Life and Disability Insurance

[ddjamb]

Hi All,

I would like to purchase life and disability insurance while in residency. Any recommendation of a good source for self-education on the matter?
Is there any physician-tailored insurance out there that is popular in the healthcare industry?

Thanks.

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[DoctwoB]

For self education look at thewhitecoatinvestor.com. They have good articles on what you likely want (term-life and own occupation disability insurance) and what to avoid (whole life insurance and related products). There are only a few companies that offer true specialty specific own occupation disability insurance including guardian, northwestern mutual, and a couple others. All of those companies offer term life as well. Your GME office may have a deal set up with one of them so its worth looking into that.

 

[Ironspy]

For self education look at thewhitecoatinvestor.com. They have good articles on what you likely want (term-life and own occupation disability insurance) and what to avoid (whole life insurance and related products). There are only a few companies that offer true specialty specific own occupation disability insurance including guardian, northwestern mutual, and a couple others. All of those companies offer term life as well. Your GME office may have a deal set up with one of them so its worth looking into that.

This is all good information except that northwestern does not offer true own occupation disability insurance. They’ve created their own euphemism for it but the definition is inferior to own occupation and cost is (typically) higher. You need to discuss with an independent agent. Whitecoatinvestor.com has lots of great info

 

[NotAProgDirector]

My understanding is that when you buy disability insurance, you can only insure your current income, not future income. Hence, it might not be terribly useful to get disability insurance as a resident -- however some policies allow you to adjust when your income changes. But it's been a long time since I've looked at this, and could be totally incorrect.

 

[mvenus929]

My understanding is that when you buy disability insurance, you can only insure your current income, not future income. Hence, it might not be terribly useful to get disability insurance as a resident -- however some policies allow you to adjust when your income changes. But it's been a long time since I've looked at this, and could be totally incorrect.

Most of the time, it's recommended to obtain a policy when you're young and healthy with a future benefit rider (or something of the nature) that allows you to increase your coverage once you are an attending.

A lot of people wait until their last year in residency to buy a policy. Which is fine if you don't get disabled during residency.

 

[ddjamb]

Thank you all.

 

[Ironheme]

I bought mine early in residency. It's not cheap (about 2.5 k per year) but it has a cost of living rider/income adjustment. So it will increase with attending salary (up to a limit of $100k /200k per year if you become disabled - I'd have to check but you get the idea). The upside of getting it early (young and healthy) is that you don't have to go through a physical exam later/cost more money. Mine auto renews every year without an exam and will stay that way even as an attending.

I second the whitecoatinvestor website. It's a great starting point to reading about disability insurance/etc. Make sure you're getting one that is specific for physicians/higher skill level jobs - you'll still want disability income if you're a surgeon unable to perform surgeries for example and your income drops from $500k to $100k because you're teaching full time. You'd still qualify for disability reimbursement with the right type of insurance.

 

[ddjamb]

2.5K to buy $3k-$4k/month?

 

[DoctwoB]

2.5K to buy $3k-$4k/month?

I pay 200/month for 6.5k/month. Note that most of these companies will allow you to purchase more coverage then your residency income would justify (typically max of 60% of income) due to the fact that you have a near guarenteed income rise in the future. I would actually make more (almost 2x as much given the benefit is not taxable) if I were disabled right now.

 

[MD Financial Services Scott]

For self education look at thewhitecoatinvestor.com. They have good articles on what you likely want (term-life and own occupation disability insurance) and what to avoid (whole life insurance and related products). There are only a few companies that offer true specialty specific own occupation disability insurance including guardian, northwestern mutual, and a couple others. All of those companies offer term life as well. Your GME office may have a deal set up with one of them so its worth looking into that.

Just so you know Northwestern does not offer true own specialty definition of disability insurance products and have not since about 1999. The carriers that offer it here in 2019 are Guardian, Ameritas, Mass Mutual, Standard, Principal, and Ohio National depending on the state you live in.

 

[MD Financial Services Scott]

My understanding is that when you buy disability insurance, you can only insure your current income, not future income. Hence, it might not be terribly useful to get disability insurance as a resident -- however some policies allow you to adjust when your income changes. But it's been a long time since I've looked at this, and could be totally incorrect.

