security, group coverage or your professional association’s coverage. Many group policies are structured with loopholes and nit-picking provisions.
To qualify for Social Security, you must be completely disabled with no hope of recovery for a period of at least one year, or have a disability expected to end in death. You must also be unable to do any kind of work, not just your job. The majority of people who apply for Social Security disability are denied.
Group coverage and professional association coverages may protect your “Own Occupation or Specialty” but only for 2 or 5 years. After 2 or 5 years your policy definition will switch to any occupation based on your education, training and experience. If the insurance company feels you can do some sort of reasonable occupation based on education, training or experience, benefits will cease. Other group and association coverage’s read that if you can not perform the material and substantial duties of your regular occupation and you are not engaged or performing any occupation for wage, remuneration or profit benefits will be paid. Insurance companies know from claims statistics that most claims involve partial disability where individuals are still working in their own occupation or in another occupation. In both group contracts and association contracts your benefits would be limited. Premiums also generally increase every 5 years with association coverage.
Most individual disability contracts can be purchased at discounted rates of 15%-50%. This could mean thousands of dollars in savings over the course of your career. In one example we were able to save a physician over $220,000 in premiums over her career.
It is very important that you work with a professional who works primarily with physicians and are exerts in True Own Occupation Disability Insurance, and who can provide detailed comparisons of all the insurance options available to you.
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