Physician Disability Insurance
Physicians interested in purchasing a disability insurance policy should shop for some very specific and necessary policy features. Unlike a traditional office-based job, you are conducting a variety of daily tasks that require protection for a specific medical skill developed through years of training in your residency or fellowship. Your true medical specialty defines who you are as a doctor. Anesthesiology, Emergency Medicine, Orthopedic Surgery, Radiology - protecting your ability to perform the duties of that occupation is the primary focus for you in determining the right type of disability insurance policy to purchase.
Additionally, your income may be comprised of a base salary and fee’s charged for patient visits or procedures you conduct. If your income as a physician is primarily generated on a fee-for service basis, consider how a disability insurance policy will protect you in the event of significant income loss due to an illness or injury that may still allow to see patients or do your surgical procedures.
Essential Disability Insurance Policy Features
These contract provisions should be what you look for in your disability insurance policy.
1) True Own Occupation Definition of Disability - Disability income insurance policies provide a monthly benefit for total disability. When you read a disability insurance contract, the most important component of the policy should be how it determines you to be disabled. A typical true own occupation definition will read:
-Total Disability or Totally Disabled means that, solely due to injury or sickness, you are not able to perform the material and substantial duties of Your Occupation. You will be Totally Disabled even if you are gainfully employed in another occupation so long as, solely due to Injury or Sickness, you are not able to work in your occupation.
Your occupation means the occupation (or occupations, if more than one) in which you are gainfully employed during the 12 months prior to the time you become disabled.
This essentially means the insurance company will recognize you as totally disabled if, because of sickness or injury, you cannot perform the duties of your occupation and will not force you to return to work in another occupation. Also, equally important, you will have the choice to earn an income working in another occupation without jeopardizing your benefit payment.
There are numerous variations of the language in the marketplace today. PLease read any policy you are considering carefully.
Ideally - you should select a policy that includes an additional contract provision that recognizes your medical and or dental specialty. An example usually follows the above definition with:
- If you have limited your occupation to the performance of the material and substantial duties of a single medical specialty or to a single dental specialty, we will deem that specialty to be Your Occupation.
2) The policy is BOTH Non-Cancelable and Guaranteed Renewable to at least the age of 65. - Understand the renewability provisions which define your rights in maintaining your disability income protection. If a policy is just guaranteed renewable only, it will remain in force as long as your continue to pay for your policy on time, but the insurance company may increase your premiums.
When you purchase a policy that is both non-cancelable and guaranteed renewable to at least the age of 65, the insurance company can not change your premiums or the contract language in anyway provided premiums are paid on time.
3) Residual or Partial Disability Benefit Rider - This very important benefit is usually offered as an optional rider to purchase on most disability insurance policies. Consider that you may suffer an injury or illness that doesn’t cause a total disability, but limits your ability to work and causes a loss in your income. Most contracts will provide some form of a benefit to you if, due to an injury or illness, you suffer a loss of time and duties and a loss of income in your occupation. How much of a benefit you receive depends on the contract and income loss. Some carriers also provide a recovery benefit period which, in the event you return to work full-time from your disability but still have a loss of income, will pay you a benefit.
Important Optional Riders to Consider for your Policy
1) Future Increase Option Rider* (aka Future Purchase Option Rider) - Many physicians want to ensure the ability to add more protection to their policy as their income increases. This rider allows, with financial approval by the insurance carrier, for the policyholder to purchase additional disability insurance coverage without any future medical underwriting. This is extremely important for young physicians, residents or fellows who need to protect their ability to get more coverage in the future, even if they suffer a setback in their health along the way.
2) Cost of Living Adjustment Rider (COLA) - Inflation can have an eroding effect on a person’s level of disability insurance protection. This rider will adjust your benefit to help keep pace with inflation while you’re totally or residually disabled. There are a variety of COLA riders available from all carriers - the most popular is typically a 3% fixed COLA.**
3) Catastrophic Disability Benefit Rider - Extra protection may be needed from the financial impact of a severe disability. This rider is an additional benefit that pays along with your base monthly benefit in the case you suffer an injury or sickness that results in a cognitive impairment, the loss of two or more activities of daily living, and or the irrecoverable loss of sight in both eyes, hearing in both ears, speech, or the entire use of both hands, both feet or one hand and one foot in their entirety.
4) Retirement Protection Plus Disability Benefit Rider*** - The funding of your retirement savings is critical, especially if you suffer a long term disability. Would you be able to cover both your living expenses and saving for retirement with your disability benefit alone? This rider will provide you with an additional benefit that is invested toward your retirement savings while you are totally disabled and not gainfully employed.
*Restrictions and limitations apply. While medical information is not required when exercising a future increase option, applications to exercise an increase option will be financially underwritten taking into consideration both the applicant's then current income, as well as all disability insurance which is then in force, or for which the insured has applied or is eligible to receive.
**This benefit is not necessarily protection against increases in the cost of living.
***Retirement Protection Plus is not a pension plan or a substitute for one.
Click here to see disability insurance information for your medical specialty.