Actually as a resident or fellow in 2019 we can obtain coverages in the amount of $60-$72k per year with tax free distribution which is more than one typically makes as a resident/fellow. That is the same benefit load one can buy when they make aproximatly $150k as an attending, may not be all that one wants eventually but it goes a long way toward paying basic bills.

 

[MD Financial Services Scott]

2.5K to buy $3k-$4k/month?

Are you saying $2,500 per year to buy $36,000 to $48,000 per year of benefit?
Typically for most residents (age 26-32) it is about $25 per month per $1,000 of monthly benefit for males and $30 per month for females.

 

[Ironheme]

2.5K to buy $3k-$4k/month?

Per year. I'm around the same numbers as DoctwoB up there. I also have a student loan rider on mine. So it ends up being 2.2k per year for 6k per month if I'm unable to work (4k/month for the job, and 2k/month for student loan repayment).

 

[ddjamb]

My program offers short and long term disability plan. Is it better to waive it and go with a personal plan on the site. I am assuming the residency plan will be terminated after residency right?

 

[MD Financial Services Scott]

My program offers short and long term disability plan. Is it better to waive it and go with a personal plan on the site. I am assuming the residency plan will be terminated after residency right?

Most of the time you can not waive employer provided coverage because it is know as 'forced coverage' so that the insurance company gets 100% participation. However, as a resident or fellow the individual carriers essentially ignore the employer coverage because they know it will most likely be left behind and when you finish training you will then be earning more money thus the $5k or so they will offer you as a resident will be only a part of what most physicians end up owning in total.

 

[MD Financial Services Scott]

Per year. I'm around the same numbers as DoctwoB up there. I also have a student loan rider on mine. So it ends up being 2.2k per year for 6k per month if I'm unable to work (4k/month for the job, and 2k/month for student loan repayment).

Seems high, most $4k contracts should be between $80 to $120 depending on how you load them up. The Student loan rider is cheap, usually about $3 per month per $1k of benefit so that even at $2500 per month for 15 years of loan payment is only $8 bucks or so. That makes the whole premium about $90-$130. You should double check your prices to make sure you have the most competitive carrier for your specialty and that you have max discounts available to you.

 

[rokshana]

My program offers short and long term disability plan. Is it better to waive it and go with a personal plan on the site. I am assuming the residency plan will be terminated after residency right?

Not necessarily...many policies will let you port that over and are usually cheap enough to keep

 

[ddjamb]

Seems high, most $4k contracts should be between $80 to $120 depending on how you load them up. The Student loan rider is cheap, usually about $3 per month per $1k of benefit so that even at $2500 per month for 15 years of loan payment is only $8 bucks or so. That makes the whole premium about $90-$130. You should double check your prices to make sure you have the most competitive carrier for your specialty and that you have max discounts available to you.

$80-$120 is more in my budget.

 

[Dr.LeoSpaceman]

$80-$120 is more in my budget.

Guardian offers a graded premium that is cheaper in the short term, but increases later on. They then offer fixed schedules to switch it to a level premium at any given point. While overall cheaper to start on a fixed premium, it can be useful to have the lower payments in the first few years if you are in residency/fellowship.

I have a $140/mo premium for 3k+2k loans, guaranteed increases to $17k/mo based on salary to age 67. That's the graded amount, and to start out at a flat premium would have been a little over $200/mo. As soon as I get my first job, I'll convert it to a flat premium.

 

[MD Financial Services Scott]

$80-$120 is more in my budget.

Agreed and for fixed rates, not increasing there are some good deals out there we have found for our clients.

 

[MD Financial Services Scott]

Guardian offers a graded premium that is cheaper in the short term, but increases later on. They then offer fixed schedules to switch it to a level premium at any given point. While overall cheaper to start on a fixed premium, it can be useful to have the lower payments in the first few years if you are in residency/fellowship.

I have a $140/mo premium for 3k+2k loans, guaranteed increases to $17k/mo based on salary to age 67. That's the graded amount, and to start out at a flat premium would have been a little over $200/mo. As soon as I get my first job, I'll convert it to a flat premium.

