The American Medical Association estimates that medical professionals are more likely to suffer a disability that prevents them from earning an income than to die prematurely.
That’s comforting news if you’re worried about your mortality. Less so if you’re concerned about your ability to enjoy your golden years.
According to a 2023 Annual Report on People with Disabilities conducted by the Disability Compendium, the likelihood of living in poverty is nearly 15% more for adults with a disability than for those without one. Most likely due to the medical costs for treatment and recovery amid loss of their income.
So having some kind of disability coverage is important, especially for those earning high incomes but getting a later start on investing for the future, like physicians.
The question is, what’s the best disability for physicians right now?
Types of Disability Insurance for Physicians
There are two basic types of doctor disability available to provide income should you suffer an illness or injury that prevents you from performing the duties your job requires: Group and private.
Group disability insurance for physicians is provided by your employer. It’s less expensive than private disability, but your coverage and premium are based on the health and needs of the other members in your group plan. If the number of disabling incidents is higher among the group population, you’ll pay more and get less coverage than you will through private insurance.
Private disability insurance is coverage you buy on your own. It’s more expensive, but your rate is not tied to anyone else’s. It’s based solely on you.
Private disability insurance can further be broken down into Own Occupation and Own Specialty.
This is where the definition matters.
Insurance companies are becoming increasingly deft at manipulating language in their policies. So, while you can get a quick quote for disability insurance online with enticingly low numbers, you need to pay attention to how each insurance carrier defines disability.
Most basic group disability will only provide benefits if you are unable to perform any job. That means that if you can work at McDonald’s, you’ll be doing that instead of collecting disability.
Own occupation insurance allows you to collect disability benefits in the event you suffer an accident or illness that prevents you from working in your current occupation. So, it’s easier to collect benefits from an own occupation policy.
But if you choose to work in another occupation, certain types of own occupation policies may not allow you to collect all of your disability benefit—especially if you choose to work in another profession. Because you’re working and collecting an income, the insurance company will provide less in benefits.
Only Own Specialty Disability will provide full coverage even if you choose to work in another profession. The premiums are higher but well worth the investment. Like anything else, you get what you pay for.
Imagine you suffering a stroke just before your 50th birthday severe enough to prevent you from performing your current specialty. You decide to make the best of it by going into semi-retirement. You want to invest in a small business related to something you love. It will allow you to work less but continue to be useful.
With a group policy, you would have zero chance of collecting a disability benefit. You won’t be able to afford to invest in anything. You’ll be lucky to have a job that sustains your current standard of living.
With an own occupation policy, you will receive a benefit. But if you start earning a significant amount of money from that small business you invest in, you’ll likely see a decrease in that benefit.
If you’ve elected an Own Specialty disability policy like True Own Specialty offered by InsuranceMD, you’re guaranteed to enjoy your full current income, plus what your new business generates.
Other Things to Watch Out For:
False Claims. The AMA and other medical associations claim to offer Own Specialty disability. They do not. Neither does Northwestern Mutual. Their definitions of disability are too vague and thus easily manipulated in the carrier’s—not your—favor.
Assumptions About Time. If you’re forgoing short term coverage because you assume your sick leave will cover you adequately, think again. Long-term COVID is prevalent among medical professionals who were on the front lines of the pandemic.
You also want to look at the elimination period – how long you have to wait to receive your benefit. The lower your premium, the longer you’ll wait for the payout.
Now let’s look at some riders you can use to personalize your policy.
Best Disability Riders 2023
An Own Specialty rider can enhance a group plan offered by your employer if you don’t choose to purchase private insurance. If you simply can’t bypass the low price tag attached to a group policy, at least add a specialty specific rider.
Inflation Protection/Cost of Living (COLA) rider indexes your benefit to keep up with inflation.
A student loan rider will pay your student loan if an illness or injury prevents you from working.
“Future” riders allow you to increase your benefit in the future. Types of riders that fall loosely into this category include Future Purchase Option (FPO), Future Increase Option (FIO), Benefit Update (BU), a Benefit Purchase Rider (BPR) and a Benefit Increase Rider (BIR). Although these riders are similar, they do have slight differences.
A Non-Cancelable rider locks in your premium and benefits no matter what.
Renewable riders (guaranteed and conditional) require a close look. Both guaranteed and conditional riders allow the insurance carrier to change the premium rate; but each has different protocols.
A Residual rider provides temporary coverage as you recover from your disability and transition back to work.
A Partial rider provides long-term coverage to fill the income gap if your disability allows you to work part-time or in a diminished capacity.
A Catastrophic rider provides an increased benefit in the event you cannot perform two of the six activities of daily living: bathing, dressing, eating, toileting, continence and transferring out of and into chairs and bed.
Best Disability Insurance Companies 2023
As of now, only six carriers offer True Own Specialty insurance.
- Mutual of Omaha
- The Standard
And again, although they may claim to, neither medical associations nor Northwestern Mutual offer true own specialty disability coverage.
It’s all in the definition.