Disability Insurance for Physicians: Cover Your Unique Medical Skills

January 24, 2014

Selecting the right disability coverage to fit evolving needs is vitally important as you proceed along your career path as a physician. So know your options.

Physicians are healers. But sometimes, they themselves need healing, as well as a way to keep income flowing into the household when they have a disability that either curtails or prevents them from practicing medicine. Disabilities don’t just stem from an injury. In fact, about 90 percent result from an illness rather than an accident, according to the Council for Disability Awareness

Is your current plan sufficient?

There are a number of special factors that physicians and other medical professionals should take into account when considering disability insurance. Traditional group disability insurance and association plans may be insufficient to protect the income of a highly-trained medical professional. If you were physically able to work in a different branch of medicine, or even to be gainfully employed in a totally different occupation, there is a possibility that benefits can be limited or denied. This might come as a shock to physicians who have spent years in residency, fellowship, and even passed multiple board exams to get to where they are today.

An adviser who specializes

Physicians need a well-designed disability insurance plan that can provide adequate income protection as their careers progress, but selecting the right coverage and company can be a challenge. A financial adviser who specializes in working with medical professionals can provide valuable perspective and judgment in the selection process. The appropriate adviser should have a fiduciary responsibility to represent your best interests. Inquire about the adviser’s credentials, the volume of disability insurance they write, and how many companies they work with in order to get the policy that suits you best.

Important features and benefits:

Specialty Occupation Rider

This is an important one. Look for a carrier that actually will include in its contract that your medically defined specialty will be covered. This rider is not to be confused with the basic Own Occupation Rider. It will also ensure that the disability benefit will be paid out to you even if you were gainfully employed in a different occupation or specialty, for example as a teacher.

Residual Disability and Recovery Benefit

This rider adds income protection in two ways. It will provide a benefit to you if you have a disability that doesn’t render you completely unable to work, but causes a reduction to your income. It will also restore some of your lost income if you are out of work for an extended period of time only to come back to a practice that is half the size.

Guaranteed Future Insurability

This rider can particularly help younger professionals who are starting out in their careers and will be earning considerably more in the future. It allows the purchase of additional insurance without answering any medical questions as long as you meet the income eligibility.

Catastrophic Disability Benefit

Disability insurance is designed to replace income, not to cover additional medical expenses that may arise from a major illness or injury. With most companies, for a nominal amount (sometimes less than 5 percent of the total premium) policy holders can increase their monthly disability benefit by up to $10,000 per month.

Cost of Living Adjustment

This rider can be added to your contract to ensure that the purchasing power of your disability benefit does not erode if you are on claim for an extended period of time. However, your monthly benefit will not increase unless you are on claim. For example, if you purchased a policy in your 20s and file a claim at age 60, you would have paid a large amount of money to the insurance company for a very small increase to your benefit. This shouldn't necessarily deter you from adding this benefit to your contract, but it is important to understand how it works.

Non-Cancelable vs. Guaranteed Renewable

Having a non-cancelable contract guarantees that the provisions and rates set forth in the policy cannot be increased or changed. It is highly recommended to stick with this type of contract, but guaranteed renewable contracts can be a good solution if you are on a budget.

Capital Sum Benefit

This is an additional feature that some major insurance companies include in their contracts free of charge. In the wake of a catastrophic disability, the contract owner will receive an immediate lump sum of 12 times the monthly benefit.

Clearly, selecting the right disability coverage that fits your evolving needs is vitally important as you proceed along your career path, and it literally pays to be knowledgeable about the options.  

Vincent J. Cucuzza is a certified financial planner with the Barnum Financial Group, on office of Met Life, based in Shelton, Conn. E-mail him here.

This article was prepared by Vincent Cucuzza and is not intended as legal, tax, accounting or financial advice. The opinions provided above are those of Vincent Cucuzza and not necessarily those of MetLife and are provided for general information purposes only. MetLife does not guarantee the accuracy of the information presented as the features and benefits being presented may not be applicable to MetLife insurance products.