Almost all graded premiums are from Guardian so check some of the other carriers, we just put together a fixed rate to age 65, $2500 of benefit, purchase options to $20k for a client this week at $58 per month.

 

[ddjamb]

$58 for $2500... I am interested. Any particular carrier?

 

[MD Financial Services Scott]

You can email me so we can look at your specific situation but the carriers in play for most in that $20-25 per month price range for the typical resident age are Principal, Ameritas, Ohio, and sometimes Guardian.

 

[Noah Littell]

My understanding is that when you buy disability insurance, you can only insure your current income, not future income. Hence, it might not be terribly useful to get disability insurance as a resident -- however some policies allow you to adjust when your income changes. But it's been a long time since I've looked at this, and could be totally incorrect.

You would want to look for “FIO” option in the policy or future increase option which increases your coverage without medical once you get an increase in pay (ie new contract etc)

 

[Noah Littell]

Not necessarily...many policies will let you port that over and are usually cheap enough to keep

Since disability is one of only 3 threats that can devastate your career, the objective should be to get the best policy available based on your needs, financial status, etc. price is irrelevant. Penny wise and pound foolish in long run

 

[Noah Littell]

Hi All,

I would like to purchase life and disability insurance while in residency. Any recommendation of a good source for self-education on the matter?
Is there any physician-tailored insurance out there that is popular in the healthcare industry?

Thanks.

The long and short of it is stay away from googling it and yes there is physician specific DI. You should begin vetting a physician specific advisor via signed testimonials from their Dr clients, including testimonials evidencing their experience handling claims, which at the end of the day it most important.

 

[rokshana]

Since disability is one of only 3 threats that can devastate your career, the objective should be to get the best policy available based on your needs, financial status, etc. price is irrelevant. Penny wise and pound foolish in long run

It’s not like it’s the only policy one can have...and sorry but price is an important factor...yes disability insurance is very important but one can be over insured.

 

[Noah Littell]

My program offers short and long term disability plan. Is it better to waive it and go with a personal plan on the site. I am assuming the residency plan will be terminated after residency right?

It’s not like it’s the only policy one can have...and sorry but price is an important factor...yes disability insurance is very important but one can be over insured.

Of course.. irrelevant in the context of not going with the best carrier due to price with broadest language defining own occ with future increase option without new medical .. all while assuming the quote is based on the correct amount of coverage based on your situation. Hope that clears up my point

 

[Tesselate]

Hi All,

I would like to purchase life and disability insurance while in residency. Any recommendation of a good source for self-education on the matter?
Is there any physician-tailored insurance out there that is popular in the healthcare industry?

Thanks.

Email him, I gave him some information and he put together some quotes for me for ~6 companies and really broke everything down.

[email protected]

 

[ddjamb]

thank you very much

 

[sdnuser001]

Since disability is one of only 3 threats that can devastate your career, the objective should be to get the best policy available based on your needs, financial status, etc. price is irrelevant. Penny wise and pound foolish in long run

What are the other 2 threats?

 

[Groove]

It’s not like it’s the only policy one can have...and sorry but price is an important factor...yes disability insurance is very important but one can be over insured.

I could be misinterpreting your statement, but let me give my own perspective.

As a doc who went through a recent health scare only to find out after a work up that my fears were unfounded, I can say I've never been so thankful in my life for my $16.5K/mo maxed out, tax free disability insurance policy when faced with possibly having to cash in on it early. Sure, these things are expensive but I always recommend young docs (especially ones with loans) and little retirement savings to max out disability insurance plans for at least the first half of their career. If something happens to you and you can't work, or can only work very little...it can be absolutely devastating to your quality of life, as well as to your financial assets. Something else that people don't tend to think about is the undue burden it can place on families and loved ones. Let's say you get cancer and would like the best care possible but aren't covered for MD Anderson...well that's something you can finance easily with a good disability policy. If you run through your assets and need the help of family and friends, they don't have to spend a dime in caring for you as your disability policy will pay for everything (if you have a good one). Family shouldn't have to worry about the financial stress that is easily incurred when taking care of sick loved ones. If something like that were to ever happen to me (God forbid), I want my family to be as stress free as possible where finances are concerned.

