As a health care professional, your most valuable asset is your ability to earn a substantial living doing what you love. An unexpected illness or injury can easily jeopardize that capability, reinforcing the need for the right physician disability insurance policies and endorsements to protect your financial security.
When deciding what coverage and insurance rider options are best for you, there are several common mistakes to avoid:
1. Waiting Too Long to Apply
Among the leading disability insurance pitfalls for doctors is waiting too long to apply for coverage.
It's best to buy disability insurance early on in your career since age is a common factor carriers consider during the application process. You can often lock in permanent discounts since you can buy guaranteed renewable and non-cancelable policies. These features help keep premiums level unless you apply for a benefits increase. Plus, many companies offer discounted disability insurance for residents and students, allowing you to capture long-term savings by applying early.
Carriers also assess your health during the application process. Medical underwriting is part of that, so getting disability insurance can take several weeks to two months. Companies can modify coverage offers or even deny coverage for preexisting medical conditions, so buying when health concerns are less likely is more affordable and offers more comprehensive protection.
2. Underestimating the Importance of True Own Occupation Coverage
Every disability insurance policy contains a definition of disability that can vary among carriers and coverage types. A critical part of this definition is how the policy determines your eligibility to collect benefits depending on your ability to work. Often, the base language deems the policyholder totally disabled if unable to perform within their own occupation, but only if they are not working in any occupation while disabled.
This narrow definition poses unique challenges for physicians. Many provide patient care that heavily relies on fine motor skills that could be compromised by an illness or injury. True Own Occupation language helps mitigate this risk, and physicians should look for this protection when evaluating disability insurance for doctors. A True Own Occupation rider redefines total disability as the inability to perform the substantial duties of your specialty, and will payout total disability claims even if you decide to work in another occupation.
For example, an oncologist with a disability that prevents them from treating patients clinically can earn a living as a consultant without the income offsetting their policy benefits. Plus, a True Own Occupation endorsement won't force you to accept any employment of which you could technically perform as that choice will be up to you.
3. Relying Solely on Employer-Provided Group Policies
Another common oversight for doctors is relying only on the disability coverage their employer provides as a group plan. Many medical professionals take it for granted that this coverage offers adequate income protection, which is rarely true. Policies may contain language excluding some of your income, like annual bonuses, when determining your benefit amount.
Other considerations to make when comparing individual versus group protection include:
- Coverage often has a narrower definition of total disability. This language can make it more challenging to collect benefits.
- Benefits are federally taxable if your employer paid the premiums. Conversely, the IRS categorizes individual disability insurance income as tax-free since you pay with after-tax earnings.
- This coverage is typically not portable. If you change employers, the group coverage lapses.
- Group policies will offset your benefits by other income you receive. That includes workers' compensation and Social Security Disability Income (SSDI), and even lawsuit settlements. Group policies typically have clauses outlining the requirements for applying for Social Security benefits.
4. Ignoring the Impacts of Financial Changes
As a physician, your income rises as you progress further in your career. The cost of living also goes up consistently, and the monthly benefit you choose now will buy even less in a few short years. That means you need to know how to get disability insurance coverage that keeps pace with the changes.
Future increase policy endorsements are an effective way to plan for wage growth and ensure your monthly benefits can meet your needs. These riders allow you to apply at specified times to increase your monthly benefits without additional medical underwriting or testing.
Most policies also offer Cost of Living Adjustment (COLA) riders that help offset the impacts of inflation. These policy endorsements are available in several different types, with options varying between carriers.
5. Focusing Only on Premium Costs
Among the leading pitfalls awaiting doctors when buying disability insurance is not buying enough. That mistake often happens because they remain laser-focused on premium costs, which multiple factors influence. It's best to remember that the value of your coverage is the income protection and peace of mind it provides. Maximizing that value comes from creating a custom plan that balances benefits and affordability.
It's vital to have an accurate idea of how much disability insurance coverage to get. Too little, and maintaining your lifestyle becomes challenging — especially when you factor in the costs of care for a disabling illness or injury. Too much, and you're spending money that you could be investing elsewhere. The right amount will vary based on your current income, earnings potential and expenses. An experienced broker can help you determine what amount to apply for and how to cost-effectively customize your coverage for your needs.
6. Working With a Captive Insurance Agent
A captive insurance agent works specifically for one insurance company, typically for a combination of salary, benefits and sales commissions. They may be actual carrier employees or independent contractors for the company. As a result of this exclusive relationship, the agent will only present coverage options for that single company. They may even show you options from one or two other carriers but discuss why their company is the best for you. These policies may meet your needs, yet no single carrier has the best solution for every doctor.
That's where an independent agent can help. These professionals work with a trusted network of insurance companies, giving you access to the market's leading insurers and coverage. They'll assist you with determining how much disability insurance you need as a physician and comparing the different discounts, benefits and riders. Since the agent isn't tied to a single company, you also benefit from objective advice.
Get Unbiased Disability Insurance Advice From DrDisabilityQuotes.com
DrDiabilityQuotes.com is a truly independent insurance partner working with the industry's most well-known companies. We specialize in helping medical professionals find and buy the right coverage for their needs. Our team gathers the quotes on your behalf, saving you the time of contacting each insurer independently. Once we have the numbers, we will thoroughly review your options with you so you can make the most informed decision possible.
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