As a young physician, you should obtain an individual disability insurance policy. It is designed to protect your ability to work within your specific medical specialty. If an illness or injury leaves you unable to work at your full potential, your disability insurance will provide you with the necessary income to continue your way of life.
Only a true Own-Occupation definition of disability will protect you within your chosen medical specialty.
Important Disability Insurance Policy Information
- Own-Occupation: Look for the True Own-Occupation definition of total disability that is specific for your specialty. It is this definition of disability that allows a physician, who is no longer able to perform their specific occupational duties, to receive disability benefits and still earn an income in another occupation or specialty at the same time.
- Noncancelable: The most preferable renewability option is Noncancelable and Guaranteed Renewable. This will guarantee that the insurance carrier cannot cancel your policy, increase your premiums or change the provisions so long as you pay your premiums on time.
- Residual/Partial Disability: The Residual Disability Benefit is one of the most important provisions that can be provided in a disability contract for young physicians. Residual/partial disability will pay disability benefits while you are partially disabled (i.e. working part time due to illness or injury). Since an overwhelming number of claims are due to illness, it is likely that a claim will start with partial benefits before transitioning into a total disability. Look for a residual benefit that solely requires a loss of income and does not require a period of total disability first. Additionally, this benefit should pay partial benefits once returning to work from a total disability for as long as there is a loss of income.
- Future Increase Option (FIO): The Future Increase Option provides young physicians with a way of guaranteeing their ability to increase their monthly benefit, regardless of any changes to their health. To exercise an FIO, you are only required to provide financial documentation to prove you earn enough income to qualify for the amount of benefit you want. No medical information will be needed. This is extremely important for residents, fellows and young physicians to ensure the ability to increase their benefit when their income increases.
- Cost Of Living Adjustment (COLA): The COLA rider is designed to protect your benefits against inflation. It increases your monthly benefit each year you are considered disabled and collecting benefits. A compounding annual basis is preferable and will help to increase your benefit more quickly. COLA is especially important for young physicians.
- Elimination Period: The Elimination Period, or waiting period, is simply a period of time which must be satisfied before benefits are payable. This can be viewed as a deductible. Most companies offer 30, 60, 90, 180 and 360-day elimination periods. The longer the elimination period, the lower your premium will be. A 90 day elimination period is usually the most cost effective.
- Benefit Period: The Benefit Period dictates how long benefits are payable, for any single period of disability. Most carriers offer benefits for 2, 5, 10-year periods and to age 65 or 67. To age 65 or 67 is the most commonly chosen benefit period by physicians as it provides income protection for the majority of your career, if not your entire career.
Written by: Tyler L. Rivetti