Disability insurance is a necessary form of insurance for practically everyone, but as a physician, you’re in a unique position. You’re a high-income earner, you likely have your own practice and function, at least in most capacities, as your own boss. Also, you’re a healthcare professional who probably takes good enough care of your health that you believe your overall chances of needing disability insurance are low. You can consider long-term care planning or short-term planning.
Well, all of those factors make you even more likely to need disability insurance than a lot of other people.
In 2022, disability insurance for physicians is a must-have asset, and here’s an in-depth guide into why you need it, what it covers, and how you can get the best policy for you.
What is Disability Insurance?
Disability insurance is a blanket term for two different types of insurance products. There is short-term disability insurance, and there is long-term disability insurance. These will be covered individually later on, but both types of disability insurance plans share the common trait that they protect against a loss of income in the event that you become disabled and can no longer carry out your duties as a physician; there are a lot more qualifiable conditions for that than you might think, too.
How Much Does Disability Insurance Pay?
Individual disability insurance policies differ depending on the disability benefits provider or disability insurance company you purchase them from, the type of policy you buy and level of coverage you request in your policy. So, the monthly benefit your policy will pay in the event of a horrible situation will differ from that of someone else, and there’s no concrete number to give you.
However, there is a fairly reliable range you can use for reference.
Depending on the factors listed at the beginning of this section, you may receive between 55% and 80% of your normal income each month once your benefits kick in. Some comprehensive coverage policies that contain additional coverage in the way of riders (add-ons), may go higher than that, but they tend to be the cream of the crop insurance policies with higher premiums ((1)).
Now, that may seem like a huge pay cut compared to what you’re used to, and 55% of your income may not seem like adequate coverage, but take into account that, if you become disabled without a disability plan, you can end up with a 100% income loss, or at best on SSDI—which is not optimal if you can afford the monthly expenses of disability insurance in any way.
How Much Does Disability Insurance for Physicians Cost?
Disability insurance coverage for physicians is fairly inexpensive compared to a life insurance policy, health insurance or even higher-end car insurance policies.
This is a good thing since if you don’t end up becoming disabled, you won’t ever see the benefits of a disability policy. If it were a more expensive policy, it may be a bit easier to turn it down.
There is a choice of two options for physicians looking for disability insurance. Both forms of insurance premiums will cost between 1% and 3% of your annual income, usually paid in monthly premiums, and you may have to pay up to 6% of your coverage amount with some policies ((2)).
This can be too much from a low-income earner’s daily living expenses, but taking your high-income, neither premium is a massive cost of living adjustment considering they can ensure some financial security. If you are newly qualified and still paying student loan payments or medical school bills and your budget is tight, you could initially begin with a smaller premium that includes a “future increase” option rider. When your attending salary becomes your ordinary income, you can then add extra coverage.
At least one individual coverage policy should be an affordable part of any physician’s budget. Not only that, but insurance companies have price cap policies. So, if you make $150,000 per year, don’t expect to pay the massive 3% sum of that. The price cap will keep it lower.
This is one of the key reasons no physician should go without it. In comparison to other insurance policies, the price is practically negligible given all the benefits it can potentially provide.
Short-Term Disability Insurance for Physicians
Before you learn about why physicians need disability insurance, you need to know a little about what each individual plan covers and the insurer’s definition of disability. Here are the main disabilities covered by short-term disability policies. As you’ll probably understand, not all of them require something dramatic to happen or pre-existing health conditions ((4)).
Everyone can be affected by these unfortunate disabilities.
Yes, disability insurance can have a use in positive situations. If you can’t safely carry out your work tasks because your pregnancy is simply far too difficult, you don’t have to worry about pushing through it and potentially harming you or the baby. You can make a short-term disability insurance claim and have financial protection while you focus on what should be an amazing, yet stressful, time period in your life.
In the event, something does go wrong during or after your pregnancy, and it prevents you from working, you can take the time you need to heal and resolve the situation with disability insurance.
If you, unfortunately, require a serious surgery that puts you out of work for months, you can use your disability insurance to protect your income and focus on not only getting the surgery but also on recovering from it properly.
It’s a fact of life that, while you can do a lot of things to minimize serious injuries, some things are completely out of your control. You can have a fit, healthy body, understand healthcare perfectly, and avoid dangerous situations at all times. You can still get hit by a car crossing the street, get into an accident, or suffer any number of other horrific situations that leave you bedridden for a while.
This is where many physicians overestimate their health’s ability to prevent the need for short-term disability insurance, but sickness and injury can happen to anyone, and disability insurance will protect you if it does happen.
However, keep in mind that this is for non-work-related injuries. If you’re hurt on the job, you need to seek aid from Worker’s Compensation. It provides the same financial protection, but it’s designed to help if you get injured at work. Disability insurance will only kick in if you get injured outside of the workplace in your day-to-day personal life.
If you catch the flu or get a cold, you’re unlikely to need enough time off work to warrant a disability claim, but did you know something as common as Covid-19 can leave you bed ridden for months ((3))?
Many other illnesses can do that to you, too. When they do, you’re unlikely to have enough in your savings as a solo practitioner to simply absorb the income loss without feeling the consequences, and if you’re employed, your employer probably doesn’t offer six months of sick leave every year.
