If you are a physician looking for a high-quality disability policy to supplement your employer policy or your total coverage, this article is for you. If you are a resident, take a look at our How to Buy Disability While in Residency article.
Own-Occupation or Own-Specialty
A true own-occupation definition will pay you even if are unable to perform the material and substantial duties of your occupation. These are the main duties you perform, and cannot be omitted, and still allow you to practice in your occupation. If you choose to work in another occupation or another specialty, you will continue to receive benefits regardless of the income that you earn in your new occupation. There is no penalty if you are resourceful enough to find a way to earn income. For example, if you can no longer perform surgery because of a physical ailment, but make a substantial income teaching, you will continue to receive your disability benefits.
Tip! Make sure to buy from the right company – There are only five disability insurance companies that offer own-occupation as described above. They are Berkshire Hathaway/Guardian, The Standard Insurance Co., Ameritas, Ohio National, and Principal. If you have a disability policy from any other company, you do NOT have the coverage for own-occupation as described above. The agent representing the other companies will try to make it sound like you are covered for your own-occupation but unless you are a lawyer trained in deciphering disability insurance contracts, I strongly suggest you buy your policy from an agent who represents one or more of the listed companies.
“Guaranteed Renewable” means that your policy must be renewed by the insurance company every year, as long as you make timely payments. However, with a guaranteed renewable policy, the insurance company can increase your premiums.
“Non-Cancelable” means that the insurance company cannot raise the premiums on your policy.
When you put these two benefits together, the insurance company cannot take away your insurance, and they can never increase your premiums as long as you pay your premiums on time.
Tip! Riders are add-ons to insurance policies – Own-occupation, Guaranteed Renewable, and Non-Cancelable are benefits that are part of the base policy. The following are add-ons to your disability policy.
Residual Disability or Partial Benefit rider
The “Residual Disability Rider” will pay you a partial benefit if you can work in your current specialty but need to reduce your time or the number of procedures you perform. If your income has been decreased by 20% or more, this rider typically kicks in.
Recovery Benefit Rider
Typically, the “Recovery Benefit Rider” is a part of the residual disability rider. When returning to work, will you be able to generate the same income as before your disability occurred? Can you see as many patients? Have many of your patients left? Have referrals from other physicians stopped? The “Recovery Benefit Rider” will provide for a limited amount of time while you build your practice back to where it was before your setback.
Future Increase Option Rider and Benefit Update Rider
The “Benefit Update Rider” allows you buy more coverage as your income rises, with no medical underwriting. This increase option is typically offered every one to three years, with the ability to request more often if you have a substantial income increase or lose your employer disability plan.
This rider can be especially important if your income is rising, but your health is failing. You can increase your disability coverage even if you are no longer eligible to purchase additional coverage on a medical basis.
Tip! Skip the Future Benefit Increase Rider – The “Future Benefit Increase Rider” allows you to buy coverage to keep up with inflation. If you have the “Benefit Update Rider,” you don’t need a cost of living purchase option. Pass on this unless it is offered for free.
Cost of Living Adjustment Rider
This rider comes into play after you are disabled. Your benefits will increase as the cost of living increases. The cost of living adjustment rider preserves your purchasing power while you are on disability which is especially important for younger physicians who could end up on disability for multiple decades.
Find an Excellent Disability insurance Policy
When looking for a disability policy, make sure to include all of these benefits in your policy. You can add additional benefits and riders as you desire, but these should be considered mandatory.
Buying disability insurance can be one of the most confusing and frustrating financial tasks that a physician undertakes. I hope this article helps you cut through all of the confusion by giving you the basic “must have” benefits.
If you need further guidance in obtaining a great disability policy please schedule time to talk with us.