How to choose the best physician disability insurance policy

Physicians are some of the hardest working individuals in the country. Years of rigorous training culminate in long hours at the practice. Even physicians can overlook the importance of protecting their ability to earn a living. When something as trivial as a sprained wrist can prevent a doctor from completing their daily tasks, disability insurance becomes a real consideration.

Medical school tuition has never been higher. According to CBS News, the average physician graduates from medical school with an average of $166,750 in student debt. With another five to six years earning $50,000 a year as a resident in training, compounded interest will send that student debt through the roof. It takes some physicians 30 years to pay off their student debt. Depending on the interest rate of the loan, the debt total could creep to over $400,000. That’s a herculean financial burden for someone that’s just starting a career. 

Fortunately, doctors are still some of the top earners in the country. Online salary information provider Payscale estimates that most physicians can earn anywhere between $166,080 and $288,414 a year.  However, with retirement savings, mortgage payments and the years it takes to wash away the pains of student debt, many doctors cannot afford to go without a paycheck for a week, let alone several months.

The likelihood of becoming disabled

A doctor’s life isn’t necessarily a dangerous one, but that doesn’t mean that they aren’t immune from injury or illness. The Council for Disability Awareness reports that a typical female in her mid-30s has a 24% chance of becoming disabled for at least three months during her professional career, while the typical male in his mid-30s has a 21% chance of becoming disabled for at least three months during his professional career.

It’s easy to see how three months without work could be damaging to a physician’s finances. If a minor hand injury puts a new doctor out of work for three months, making those monthly student debt payments would be a difficult challenge. That doesn’t even include a physician’s cost of living, saving for retirement or any overhead expenses for those in private practice.

The best disability insurance for physicians

While the need for disability insurance is clear, it’s important for physicians to understand that not all disability insurance policies are the same. Physicians need what is known as own-occupation disability insurance. The term “own-occupation” means that the policyholder will receive benefits when they are unable to perform the duties essential to their specific occupation. Physician disability insurance also needs to account for the individual’s specialty such as radiologist or orthopedic surgeon.

If a doctor becomes partially disabled and can still perform a portion of his daily responsibilities, he will need what’s called a residual disability provision in their insurance policy. This helps recoup a portion of a doctor’s lost income if they can return to work in a limited setting.

Selecting a policy

As some of the nation’s highest earners, physicians need to make sure that their insurance provider is financially competent enough to foot the bill when a disability occurs. With monthly benefits of up to $20,000 and higher, some insurance companies might not be able to properly compensate their customers over a long period of time. Every physician needs to do research on whichever company they choose to ensure that their finances will be protected when the going gets tough.

Terms to know when shopping for coverage

Elimination period: 

The amount of time during which the policyholder will not receive benefits, beginning at the start of the disability and lasting until the first benefits check is received. Policies with longer elimination periods tend to have a lower monthly premium. Most elimination periods start at 30 days and can last as long as one year.

Residual Disability: Also known as partial disability, residual disability takes effect when the policyholder goes back to work part-time. The policyholder receives a portion of their disability benefits based on how much of their income may still be missing. Without residual disability, the policyholder would lose all of their benefits if and when they return to work in any capacity. 

Waiver of Premium: Allows the policyholder to stop paying their monthly premiums once they become disabled and after the end of the elimination period. Certain policies may extend the wavier of premium until the policyholder fully recovers from their injuries. 

Rehabilitation Benefit: Provides some financial reimbursement to the policyholder as they enroll in an approved physical rehabilitation program. The rehabilitation benefit stipulates that the policyholder will not lose their original benefits during their time in the program and provides some additional funding to help pay for the cost of the program.

How to purchase coverage

When a physician is ready to purchase disability insurance, he should consider using an insurance broker who specializes in this coverage. Comparing quotes across multiple insurance companies is key to making sure that a physician receives the policy that is best tailored to them, at the best possible price. For physicians, few decisions are as important as choosing the right disability insurance policy.