As an incoming resident physician, I need disability insurance. Although a group policy is offered through my employer, it doesn’t provide enough coverage to adequately cover my monthly expenses or insure my future income. Thus, I purchased an individual long-term disability insurance policy. This is what I discovered:
1. Disability insurance is expensive. A substantial number of people use disability insurance, so companies raise the price to cover the payouts and ensure they aren’t losing money. Quotes from different companies ranged from $100 to 250 per month. Many places offer “graduated” premiums (which allows clients to pay a reduced monthly premium for a few years in exchange for a higher premium later in life) to make it more affordable. I still opted for a “level premium” with a set rate. Mine is $110 a month.
2. The definition of disability is important. The definition of disability is variable. Some people might consider themselves disabled if they can’t work full-time, while others may only consider themselves disabled if they are unable to work at all. The broader the definition of disability, the harder it is to claim the benefit. Physicians need “own-occupation” disability insurance so that if we are unable to meet the specific demands of our own specialty (i.e., surgery), we will get compensated, even if we can technically still do the work of another specialty (i.e., Family medicine). As a family medicine resident who plans to specialize in sports medicine, I still opted for an own-occupation definition of disability.
3. Gender bias is real. Disability insurance is more expensive for women than it is for men. Insurance companies claim that women are more likely to get disabled and seek payout from disability insurance (due to factors like pregnancy) so they charge females more for it. To avoid paying such high premiums, I purchased a “unisex” policy (which is the same price for men and women). These policies offer similar coverage and tend to be cheaper than gender-based policies for women.
4. Some companies are better than others. When I contacted a few disability insurance brokers, I realized that one company was vastly cheaper than the others. Mass Mutual was the only company that offered an individual unisex disability insurance policy for female resident physicians. Since unisex policies are cheaper for women than gender-specific policies, the monthly premium for disability insurance from Mass Mutual was vastly cheaper than any other company. On the flip side, Principal offers discounted gender-specific policies for men, so many male residents purchased individual disability insurance policies through that company instead.
5. Certain “riders” or added protections are essential. When I shopped for disability insurance, I had the option to buy additional protections. As a resident physician with high-income potential there are three main riders I needed: 1. a cost-of-living-adjustment rider (so my payout will increase with inflation each year); 2. a residual and recovery rider (so I am compensated for any partial disability until I am back to my full productivity); and, 3. a future purchase option (so I can purchase more disability insurance after residency when my salary increases without having to re-qualify or pay a much higher price). Since I have a substantial amount of student loans, I also purchased a student loan rider, so if I get disabled before I pay off my debt, the disability insurance policy will pay me an extra $1700 a month for up to 10 years to cover my student loan payments.
6. There is a limit on how much individual disability insurance we can buy. By law, resident physicians can only purchase an individual disability insurance policy with a maximum benefit of $5,000 per month. (They don’t want to incentivize us to become disabled by compensating us more than our current salary). We can purchase more disability insurance as attending physicians, but we need to have an individual disability insurance policy as residents so that we are fully covered now and can upgrade our coverage later for a cheaper price.
7. It’s cheaper if you’re healthy. As I filled out the disability insurance policy application, I answered a ton of personal questions. Insurance companies take an extensive history to determine our risk of being disabled in the future. I was asked about my own medical history and that of my family. They wanted to know if I had broken any bones, got in any recent car accidents, and whether I had ever smoked cigarettes. I was also asked if I had plans to travel out of the country or engaged in any high-risk behaviors like rock climbing or sky-diving. They wondered if I had ever gotten pregnant and the result of my last “wellness check” from the physician. Because I was young and healthy, my rate remained low.
8. The price varies by state. I currently live in Florida, but I will begin residency in Atlanta, GA. My disability insurance premiums are lower with my Georgia address than they are when I use my Florida address. Insurance companies look at hobbies, accident rates, and other data and determined that we pose a greater or smaller risk to them depending on where we live. California is one of the most expensive places, Georgia is one of the cheapest.
9. Be wary of group policies through professional organizations. As physicians, we can buy into a group disability insurance policy from the American Medical Association or our specialty-specific organizations. These policies seem cheaper and look enticing. However, after doing some research, I saw several drawbacks. First, the premiums were not “level,” meaning the cost of policy could increase every few years as I aged. Secondly, they did not offer sufficient “future purchase options” so I couldn’t upgrade my coverage as often as I’d like (i.e., when my salary increased as an attending physician). Lastly, buying into these group policies would negate or significantly reduce the payout from any disability insurance coverage I already have from my residency. Group policies usually cancel each other out; individual policies do not.
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