A Guide to Disability Insurance for Physicians
While the medical practice is filled with complex challenges and decisions, understanding disability insurance for physicians doesn’t need to be one of them. In this blog post, we provide an overview of what disability insurance is and why doctors must have comprehensive coverage. We also look at the different definitions and riders available to help you make the best decision when selecting a policy.
Whether you’re a physician seeking coverage or want to know more about what disability insurance entails, this post contains all the information you need.
What Is Disability Insurance for Doctors?
Disability insurance is a policy designed to provide income replacement in the event of an illness or injury that prevents a person from working, so that they can maintain their financial stability and lifestyle. It can be thought of as a form of “safety net” that provides you with protection against specific contingencies.
Since physicians are more likely than others to become disabled due to their specialized work, understanding the different definitions and riders available for coverage can ensure you have the best protection possible.
There are three key definitions you should know are “own-occupation,” “modified own-occupation,” and “any occupation.”
A “true” own-occupation policy will pay benefits if a physician is unable to perform their specific job duties because of an illness or injury. This definition allows physicians to receive benefits even if they can work in another field while waiting to recover enough to go back to their medical practice. The primary benefit of this type of coverage is that it gives doctors more flexibility when returning after an extended leave due to disability.
A modified own-occupations definition generally requires the insured physician either perform their current medical specialty full time or be able to work in another field and make at least 80% of what they were earning before becoming disabled. If you don’t fit either criterion, you won’t qualify for benefits under this type of policy.
An any occupation definition requires that a person be mentally, physically, or totally unable to do any job for which they have training or experience for them to receive benefits from the policy. This definition can often result in the denial of claims due to its stringent requirements, so it’s not recommended for those seeking comprehensive coverage options.
A specialty own-occupation definition is the most comprehensive coverage option for physicians and other highly specialized professionals. It requires that a person be unable to perform the duties of their current specialty as defined by their policy, but they can still work in another field while they receive disability benefits. This type of coverage is ideal for those seeking maximum protection.
With so many options on the market and little time to dedicate to the pursuit, ensuring financial stability can take time and effort. Physician’s Resource Services has supported doctors in 49 states with excellent consultative services since 2007. We can help you structure a disability insurance plan that fits your objectives.
What Does Disability Insurance Cover?
Disability insurance for physicians typically covers a large portion of their regular income if they become disabled. Depending on the policy, it will cover disability caused by an illness or injury and provide the physician 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 types of disability insurance policies available to physicians: long-term and short-term. Long-term disability is designed to provide financial security for a physician who cannot work for an extended period, such as one year or more. Short-term disability insurance, on the other hand, offers income replacement for those who may be out of work due to an injury or illness that lasts only a few weeks or months.
The type of insurance a physician chooses should depend on their particular situation. For instance, long-term coverage may be the best choice if one has already accumulated enough financial resources to sustain them for a year or longer.
If the doctor only needs to replace income briefly, then short-term disability insurance may be the better option. Insurers frequently offer both policies so that you can have both types of coverage at once, but typically one is chosen over the other.
Policy Riders for Physicians With Disabilities
Several riders are available on select policies that may benefit physicians with disabilities. These can help increase payment amounts and extend the length of payment should you become disabled and need additional financial support over a longer period than your original policy allowed. Here are some standard types:
Cost of Living Adjustment (COLA) Rider: Increases benefit payments annually based on inflation rates so beneficiaries can keep up with rising living costs while receiving benefits
Future Increase Option (FIO) Rider: Allows you to increase your benefit amount as your salary increases without having evidence of insurability every 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 will not increase during the life of your policy; guarantees that the insurer cannot cancel your coverage without cause
How Much Disability Insurance Do I Need?
The type of coverage depends on your individual needs and lifestyle. Physicians should consider a policy covering at least 65% of their income. This may vary slightly depending on how much other income you have from investments or other sources. If you’re planning for retirement or will no longer have another source of income, you will likely want to purchase a higher percentage of coverage.
It’s also important to note that the benefit period is just as important as the amount of coverage when purchasing a policy. While it will vary depending on the type of insurance you choose, most policies will provide several months or years of protection based on your premium.
Work With Physician’s Resource Services to Find Proper Coverage
As a professional doctor or physician, you may not have time to research and apply for disability insurance coverage. There’s no shortage of options on the market, and knowing where to start can be tricky.
Your ability to earn an income is critical. Let Physician’s Resource Services help you discover and buy disability insurance that satisfies all your requirements. We model our consultative services to make securing adequate coverage straightforward and friction free.
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