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Physician disability insurance provides you with a steady income to live on if you’re unable to work due to a medical condition or accident. The insurance policy pays a predetermined monthly amount until you recover or reach retirement age, allowing you to maintain your financial stability even when you’re unable to practice.
Types of Physician Disability Insurance Coverage
Before securing coverage, it’s crucial to understand disability coverage types:
Own-Occupation
Own-occupation disability insurance policies cover you based on your duties at the time of the claim and allow you to receive benefits even if you can find work in another field and earn a comparable income. If you transition into a role different from the one described in your policy or enter a new professional field, you may only receive partial benefits since you will no longer be considered totally disabled.
Modified Own-Occupation
Under a modified own-occupation plan, you receive full disability benefits only if you can’t work in your original position and are not working in an alternative role.
Any Occupation
An any occupation policy requires you to be completely unable to do any job you have experience or training in, including any activity they’re able to perform regardless of whether it’s suitable to your profession, educational background, or economic status. However, this broad definition can make it difficult to receive disability benefits.
Transitional Own-Occupation
With a transitional own-occupation policy, your disability insurance plan covers you if you can’t work in your medical specialty, even if you can find work in another position. However, if you exceed your previous income while working in a new profession, your provider may reduce your monthly benefit.
Speciality Own-Occupation
Specialty-specific own-occupation provides full disability benefits, as well as any income you make in another role. For example, let’s say you experienced an injury that impacted your ability to practice your medical specialty, but managed to find a new role in urgent care or at a clinic. In that case, you’re entitled to all the disability benefits under your plan and whatever money you earn at the clinic.
Doctors make a high income; however, you could make even more by investing.
What Does Disability Insurance Cover?
Disability insurance typically covers a large portion of your regular income if you become disabled. Depending on the policy, your plan will cover any disability caused by an illness or injury and provide you with monthly benefits that help to replace lost income. Disability insurance for physicians also helps to cover additional expenses, such as medical costs, rehabilitation expenses, and more.
Long-Term and Short-Term Disability Coverage
There are two main types of disability insurance policies available to physicians: long-term and short-term disability insurance.
Long-term disability is designed to provide financial security if you can’t work for an extended period of time, such as one year or more, while short-term disability offers income replacement if you’re out of work for a few weeks or months due to an illness or injury. The type of policy you choose depends on your individual circumstances. For example, if you’ve already accumulated enough financial resources to sustain yourself for an extended period of time, then long-term coverage may be the best option. However, if you only need to replace income for a brief period of time, then short-term disability insurance may be a better choice.
Policy Riders for Physicians Disability Insurance
You can add riders to your physician insurance policy to maximize your benefits. Riders are special provisions that come with a disability policy and can increase payment amounts and extend the length of payment. The four most common types of riders are:
- Cost of Living Adjustment (COLA) Rider allows your benefits to increase annually based on inflation rates.
- Future Increase Option (FIO) Rider allows you to increase your benefit amount as your salary increases without having to provide evidence of insurability each time.
- Residual Benefits Rider pays partial benefits when you’re able to take on part-time employment yet still suffer some level of impairment from your disability.
- Noncancelable & Guaranteed Renewable (NC&GR) Rider ensures your premiums won’t increase during the life of your policy and guarantees that the insurer can’t cancel your coverage without cause.
How Much Disability Insurance Do I Need as a Physician?
As a physician, you should aim for an insurance policy that covers at least 65% of your income. This percentage may vary, depending on other sources of income like investments or your partner’s income. If you’re planning for retirement or don’t have another source of income, it’s best to purchase a higher percentage of coverage.
How Much Does Disability Insurance Cost for Physicians?
Disability insurance costs can be a tricky thing to calculate. The price of your policy depends on a few factors, such as the type of coverage you choose, the length of your policy, the amount of the monthly benefit you want, and your age. In most cases, you can expect to pay anywhere from 1-3% of your gross annual income for disability insurance.
Customized Physician Disability Insurance Coverage
At Physician’s Resource Services, we understand that your lifestyle and needs are unique, which is why we offer customizable disability benefits. Our plans are also flexible, meaning you can change them as your life and career evolves. Plus, our team of knowledgeable insurance professionals will be there every step of the way to help guide you through the process and answer your questions. Contact us today to learn more about physician disability insurance coverage.
This material is provided as a courtesy and for educational purposes only. Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation.
Advisory Services Network, LLC does not provide tax advice. The tax information contained herein is general and is not exhaustive by nature. Federal and state laws are complex and constantly changing. You should always consult your own legal or tax professional for information concerning your individual situation.
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