Disability Insurance for Resident Physicians
At a time in your life where money is tight, don’t spend all of your hard earned income on a DI plan that covers your future earnings immediately. Disability insurance for resident physicians is important, but it is also critical to allocate your limited resources carefully. “Buy up” programs are available to help you keep premiums low for now with a substantial increase in coverage option (without medical underwriting) allowing for increased future earnings. Contact us today so that we can design one of these plans for you.
Your Early Years
Years and years of school, graduate coursework, and a lot of hard work has put you in the position where you’ve achieved your residency. Now you have the next several years to look forward to brutal hours, unforgiving attendings, and very little income (relatively speaking).
You will have an opportunity to purchase disability insurance through your hospital or your residency program. At first glance, these policies may seem to suffice: inexpensive premiums, decent coverage (given your lower-income), and a stamp of approval from an organization with which you’re closely aligned.
Disability insurance for resident physicians is very important. Don’t make the mistake of thinking that the easy option is the best option. Your actual coverage and its ability to pay claims must take priority over everything else.
Look for These Benefits
Individual disability policies for resident physicians should offer a few features that the average profession will not have access to. These five benefits provide the bedrock that protects a resident’s most valuable asset: future income.
- Most disability insurance policies will only offer about 60% of your income in a monthly benefit. Residents can often secure up to 5k per month in coverage, which may approach close to 100% of their total income.
- A strong disability policy for a resident physician will also allow them to increase their coverage later using a future purchase option (FPO). Often, this is added through buying a “rider”. An FPO can greatly increase your coverage without evidence of medical insurability (you’ll still need to provide financial substantiation). This type of rider will often allow the purchase of additional disability insurance benefits to increase current coverage to more than 10k per month. While that is not ideal for a surgeon or other specialties, it certainly provides some flexibility in planning.
- Covering a specialty is infinitely important in medicine. Sales people, executives, and other high income professionals simply don’t have the same narrow fields that medical professionals often do. Making sure that your resident physician disability insurance policy offers coverage specific to what you actually do to make a living is very important.
Other Key Features
Portability. Having an individual disability insurance policy allows for the ultimate in flexibility. Change groups, hospitals, and even specialties, your DI plan is still there for you. It covers everything that you need and it goes where you go. There is no need to maintain some association alliance or a connection with a specific group…your coverage is there no matter what.
Residual disability. Most group plans will offer little in the way of coverage should you become partially disabled (example: cancer…some days patients feel well, other days they do not). Most group plans require a “total” disability prior to receiving a claim. An individual disability insurance policy will cover both of these instances. A “total” claim is certainly important to cover, but what about covering your income should you only be able to partially work?
The Importance of “Specialty Own Occ” Coverage
When looking at disability insurance for resident physicians, specialty coverage MAY be very important. It essentially says that if you’re unable to perform the duties of your actual occupation (surgeon, specialist, etc.) it will pay your full benefit. This means that even if you are able to later perform another occupation (teaching, admin, etc.), you will still be compensated with your monthly disability insurance benefit; the ability to make an income as though you’re performing your regular occupation while doing something else is extremely important in this field.
This language (the term for your policy claim description) is without a doubt the most important part of your policy. For most residents, this type of policy design does not exist in your group sponsored policy.
A Resident Physician Policy in Action
Troy is a 28-year-old resident, making 60k annually. His specialty is neurosurgery, and his expected lifetime income exceeds 20 million dollars. During his last year of residency, he develops an essential tremor, effectively ending his ability to earn his lifetime potential. He doesn’t want to consult or diagnose without being able to perform procedures so this becomes a very frustrating time for him.
Fortunately, Troy is a great teacher. Although he is unable to practice surgery, he secures a job at a local college, teaching high level medicine. Because he has the ability to automatically increase his DI policy with only income verification, he is able to do so and go on claim, essentially earning an additional 10k per month above and beyond what his salary at the college allows.
Although this is not an ideal situation, Troy is able to make much more than what his teaching salary allows for, albeit less than if he had completed his residency as a neurosurgeon.
Had he been a neurosurgeon prior to his tremor, he could have applied for even more coverage, effectively covering all of his post tax income while adding his teaching income to his bank account.
Disability insurance is fluid coverage. A lot depends on what you purchased from day 1. Don’t short your future by underinsuring from the outset.
How Do I Get Disability Coverage?
My model follows a four step process: education, selection, application, and implementation.
Once you have completed my quote form, you’ll receive and email (or possibly a phone call) requesting some additional information which is often necessary to customize your quote based on health, occupation, state of residence, etc.
Education
One of the most important things about purchasing any insurance policy is to make sure that you understand what it covers and that you select the features that are most important to you. We review your quotes with you in detail so that you can feel confident in your disability insurance policy.
Selection
Once your quotes have been reviewed, we will often need to rerun a few options. This is often due to changes that we decide are necessary, new information not covered during our earlier interactions, or certain discounts/premium reductions that you might be eligible for. This will often distill our choices down to one or two carriers. At this point, we will select the carrier that fits your needs and begin the application process.
Application
In many cases, we can complete the application together online through the carrier’s eApp portal. In situations where a physical application and signatures are necessary, we share a protected drive file with you for download. You can then simply sign the application, scan it, and upload back to your folder for processing. Once the application is submitted, the underwriting process will begin. Depending on the amount of coverage you request, the carrier could request medical exams, doctor records, and even tax returns. Thankfully for residents, the underwriting is normally simplified (the carrier doesn’t normally request as much documentation) and accelerated.
Implementation
You learned about the various features and designs of a disability policy, we selected a policy that fits your needs, applied for it, and now you’re hopefully approved. Finally, we implement your policy by fulfilling any delivery requirements and paying the first year’s (or month’s) premium. Once your policy is “in force”, you can confidently say that you have disability insurance coverage.
In Force Policies
Lastly, purchasing this policy doesn’t end our relationship. Since you’ll likely see a substantial rise in income over the coming years, we do annual policy reviews and offer complimentary reviews of group and life coverage that you might be offered. Also, you can feel free to contact me if you have any questions, if you would like to refer someone, or unfortunately, if you have to file a claim. I am here to help with the good, the bad, and everything in between.
Final Thoughts for Residents
Finding disability insurance for resident physicians is no easy task. There is a lot to think about here. A group policy is very affordable and should be purchased if your finances allow for it. The most important thing that you can do for your family and loved ones is to secure an individual disability policy. They will cover you no matter your profession, affiliation, or specialty.
Remember this: your biggest asset is your earning potential. Cover and protect this! If you have the chance to cover this without future medical underwriting, please take advantage of it.
Most of your choices in life come down to a yes or no. For your disability insurance coverage, say yes to as much as you’re offered. The average DI policy costs roughly 2-4% of current income. That is a relatively small amount to pay to protect millions of dollars in future income.
