To practice veterinary medicine you must spend years in school to obtain their DVM, one of the most valuable assets in their diverse arsenal. Naturally, becoming a professional, licensed, and certified veterinarian isn’t cheap at all.
According to a recent study by the American Veterinary Medical Association in 2020, the average veterinarian school graduate faced an educational debt that hovered around $150,000. Even though veterinarians have a high earning potential, they are often troubled by high student loan debt.
However, this combination of high earning potential and high student loan debt makes veterinarians excellent candidates for disability insurance. With that in mind, let’s talk about what disability insurance protection for veterinarians is and the things you should know about it.
What is disability insurance for veterinarians?
If a veterinarian is unable to perform their duty due to chronic illness or disability, a disability insurance policy will covers earnings lost. The policy pays a monthly benefit to the policyholder to provide coverage for all necessary expenses and help them stay financially stable.
This policy also helps you to avoid losing your possessions, such as your car and home, due to a need to pay medical care, and utility bills.
The payout that the disability insurance for veterinarians provides will covers theose essentials, such as a mortgage, car payments, utilities, student loans, medical bills, etc.
Inform yourself on what does disability insurance cover?
Basic disability insurance for veterinarians covers about 40%-60% of your gross income for a certain period of time. You can opt for different benefit period options, such as:
- 5 years
- 10 years
- To age 65
- To age 67
Types of disability insurance for veterinarians
While there are many types of disability policies for animal vets, two main options stand out—short-term and long-term. The former lasts usually 9-52 weeks, and provides coverage immediately after an accident that caused the disability. There are different types of insurance so you can get long term care for your parents too.
It’s provided either by the state or your employer. The latter is meant to kick in after the short-term period ends and the person is still not able to work. After the elimination period is over (60–365 days), the claim payment kicks in and provides coverage for as long as the policyholder is disabled, up to the benefit period on the policy.
How to buy disability insurance for veterinarians
You can purchase disability insurance as an individual or a group, and the latter is purchased through your employer. Employers usually offer long-term disability insurance policies with inferior benefits to individual plans. Group plans are taxable and require employees to pay taxes on the benefits received.
They include certain limitations regarding what is defined as total disability. Certain employers don’t allow you to work in other occupations while receiving disability payments. However, the biggest concern is the way group plans adjust the payouts.
They provide coverage by adjusting dollar for dollar if the policyholder receives any other income such as social security, lawsuit claims, and residual pay. Employers issue group insurance plans through a certificate, not a policy, meaning the employees hold no ownership rights.
If your employer decides to cancel your plan, change benefits, alter definitions, or increase the cost, you have no say in it, and they can do it any time they want. Group plans are also much harder to come by, which is why you should think twice before you opt for this option.
Companies will try to avoid paying out for this type of insurance. When an employee files a disability claim, their health history and medical records will become determining factors in deciding whether they are approved or not.
Individual disability insurance plan
Individual disability insurance for animal veterinarians is far superior to group plans because of the certain advantages they offer, including:
- They are portable and allow you to collect claims even if you change employers.
- They aren’t taxable;
- They include the best specialty-specific definition of total disability;
- They are easier to qualify for and fully underwritten (health records considered).
Individual plans are better because they provide full medical underwriting, which may include an examination, when checking your eligibility for disability coverage instead of group plans. An individual disability insurance policy allows the carrier to determine the type and period of coverage, what they want covered by the insurance company at the time of application, etc.
If you have a group plan but you’re changing employers, it’s possible to supplement your group plan with individual policy coverage. However, if the policy you have isn’t at its maximum benefit level, the disability insurance company might not be able to further increase the policy limit.
How to know how much disability insurance coverage you need
The ideal short-term disability insurance would be the policy that provides enough coverage to pay for your livelihood until you’re able to return to work or you ensure other resources such as collecting social security or your pension.
Disability insurance provides benefits quoted as monthly income that the carrier receives if disabled. You can determine the base amount you would need by considering your current monthly income minus the taxes, the period you want to collect benefits, and the time you need them to begin.
Other factors that impact how much insurance you need include your savings, financial independence, and whether you live in a dual high-income household or not. If you and your spouse both earn a high income and have an abundance of savings, you may not need the maximum amount of insurance policy.
Long-term disability insurance features to consider
When considering long-term disability insurance, certain features determine what your policy would cover. Here are some of the features every veterinarian should consider.
Veterinarians go through long years of education, so it’s only natural that they want to work in their chosen specialty or field. In other words, one of the most important features your disability insurance policy should include is “own occupation” insurance coverage.
