Life is unpredictable, and disabling illnesses and injuries occur without warning. The odds of one affecting you may be higher than you think. Experts estimate over 25% of people in their 20s will experience a disability before retirement.
In the event of a serious illness or injury, the financial impact could be significant, with the loss of income from being unable to work in your specialty. Group-sponsored plans often fail to provide adequate coverage, having limited definitions of disability and payout offsets. Solve these issues by investing in an individual disability insurance policy.
Benefits of Individual Disability Insurance
Disability insurance helps protect you against income loss by providing monthly benefit payouts if you’re unable to work due to a severe illness or injury. In addition to safeguarding your financial stability, individual coverage offers several other benefits:
It’s Yours
When you buy an individual policy, it’s yours. As the owner, you retain control over the customization of your policy and the carrier you choose. You also decide the income benefits you need — as long as you qualify based on income and the insurer’s participation and limits — and the policy features you want.
Conversely, with employer-paid plans, the organization makes the choices for you. They select the insurance company and how much coverage to buy. Your employer can also cancel the plan or amend its terms without your consent.
It’s Portable
You lose benefits under those group plans if you change employers. Individual disability insurance is portable, so you can maintain coverage as you progress throughout your career even if your health changes.
It’s Affordable
Disability insurance is most cost-effective when you apply earlier in your career. Obtaining disability insurance during residency often translates into lower premiums across the life of the policy. Because you can lock in those prices if you make prompt payments and don’t change the plan’s terms, you save money long-term.
No Taxes and Other Offsets
Another advantage of individual disability insurance for residents is that your payouts are not subject to income tax since you pay the premiums. If the employer pays for your group plan, you will be taxed on the benefit amounts you receive under the coverage while you’re disabled.
Employer-sponsored insurance generally offset your monthly benefit amounts by other income you receive while disabled. Within group policies, you will find a section with a list of these ‘deductible sources of income’, or ‘other sources of income’, which typically includes other employment income you receive while disabled, Workers’ Compensation, Social Security, salary continuation and more. Individual disability insurance will not have any offset provisions, meaning you could collect your full benefit amount even if you are collecting from Social Security or any other source of income while disabled. Group benefits and Individual benefits will typically not affect one another, meaning you could collect on both while disabled.
Options May Exist for Those With Preexisting Medical Conditions
Residents with preexisting medical conditions often wonder if they can qualify for disability insurance since many policies are fully underwritten and require a comprehensive medical review. The good news is that having health concerns doesn’t automatically disqualify you. Insurers can sometimes offer modified protection or implement an exclusion for a specific condition without completely denying coverage.
Another option, available exclusively for residents and fellows at a number of institutions, is Guaranteed Standard Issue (GSI) insurance. Applying for fully underwritten policies and receiving a modified offer or being declined coverage can affect your eligibility for GSI. It’s beneficial to explore your options with an independent broker as they will be able to help you find the best fit.
Best Types of Disability Insurance for Resident Physicians
Coverage works best when you can tailor the policy to your unique needs, so finding customizable disability insurance for residents is the first step. Today’s top disability insurance companies offer many ways to create bespoke protection strategies through policy enhancements called riders. Two of these amendments are crucial to comprehensive security — True Own Occupation and Non-Cancelable and Guaranteed Renewable.
True Own Occupation Language
Every insurance policy includes a definition for total disability that determines how and when you qualify for benefit payout. The language the company uses in this clause is especially vital for physicians due to the potential impact of a disability on the physical demands of their specialty. It is recommended that physicians obtain True Own Occupation definitions of total disability. This would ensure the company pays out your benefit if you cannot perform the duties of your specialty, even if you decide to be gainfully employed in another occupation. For example, a surgeon who develops tremors can no longer perform procedures but can earn an income in teaching without jeopardizing their disability payouts.
Under group policy language, that physician may not qualify for benefits since they can be gainful employed in another occupation. It is important to read through your employer’s long-term disability Certificate in order to determine the definition of total disability, however it will likely not be True Own Occupation.
Non-Cancelable and Guaranteed Renewable Feature
Other vital components of comprehensive disability insurance for residents are non-cancelable and guaranteed renewable riders.
Non-cancelable language prevents the carrier from increasing policy premiums as long as you continue timely payments. Guaranteed renewable does not allow the company to cancel the plan or change policy provisions and definitions when you maintain current premium payments. These features help ensure continued protection and premium stability.
Other Popular Policy Enhancements to Consider
Aside from the riders above, carriers offer multiple other policy riders to customize your coverage and protect your financial stability. Ways to keep pace with your earnings and inflation are among the most popular. Options include:
- Future increase riders: These endorsements allow you to increase your monthly benefit payout up to the allowable policy maximum, even if your health changes.
- Automatic increase benefit rider: Adding an automatic benefit increase rider is another solution for ensuring your monthly payout aligns with your income potential. These riders automatically increase the monthly benefit yearly for a specified time frame, with premiums rising proportionately.
- Cost of living adjustment riders: Known as COLAs, cost of living adjustment riders allow for annual base benefit increases while you’re disabled. You must collect benefits for a minimum of 12 months before a COLA applies, and each carrier has different adjustment options to choose from.
Additional riders vary by carrier and are worth exploring to create the best solution for your needs.
Trust DrDisabilityQuotes.com to Help You Find the Right Medical Resident Disability Insurance
DrDisabilityQuotes.com is a truly independent insurance partner offering a range of disability insurance for medical residents from today’s most respected carriers. Since we don’t work directly for any insurance company, we provide unbiased guidance on your options. We’ll gather quotes from our network and review them with you so you can confidently pursue the best solution for your needs.
Call our experienced agents at 973-771-9100 or submit an online quote request to get started today.
