There are common elements, of course, that apply to just about any disability insurance policy. All of them are designed to protect (replace) a fraction of your income for a time in the event you experience a qualifying disability. In the individual market, you must be in good health at the time you apply for the insurance to get it and the younger you are and the better health you are in when you first purchase it, the more affordable it will be.
But that doesn’t mean all disability policies are the same, or that this kind of insurance is a commodity that you can purchase based purely on the required monthly premium. Not if you value actually being protected against disability, anyway!
As a physician, you want to concentrate your search on policies that are specifically designed, priced, and underwritten for doctors and other medical professionals. After all, you have very different needs than most other professions do.
Here are some of the most important parameters physicians and those about to become physicians should be looking at:
1. Ratings Comparison
What is the company’s financial rating for strength and stability? After all, an insurance policy is a promise: The carrier promises to pay large amounts of money in the event you become disabled in exchange for a comparatively small premium now. But any insurance policy’s promise is only as good as the claims-paying ability of the carrier. Fortunately, the insurance industry has a terrific record of paying promised claims. But the fact remains that it’s the strongest companies that have the best chance of weathering economic storms. Look at the insurance company’s rating from A.M. Best, Moody’s Standard & Poor’s and/or Fitch. Specific rating systems vary, but you want to be looking for the first letter to be an “A.”
2. How does the policy define “disability?
”Will the company pay claims if you cannot continue to work as physician? Or only if you can’t work at all? Some “any occupation” policies will not pay benefits if you’re capable of working in any job. The first policy described above is an “own occupation” policy. The second one is an “any occupation” policy. We recommend own occupation policies for any physician seeking disability insurance. In general, you want the definition of ‘disability’ recorded in the policy that actually triggers benefits to be as broad as possible. This maximizes your protection and minimizes chances of claims being denied on technicalities. You’ll have to pay a bit more in premiums for an ‘own occupation’ policy than for an ‘any occupation’ policy, but this is critical protection for doctors.
3. What is the “elimination period?” That is, how long must you be disabled before benefits start becoming payable? The longer the elimination period, the more affordable the policy will be – all things being equal. However, consider how long you can keep paying your expenses out of your personal savings before you opt for a long elimination period. The key is to get as robust a policy as you can easily afford.
4. Non-cancellable. Also sometimes called “guaranteed renewability.” This just means the insurance company can’t cancel your policy as long as you continue to pay premiums. You don’t want to be in the position of having to go out and shop around in the event your carrier decides to exit the doctor disability insurance industry. You may not be in the same health by that time, and may not even be insurable.
5. Inflation protection. By the time a young doctor finishes his or her career, a dollar probably won’t buy even half of what it does today, thanks to inflation. In the future, you will need more money just to maintain a given lifestyle. Ensure whatever policy you purchase includes a built-in inflation protection mechanism of some sort. You will have to pay a bit more in premium for this feature, but if you are on claim any amount of time, it is usually worth the extra cost.
6.Benefit period. How long do benefits last? The longer the period, the higher the premiums, but bear in mind some disabilities are permanent, and not temporary. The average claim for 35 year old males and females lasts 82 months, with a 35 percent chance of the disability lasting for five years or more, according to data from the Council for Disability Awareness.
7. Guaranteed increase option. Most of you will be earning more money as your careers progress. You’ll be able to afford more protection when you leave residency, for example. But what if your health declines between now and the time you reach your peak earning years and you want to buy more insurance? In that case, you will want a guaranteed increase option. This is a guarantee by the insurer that you will be able to purchase additional insurance at specific future milestones regardless of your medical condition. This is an important consideration for doctors – and a powerful argument for getting protected now, rather than waiting until you can more easily afford the premiums.
Need more information? That’s where we come in. We specialize in working with doctors and dentists and have over 15 years of experience. Visit DoctorDisability.com and request a quote today!
Doctor Disability Insurance, Inc. is an innovative, one-stop service that makes disability insurance shopping quick, affordable, and easy to understand. Physicians save time and money by comparing plans and prices from multiple insurance companies. The site provides free quotes from leading names in the disability insurance industry along with friendly and knowledgeable customer support. The best values in the insurance industry are located in one place and are available any time doctors are ready, including late at night and on weekends.
Based in San Clemente, California, President and CEO Charles Krugh is a Certified Financial Planner with more than 15 years of experience working with people in the medical industry. Call us toll free at 866-899-7318 to speak to one of our disability insurance professionals.