Broker Check

Disability Insurance

Insure your greatest asset. You buy a $30,000 car, and purchase automobile insurance. You buy a $300,000 house, and purchase homeowner's insurance. You have a career that will bring in more than $3 million dollars over your lifetime. Do you insure it? Unfortunately, most physicians don't. However, disability insurance may be the most important financial product that you purchase.

Although people are most likely to need disability insurance than any other type of insurance coverage, many are less likely to purchase a disability policy than other less frequently utilized policies.

A physician's ability to earn could be his or her greatest asset. Disability insurance protects that asset. Following are some common questions about this kind of insurance.

"Do I need Disability Insurance?"

"Doesn't Social Security cover me?"
Yes, under very specific circumstances, but the Social Security Administration's definition of disability is extremely narrow. If you do happen to qualify, you will more likely than not receive an adequate amount of income from your Social Security Disability to maintain your lifestyle and meet your financial needs.

"I don't need to buy it. My employer provides it."
That's a good start, but it may not be adequate protection, and it depends on the definitions and features in the group policy. Purchasing an individual policy with appropriate features can provide you with protection for the longest period of time.

"I'm young and healthy. Can't I just wait until I'm earning more and then purchase it?"
Yes, you could. Policies change continuously. Typically they become more restrictive each year. But as a physician you're probably more aware than most people that individuals don't anticipate illness, injury or accidents. They can happen at any time regardless of your age. Buy coverage now and feel confident knowing that if anything should happen to you, your income is protected.

Choosing a Disability Insurance Policy

Because choosing the right insurance is a difficult task, we help physicians choose disability coverage by carefully evaluating their goals and current coverage.

Every disability insurance contract is different and should be carefully evaluated by a professional advisor. The worst thing you could do is purchase a policy that does not pay when you make a claim. When shopping for a policy, physicians should look for products that offer the following benefits:

  • Occupation-Specific

    For a physician this is the most important feature of disability coverage. An occupation-specific policy pays a benefit if the insured becomes disabled and cannot work in the specific occupation at the time of disability. An occupation-specific contract is more expensive than the alternative ("any-occupation" coverage), but the extra cost may be worth every dollar spent.

  • Residual Benefit

    A policy that offers a residual benefit pays benefits after a partial loss of income. The residual benefit is calculated differently for each contract, and the time period for each residual benefit carries from contract to contract as well.

  • Graded Lifetime Benefit

    Many policies will pay a benefit to the insured up to a certain age, usually 65. Since individuals are living much longer than 65, a policy that pays a graded lifetime benefit guarantees that the insured would receive some level of benefits until his or her death. If the insured lives to 85 without a graded lifetime benefit, he/she would receive no benefit for twenty years. That's a significant loss of income. A lifetime benefit gives greater protection.

  • Cost of Living Adjustment

    Should a policy holder qualify for and collect policy benefits, a cost of living adjustment feature increases the benefit amount annually to keep pace with inflation. In ten or fifteen years, a benefit amount that seems adequate now would amount to very little if not adjusted regularly.

  • Non-cancellable, Guaranteed Renewable

    A guaranteed renewable policy cannot be canceled as long as you pay the premiums on time. Regardless of how your health changes, such a policy will continue to afford you protection. When a policy is also non-cancellable, an insurance company cannot change any policy provisions, and it cannot increase the premiums.

  • Guaranteed Insurability/Future Increase Option

    This feature allows physicians to increase the amount of their coverage without requiring additional medical underwriting (although in most cases financial underwriting is required). This feature is well worth the expense because it allows the insured to add to his/her coverage limits as they move through stages of life and goals change. As a young, single physician, purchasing a less expensive policy that includes this feature makes tremendous sense. When he/she's at the beginning of his/her career, he/she may not have as much money to put toward insurance premiums and probably doesn't have dependents yet. As he/she begins to gain income and grow a family, the guaranteed insurability allows him/her to add coverage even if he/she becomes ill later.