Disability insurance for doctors: Read this before you buy
Key Takeaways
What would happen if you could no longer practice medicine? You spent years amassing your knowledge and skills. Would you be willing to start over in a new career?
The good news is, with the right total disability insurance policy, you wouldn’t have to. While that’s simple on the surface, selecting the right disability insurance policy for doctors is complex. That’s why we contacted Lawrence B. Keller, founder of Physician Financial Services.
“There are 6 companies that offer high quality individually underwritten disability insurance,” Keller says. “The key for doctors is to really understand the pros and cons of one company and policy versus another so they can purchase the right policy based upon their needs.”
When Keller works with clients, he reviews the following 5 policy features to determine the best fit. Here’s a brief overview of each.
Non-cancelable and guaranteed-renewable policies
“These give doctors the best protection,” Keller says.
Under a non-cancelable policy, once you’re covered, insurance companies can’t change the premium rate or the terms of the policy as long as you’re paying on time.
With a guaranteed-renewable policy, the insurance company has the ability to change the premium rate, but only with the approval of a state’s insurance department and by class of policy holder. While this does not happen often, Keller recommends these policies because they provide the best coverage.
True own-occupation policies
True own-occupation policies don’t protect you from loss of income, just your ability to carry out job duties related to your specialty. Keller explains these policies as follows:
“If I’m disabled due to an accident or sickness, and I cannot perform the material and substantial duties of my occupation, I would be deemed totally disabled.”
The key phrase there, Keller says, is “material and substantial duties.” Keller provides the following example: If you’re an orthopedic surgeon specializing in trauma whose business pivots on your ability to perform surgery, surgery likely would be considered your material and substantial duty because it is a major source of revenue generation. In this case you likely qualify for total disability benefits.
However, if you’ve changed your practice since acquiring your coverage, and are performing less surgery, things may be different. In fact, if your loss of income due to your inability to perform surgery is minimal, you might not qualify for any benefits at all.
Residual disability riders or partial disability benefit
These riders, Keller says, address the potential loss of income. If you’re not totally disabled, but an injury or sickness cause you to lose income within your specialty, you receive benefits that are proportional to your income as long as you meet the threshold of a 15% to 20% (or greater) loss of income as a result of the disability.