Why doctors need disability insurance
Medical school is expensive and Physicians are high earners. According to the Bureau of Labor Statistics, 2020 median pay for physicians and surgeons was more than $208,000/annually, or over $100 an hour.
That’s a lot of money, but it’s also after going through undergrad, spending four years in medical school and then spending three to seven years in a residency/fellowship program where they aren't earning much.
That’s a lot of debt building up with the payoff coming potentially a decade down the line. This is why it’s important for doctors to buy disability insurance while they’re young. This keeps coverage affordable, and protects future income potential — and the ability to pay off debts.
The big 6 providers
Many insurance companies provide individual disability insurance, but there are a few known as “The Big 6″ disability insurance companies:
- Ameritas
- Mass Mutual
- Guardian
- Principal
- The Standard
- Ohio National
They are recognized as the top providers for one main reason:
The Big 6 are the only providers that offer a true own-occ definition of disability.
Key features when shopping
True own-occupation coverage means if you can not perform all the duties of your medical specialty, you can still collect a benefit even if you are working in a different role. For example, someone who can no longer perform surgery but could work as a general hospitalist or become a teacher would still be eligible to collect the monthly benefit and the income generated from new job.
Because doctors are so specialized, a true own-occupation policy is a must.
Supplementing your work coverage
Many physicians start out as an employee at a specific hospital but end up as a 1099 employee at multiple hospitals later in their careers. This offers business owner benefits, like writing off expenses, but also has drawbacks - for example, losing group insurance coverages provided by your employer. It is dangerous to solely rely on workplace insurance because this is tied to your employer. For doctors who move around over the course of their career or choose to open their own practice — it’s an even bigger risk. When career plans unfold - you will be older, at this point - you may have an underlying condition that could potentially prevent you from getting through the underwriting process -or- having a condition where you become uninsurable.
Disability insurance companies realize employers typically offer coverage, so, unlike other professions, they’ll let doctors buy the maximum amount of coverage even if you have workplace coverage in force. This way, you’re fully protected no matter where you end up in the future.
Having a personal private policy is tax-free if you were to go on claim. If your employer pays a portion of your long-term disability premium, which is typically paid with pre-tax dollars - the portion the employer paid is taxable if you were to go on claim.
Putting long-term DI into play
The application process is very smooth and typically completed via e-application. The majority of information needed to complete an application is basic personal/medical info and financial proof (i.e. signed employment contract). Reach out today and let us help you secure your financial future!
**Some insurance companies offer you a discount if you purchase during residency/fellowship.