Disability happens more often than many think. According to the Council for Disability Awareness, one in four workers in their 20s will miss at least a year’s worth of work before they retire due to disability. And the average long-term disability lasts over 32 months.
It’s also important to note that most disabilities aren’t caused by accidents. Instead, illnesses lead to 95% of them. Whether you work in a “physical” job or not, your chance of suffering disablement is relatively the same.
For these reasons, everyone in their working years should consider purchasing disability insurance. But it may be even more important for doctors than anyone else. Here’s why.
Why most doctors should consider physician disability insurance
It takes a lot of money to earn a Doctor of Medicine (M.D.) degree. And for many med school students, that means a lot of student debt. The average student loan debt for a bachelor’s degree graduate is just under $30,000. But the typical med student graduates with $200,000 in student debt!
And to make matters worse, most physicians will need to spend three to seven years in residency earning a relatively low income. So doctors are looking at 11 to 15 years of accumulating debt while earning only average salaries.
Doctors are willing to make these sacrifices because of their long-term earnings potential. According to the Bureau of Labor Statistics (BLS), the median salary for physicians and surgeons as of May 2018 was $208,000. So, over a 30- to 40-year career, doctors could earn a fantastic return on their education.
But if that career is cut short by disability, everything changes. Doctors invest more upfront time and money toward their careers than the average person. Physician disability insurance can help protect that investment and repay debts.
What’s the best disability insurance for doctors?
Here are a few things to keep in mind when you’re shopping for physician disability insurance:
Look for own-occupation policies
Any occupation disability policies will only pay out if you can’t do any work whatsoever. But if you’re a surgeon, answering phones for a call center isn’t going to help you a lot financially, even if it’s possible physically.
That’s why you want to look for “own-occupation” physician disability insurance policies. This means the policy will pay as long as your disability keeps you from doing your primary job.
There may be no profession where “own-occupation” coverage matters more. And you need to ask about it when you’re shopping for coverage.
Ask about overinsuring options
Most disability insurance policies pay out a percentage of your current gross income. For short-term disability insurance, 80% is common. A 60% payout is more typical for long-term disability insurance.
But this can be problematic for residents. Your monthly payout would be based on your resident income, which would be less than you’d plan to earn once you begin practicing full time.
That’s why you may want to see if you can find a resident physician disability insurance policy that allows you to be “overinsured.” Policygenius, for instance, says residents can buy policies that pay out $5,000 a month. And med students with no income can buy policies that have a $2,500 monthly benefit.
Compare the pros and cons of graded vs. level premiums
Wondering how much you’ll need to spend on physician disability insurance? LeverageRx says 2% to 6% of your monthly benefit amount is a good rule of thumb.
This means a policy with a $5,000 benefit could cost you anywhere from $100 to $300 a month. Your age, gender, health, and medical specialty will all play a role in the price of your specific policy.
Feel like you can’t afford your monthly premiums while you’re in residency? You could look for resident physician disability insurance policies that offer graded premiums. In other words, your premiums will be cheaper in the beginning while you’re earning less, then become more expensive later on.
If you can pay the premiums, a level premium policy will be your most affordable choice over the long term. But the upfront savings of a graded premium policy may be worth it for some residents.
Where can doctors buy physician disability insurance?
Disability insurance for doctors can be purchased through online insurance sites or an individual insurance broker.
Where to buy physician disability insurance online
They’ve both partnered with some of the most respected names in the insurance space, such as Ameritas, Guardian, MassMutual, Ohio National, Principal, and The Standard. Each of the insurance companies that they work with boasts an AM Best rating of at least an “A.”
With both websites, you’ll fill out one application, and they’ll take care of sending it to each of their partners. Policygenius and LeverageRx both take advantage of technology to streamline the process and help you get coverage in place as soon as possible.
How to find a reputable individual insurance broker
If you’d like a more personal touch, you may want to consider working with an individual insurance broker. This could also be a good idea if you’re looking for provisions related to the medical profession, like the ability to overinsure in residency or graded premiums.
One of the best ways to find a great insurance broker is by asking around. If someone you trust has been happy with an insurance broker’s service, there’s a good chance you will, too. This is especially true if you have doctor friends who have purchased physician disability insurance from a broker in your area.
Look for independent brokers who can get quotes from many insurance companies. Read online reviews and interview a few brokers that seem to stand out. Make sure to ask them which insurance companies they work with.
Searching for an independent insurance agent who specifically works with physicians? You may want to consider giving Stephanie Pearson or Lawrence Keller a call. Both have a ton of experience working with doctors. They can help you find the best physician disability insurance policy for your specific situation.
Physician disability insurance: A good choice for most doctors
As doctors near the end of their careers, physician disability insurance becomes less critical. By that time, their student loans should be paid off, and they’ll hopefully have a nice nest egg put away for retirement. Most physician disability insurance policies will only provide coverage until age 65 anyway.
But if you’re in the beginning or middle of your career as a doctor, you probably need physician disability insurance. The sacrifice of money and time you’ve made to enter the medical field is definitely worth protecting.