Disability Insurance

The biggest asset you have as a physician is your ability to generate income. As you start your career you probably cannot self-insure. Plus add the fact you have high debt balances (student loans, credit cards, etc.), a disability at any age can be financially devastating.

Seriously, think about it. What are you going to do if you become disabled? How are you going to pay for your financial responsibilities?

Income When You Need It

As a young physician, the risks are high that if an unexpected event were to occur where you became disabled and unable to work it would surely cause you financial stress. In fact, a disability for a physician at any age can cause a lot of financial stress. This is where a disability insurance policy comes in. It is designed to provide you with income if an injury or illness prevents you from working.

Employer Disability Insurance

Although having Disability Insurance “DI” policy through your employer is a good thing, it will most likely not offer enough coverage. On top of that, the benefit will be taxable. Also, DI premiums through your employer can change annually and if you change employment it is not portable. Ideally, you’ll want to purchase your own private disability insurance policy to complement any existing policies you might have.

Features and Benefits

There are lots of differences between Disability Insurance policies. It's important you read the entire policy contract before committing. But generally speaking, you want to make sure the policy has the following benefits and features:

• Non-Cancellable and Guaranteed Renewable : This feature prevents the insurance company from canceling or changing the policy as long as the premiums are paid on time.
• Elimination Period: A typical policy should include a 90-day elimination period (period of time when benefits are not yet payable). Consider a 180-elimination period if you think you can wait that long without causing too much financial hardship as the premiums will be a little lower.
• Benefit Period: This is the period of time your benefits will be paid. Consider policies that pay up to age 65 or longer.
• Own Occupation: The insurance company will pay benefits if you are unable to work in your medical specialty even if you can work elsewhere or decide to do something else.
• Future Increase Option: As your income increases this option will allow you to increase you DI benefit without additional medical screening.
• Cost of Living Adjustments: You benefits will increase throughout your disability claim.
• Partial Disability: This occurs when you are not fully disabled and because of this are not working full time due to injury or illness.

After Residency

If you purchased “DI” during residency (Smart Move) you’ll need to increase your disability benefit as your income has probably increased significantly. Hopefully, you purchased a policy with a Future Increase Option which allows you to increase you DI benefit without additional medical screening.

What Insurance Does a Medical Doctor Really Need

After meeting with physicians for the first time and analyzing their insurance policies it is not unusual to see they’ve purchased costly and unnecessary insurance. If you’re like most physicians you don’t have a clue about which insurance you need and probably don’t have. That’s alright. You weren’t taught about this topic in med school. Lucky for you we wrote a short blog post about the subject. We hope it helps you avoid costly mistakes. You can read it here.

At MD Tax & Business Advisors, LLC we can help you understand all of the different options available to help you choose the correct policy.

Caution: Do not purchase disability insurance from someone who does not work exclusively with physicians. We can help you choose the correct policy. Give us a call at 787-407-3755.