It allows you to work in your veterinary specialty or any other specialty and still receive your disability benefits. If you get injured or become sick while working in your veterinary specialty, you’ll be able to work in another occupation and continue to receive coverage from your disability insurance.
Partial or residual disability benefits
Injuries and disabilities are never the same, and each situation is unique. You can get injured at work and still be able to work. You can also suffer an injury that can be easily treated but still affects your performance at work and in day-to-day life.
There are also situations where people develop a health condition. They can still work but have limited capabilities or can perform for a limited amount of time. The residual disability benefit feature provides coverage for the period between your current expenses and your pre-illness or pre-injury income by paying a partial monthly benefit.
However, you can claim this particular residual benefit only if you lose at least 15%–20% of your income. It depends on the plan you opt for, but the common case scenario is that the percentage of insurance benefits paid equals your loss of income.
One of the best features of an insurance policy is the ability to increase the policy up to the maximum amount without presenting proof of health or getting re-examined by the insurance experts.
If you’re just starting as a veterinarian, this feature might be essential to protecting your higher income. If an injury leaves you disabled or an illness prevents you from performing your duties, your health status could change, making you ineligible for proper or increased coverage in the future.
This particular feature helps protect a higher income regardless of your health status. There are different options available when it comes to the future increase feature, such as Benefit Update (BU), Benefit Purchase Rider (BPR), and Future Increase Option (FIO).
FIO allows you to increase your monthly benefit by paying an additional cost at any policy anniversary date. It gives you more policy flexibility but requires you to provide income documentation, file a request for an increase, and wait for approval.
BU and BPR are the same things, the only difference being the company name— Guardian issues BPR and Principal issues BU. Neither of the features require additional cost as they come with the main insurance plans, and both allow you to increase your policy once every 3 years.
If you get approved for an increase, you must increase your policy by at least 50% of the amount you qualify for to keep the feature for another 3 years.
The term benefit period refers to the maximum amount of time your insurance policy will provide benefits. The benefit period depends on the type of insurance you’re eligible for. Short-term policies keep you covered for about three months up to a few years. Long-term insurance, on the other hand, can last until you retire. The longer you receive coverage and the more benefits a policy includes, the more it costs.
Elimination period refers to the period the carrier isn’t eligible to receive insurance claims even if a disability has made them incapable of working. The average elimination period for short-term disability insurance plans is 14 days.
Monthly indemnity refers to the range of monthly benefits you receive monthly for as long as your policy covers you. It’s one of the essential considerations for veterinarians because it may be the only financial resource during disablement. The cost of the benefits depends on your income. Typical coverage provides 60%–80% of a veterinarians’ earnings before getting injured or sick.
Other benefits to consider
Depending on the associated occupational risks and hazards in your profession, you may consider purchasing additional benefits to make your disability insurance policy more flexible. These additional disability claims options include benefits such as hospitalization income benefit, etc.
Where to buy disability insurance for veterinarians
The best place to buy individual disability plans is to contact an independent insurance broker and get the best quotes from various insurance providers. Consider seeking a financial advisor’s help to weigh in on different options and benefits available.
If you understand more about how a specific type of insurance benefits you, and what kind of coverage it provides, you’ll be able to make an informed decision.
Shopping around the top insurance providers helps find the best policies and the most affordable rates for your specific needs.
Consulting with insurance experts helps you understand the differences between each plan, learn about the benefits they offer, and the claims process to replace your loss of income, so they can help you in your time of need.
Once you have decided on the coverage you want, there is an application and underwriting process. Some insurance providers allow policyholders to customize their quotes to better align the benefits and their needs.
If you’re opting for a group disability insurance plan, make sure you find out what it covers, what benefits you get, and how much you have to pay for it in taxes. If you’re going with an individual plan—the most sensible option—make sure you know the quotes, rates, benefits, and cost.
Independent insurance brokers offer better benefits as they have to work hard to stand out from the competition. Most top-rated insurance providers allow you to request quotes directly for free. You can also get professional advice before you make your decision about disability insurance.
Keep in mind this is an investment that can become a lifeline in the worst-case scenario. Take your time, make sure you’re well aware of all the options on your hands, and talk to a professional before you apply.
Mixed News on Student Debt, 2020, retrieved from the American Veterinary Medical Association website: https://www.avma.org/blog/mixed-news-student-debt
John Tait, 2002, Disability Insurance, retrieved from the US National Library of Medicine
National Institutes of Health website: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC339411/
Life Insurance & Disability Insurance Proceeds, retrieved from the Internal Revenue Service website: https://www.irs.gov/faqs/interest-dividends-other-types-of-income/life-insurance-disability-insurance-proceeds/life-insurance-disability-insurance-proceeds-1