In this case, short-term disability insurance can mean the difference between preserving your financial status and quickly drying up your resources due to medical costs, loss of income, and lifestyle upkeep.
To make it worse, no one can really prevent these sorts of things from happening. Even if you do your best to prevent it, you can always accidentally catch something.
Back and Joint Issues:
Back and joint issues that are chronic usually fall under long-term disability coverage, but if you simply cannot work for a few months while you have the problem resolved, short-term disability can cover your finances while you do so.
Regardless of how healthy you are, you may become host to a tapeworm, develop a disease that needs treatment but won’t permanently disable you, or require something such as a gallbladder to be removed.
Long-Term Disability Insurance for Physicians
Long-term disability does the same thing as short-term disability, but it’s only for disabilities that are predicted to last for anywhere from six months to a permanent disability until day you retire.
This type of disability insurance is much more extensive due to the length the insurance company is likely to being paying you monthly payments, and of course, insurance companies want to avoid making that long-term pay out as much as possible. So, it can take up to a full year to sit through the waiting period while a claim administrator pours over every detail of your claim and medical history ((5)).
However, the disabilities it covers are serious, and many of them are completely unpredictable. Make sure you know reasons for long term care insurance rejection.
Here are the main disabilities that can qualify for a long-term disability claim.
No matter how much attention you give to your health, what you eat, or what bad habits you refrain from, you can develop cancer, and you can be unable to work because of it just like someone who did all the wrong things.
Luckily, this is one of the main disabilities long-term disability insurance covers.
You are unlikely to score a long-term disability insurance claim for being pregnant, but there are several disabilities –both mental and physical- that can occur after your pregnancy. If those disabilities are expected to last for longer than 3 months, you can make a disability claim while you resolve the issue.
Musculoskeletal issues can develop in anyone, and when they do, they can be completely debilitating. You can be unable to lift a lot of weight, or you may have issues just standing up without support. When your musculoskeletal system is weakened or damaged by disease or injuries, working any sort of job may be impossible.
When you get a long-term disability claim approved for this sort of issue, it tends to be for the long haul, and you can expect to gain benefits until you reach retirement age.
Minor injuries that will heal over the course of a couple of months are covered by short-term disability if you can prove they prevent you from working as a physician. However, when you receive a significant injury with long-lasting effects, you may be eligible for long-term disability benefits that last until the injury heals or you’re retired.
Mental Health Issues:
Mental health is just as serious as physical health. Thankfully, insurance agencies understand this, and long-term mental health disorders are covered by long-term disability policies.
If you develop a disorder such as clinical depression or anxiety, bipolar disorder that is proven to be disabling, schizophrenia, PTSD, or other issues, you can claim disability and receive benefits. Since most of these are life-long conditions, you may be on disability until you reach retirement age, but you can potentially go back to work with the right treatments.
Note: You will need to supply records of your medical history when having your policy enrolment reviewed. Having these as existing conditions might affect future claims or even your ability to purchase a policy.
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Why do Physicians Need Disability Insurance?
As you can see, disability insurance benefits cover a lot of circumstances, and you can get one for any profession, you even have disability insurance for veterinarians. Some circumstances are positive such as providing you with time to focus on your pregnancy, and some of them are a bit more difficult to deal with such as cancer, heart attacks, strokes, and other deadly illnesses and conditions.
As a licensed health professional you probably take good care of yourself, and that might make you believe you’re exempt from those sorts of things, but that’s not true. Even a healthy physician is vulnerable to these unfortunate parts of life, too.
In the event of disability, and you are not covered by an individual disability policy, you can lose everything, including any retirement savings.
Despite building a fruitful high-income career, you may never financially recover from the loss. This is because, as you’ve built wealth, you have likely increased the upkeep costs of your lifestyle. When you become disabled, those upkeep costs don’t go away, you gain more via medical bills and necessary life adjustments to accommodate your disability, and you lose your income.
This is why disability insurance is so crucial for you. Especially during 2022 when it seems everything wants to disable you somehow. You just can’t avoid all the debilitating medical conditions or accidents that can put you out of work, and disability insurance can protect everything you’ve worked hard for throughout your medical career.
However, you shouldn’t try to find a policy on your own. You need a policy that provides enough coverage to let you maintain the quality of life you’ve earned, and you need an insurance carrier you can trust.
If you’re ready to look for disability insurance for physicians, contact Policy Solver to gain access to a vast network of insurers and policies with a hands-on consultation team that can help you assess your needs and purchase the perfect plan for you.
1: Taken from Insurance Q and A, 03/04/2022, http://www.insuranceqna.com/disability-insurance/how-much-does-disability-insurance-pay.html
2: Taken from Life Happens, 03/04/2022, https://lifehappens.org/disability-insurance-101/how-much-does-disability-insurance-cost/
3: Taken from We Forum, 03/04/2022, https://www.weforum.org/agenda/2021/07/long-covid-symptoms-research/
4: Taken from Insure, 03/04/2022, https://www.insure.com/disability-insurance/short-term-disability.html
5: Taken from Mutual of Omaha, https://www.mutualofomaha.com/advice/tackle-my-finances/the-waiting-period-for-a-disability-insurance-policy