As a physician or medical resident, you’ve spent years working tirelessly to master your field. Your career is not just a job—it’s your livelihood, your passion, and a vital part of your identity. But what if something unexpected happened that prevented you from working? A serious illness or injury could jeopardize your ability to practice medicine and impact your financial stability.
That’s where disability insurance comes in. It’s a type of coverage designed to protect your income if you become disabled and are unable to work. For physicians and medical residents, disability insurance is not just an option—it’s a must-have to ensure you’re financially secure in case the unexpected happens. Let’s dive into why it’s so important and what you need to know, especially if you’re new to the concept.
What is Disability Insurance?
Disability insurance replaces a portion of your income if you become sick or injured and can no longer perform your job. It’s similar to other forms of insurance like health or car insurance, but instead of covering medical bills or vehicle damage, it helps cover your day-to-day expenses when you can’t work. These expenses include:
- Mortgage or rent
- Utility bills
- Food
- Car payments
- Student loans
Physicians and medical residents often have significant financial commitments—mortgages, student loans, and the costs of supporting a family. Without your income, maintaining your current lifestyle could become nearly impossible. That’s why disability insurance is a critical safety net for you and your family.
Why You Shouldn’t Rely Solely on Employer-Provided Group Disability Insurance
Many hospitals and medical employers offer group disability insurance as part of their benefits package. While that’s a great start, relying solely on this coverage can leave significant gaps. Here are the key reasons why employer-provided group disability insurance often falls short:
1. Limited Coverage
Group disability policies typically cover only a portion of your base salary—usually around 60%. However, bonuses and other incentive pay are often not covered. As a physician, a substantial portion of your income might come from bonuses or performance incentives, which means you could be losing out on a large part of your earnings if you rely solely on a group policy.
2. Income Offsets
Most group disability insurance policies come with offsets, which means your benefit payments could be reduced if you receive income from other sources while disabled. For example, if you receive Social Security disability benefits, that amount will likely be deducted from your group policy payout. Additionally, if you earn income from a different job while on disability, your benefits could be reduced accordingly.
3. Taxable Benefits
If your employer is paying the premiums for your disability insurance, your benefits will typically be taxable. That means the 60% of your salary you thought you’d receive could shrink even further once taxes are taken out, leaving you with far less income than you expected.
4. No Portability
Group disability insurance is tied to your employer, which means if you switch jobs or start your own practice, you may lose that coverage. Having your own individual disability insurance policy ensures you’re covered regardless of where you work.
How Individual Disability Insurance Fills the Gaps
To truly protect your income, you need an individual disability insurance policy in addition to any group coverage. Here’s why:
1. Comprehensive Coverage
Individual disability policies are designed to cover a higher percentage of your income, including bonuses and incentives, which are often excluded in group policies. This ensures that more of your overall earnings are protected.
2. No Offsets
With an individual policy, you won’t have to worry about offsets for other benefits like Social Security. In addition, if you have a “true own occupation” definition of disability, you’d be eligible to receive benefits even if you can earn an income in a different occupation.
3. Tax-Free Benefits
If you pay the premiums for your individual policy, your benefits are generally tax-free. This can make a significant difference in the amount of money you have to cover your expenses if you’re unable to work.
4. Portability
Unlike group policies, individual disability insurance is portable. That means you can take it with you if you change jobs, move to a different state, or open your own practice. It’s a long-term solution that stays with you throughout your career.
Protecting Your Future Earnings Potential
One of the most compelling reasons to invest in individual disability insurance early in your career is to protect your future earnings potential. As a medical resident, you may not be earning what you will later in your career, but by securing coverage now, you can ensure that your income will be protected not just today but as your salary increases over time. Many policies offer options to increase coverage as your earnings grow, without needing to undergo another medical exam.
The Risks of Going Without Disability Insurance
Without adequate disability insurance, a long-term illness or injury could have a devastating impact on your financial life. You could be forced to:
- Dip into your savings or retirement accounts to cover living expenses.
- Accumulate significant debt.
- Change your lifestyle drastically to account for lost income.
For physicians, the potential for losing income due to a disabling condition is especially high because of the demanding physical and mental nature of the job. The chances of becoming disabled are higher than most people realize, and the cost of going without insurance far outweighs the cost of getting coverage.
Take Action Today
Disability insurance is not just another expense—it’s a vital investment in your financial future and peace of mind. Whether you’re a medical resident or a practicing physician, now is the time to take control of your income protection.
Ready to learn more? Download our free Disability Insurance Guide or request personalized disability insurance quotes today. Protect your future, your income, and your loved ones by making sure you have the right coverage in place.
Don’t wait until it’s too late—act now to secure your financial security!
Ready to protect your future?
Get a personalized side-by-side policy comparison of the leading disability insurance companies from an independent insurance broker.
