Should I secure disability insurance as a Resident or Fellow?

There are several important reasons to secure individual disability insurance as a Resident or Fellow.  Before elaborating on those reasons, let’s reiterate the importance of income protection.  Disability protection provides a paycheck should a disability occur.  Disabilities can take any form, but are categorized as illnesses (90% of claims) or injuries (10% of claims).  Our focus is to ensure that your income continues during a disability so you can pay lifestyle expenses and maintain a comfortable standard of living.  Physicians are highly trained and specialized, so it is important to research coverage options to best fit your situation. Imagine the risk of not having income protection…working for 20 to 30 years at a six-figure income accounts to be millions of dollars of cash flow.  Why take the gamble of losing that future income due to a disability when you can simply transfer that risk to an insurance company by paying a fractional premium?   

Important considerations for securing coverage while in training…

• You are young and healthy, hopefully!  The younger you are the less expensive the premiums.  Insurance companies establish premium rates based off of claims history among other items.  As you can imagine, the younger the individual the less risky they are in the eyes of a disability insurance carrier (younger people are more resilient).  As a person ages the greater the risk of injury or illness.  In addition, if you don’t have much of a health history, it can be a simpler and quicker process to secure coverage.  Once a health issue arises, it can make obtaining coverage difficult.  Over the years we have had policies approved as applied, approved with exclusions and declines.  We are always happy when a policy is approved as applied, but that is not always the case.  Exclusions do occur and the ones we typically encounter are:  stress-related (anxiety), carpal tunnel and musculoskeletal (trouble with back, knee and other areas.).  For declines, while it’s hard to digest as the advisor and for the client, we have seen cancer diagnoses, vertigo and weight issues.  The moral of this section is that we don’t know what tomorrow holds for our health, so start today while you have the control.
• Limited underwriting requirements make obtaining coverage while in training easier for the client.  Most companies will waive income and group disability documentation while as a Resident or Fellow.  In addition, more companies are reducing or eliminating the need for a medical exam to obtain coverage.  As a physician your time is very valuable, so eliminating these requirements reduces your time commitment tremendously.  It also saves time for the insurance company and expedites the application through underwriting.  You can expect the entire process to typically take 4 to 6 weeks from start to finish.         
• The future increase rider within disability policies is invaluable to a Resident or Fellow.  You protect your income while in training, but this rider allows you to increase coverage in the future as your income rises without medical underwriting, only income documentation needed.  As you progress through your career and switch employers, the individual policy will follow with you and is easily adjusted based on income.  It is important that your advisor reviews this coverage annually to ensure it is properly addressing your insurance needs. 
• Many disability providers offer discounts to Residents and Fellows.  These discounts can vary, but often are about 10% savings.  Every few years the major disability carriers release new product offerings, so it is imperative you have an advisor that constantly surveys the marketplace.  Also, a couple of carriers still offer unisex rates, which can be a tremendous premium savings for female physicians.  Oftentimes there are policy variations within this coverage, but can be a budget friendly solution on occasion.    

As you can see there are wonderful benefits for securing coverage while in training.  The biggest complaint from Residents and Fellows is the lack of time to research disability protection.  This magnifies the importance of working with a trusted advisor that will listen to your concerns and design a policy that meets your needs now and in the future.  Insurance planning is not a set it and forget it transaction, it is a lifelong process that involves continual communication between client and advisor.  Residents and Fellows can expect to spend about 2% - 4% of their income for comprehensive individual disability coverage. 

Contact us today to learn more about income protection.  We will help you understand your options and customize proposals to protect your future income stream.  Time commitment is minimal, which allows you to focus on your work and personal life without having to worry about the minor details of securing coverage.         

Written by:  Jeffrey Marsico, CLU & David Marsico