Sure, my disability policy is expensive...but it provides incredible peace of mind. I have some colleagues who don't believe in disability insurance and I just can't wrap my brain around their mindset. If they had a car accident on the way to work and suffered a debilitating back injury or paraplegia...their life is irrevocably turned upside down and they have little to no ability to recoup lost future income.

For residents, the best time to start your policy is while you are young and in residency. You don't have to take out much, but that's the only time they will do a health screening and examine you. You will always have the option later on of increasing your policy without having to repeat health screenings or blood work. It gets much more expensive the older you get. I was a few years older than my fellow residents and my policy was noticeably more expensive even though I was in very good health. Also, many times you can get a discounted rate while you are in residency. For myself, I took out a small amount in residency and had a low monthly premium and I upped it significantly (I think to 8-10K/mo initially) after residency. A few years later I maxed it out to 16.5 and have kept it ever since.

 

[rokshana]

I could be misinterpreting your statement, but let me give my own perspective.

As a doc who went through a recent health scare only to find out after a work up that my fears were unfounded, I can say I've never been so thankful in my life for my $16.5K/mo maxed out, tax free disability insurance policy when faced with possibly having to cash in on it early. Sure, these things are expensive but I always recommend young docs (especially ones with loans) and little retirement savings to max out disability insurance plans for at least the first half of their career. If something happens to you and you can't work, or can only work very little...it can be absolutely devastating to your quality of life, as well as to your financial assets. Something else that people don't tend to think about is the undue burden it can place on families and loved ones. Let's say you get cancer and would like the best care possible but aren't covered for MD Anderson...well that's something you can finance easily with a good disability policy. If you run through your assets and need the help of family and friends, they don't have to spend a dime in caring for you as your disability policy will pay for everything (if you have a good one). Family shouldn't have to worry about the financial stress that is easily incurred when taking care of sick loved ones. If something like that were to ever happen to me (God forbid), I want my family to be as stress free as possible where finances are concerned.

Sure, my disability policy is expensive...but it provides incredible peace of mind. I have some colleagues who don't believe in disability insurance and I just can't wrap my brain around their mindset. If they had a car accident on the way to work and suffered a debilitating back injury or paraplegia...their life is irrevocably turned upside down and they have little to no ability to recoup lost future income.

For residents, the best time to start your policy is while you are young and in residency. You don't have to take out much, but that's the only time they will do a health screening and examine you. You will always have the option later on of increasing your policy without having to repeat health screenings or blood work. It gets much more expensive the older you get. I was a few years older than my fellow residents and my policy was noticeably more expensive even though I was in very good health. Also, many times you can get a discounted rate while you are in residency. For myself, I took out a small amount in residency and had a low monthly premium and I upped it significantly (I think to 8-10K/mo initially) after residency. A few years later I maxed it out to 16.5 and have kept it ever since.

I agree with you...my point in that response was that price IS Relevant...there are crappy policies that can be quite expensive...I have 3 policies that add up to 11k/month, tax free and while the 1st policy I have is from residency and is only 2k/ month, it’s dirt cheap since it has been the same premium since i left residency...no way am I going to get that premium now...

 

[Crayola227]

I could be misinterpreting your statement, but let me give my own perspective.

As a doc who went through a recent health scare only to find out after a work up that my fears were unfounded, I can say I've never been so thankful in my life for my $16.5K/mo maxed out, tax free disability insurance policy when faced with possibly having to cash in on it early. Sure, these things are expensive but I always recommend young docs (especially ones with loans) and little retirement savings to max out disability insurance plans for at least the first half of their career. If something happens to you and you can't work, or can only work very little...it can be absolutely devastating to your quality of life, as well as to your financial assets. Something else that people don't tend to think about is the undue burden it can place on families and loved ones. Let's say you get cancer and would like the best care possible but aren't covered for MD Anderson...well that's something you can finance easily with a good disability policy. If you run through your assets and need the help of family and friends, they don't have to spend a dime in caring for you as your disability policy will pay for everything (if you have a good one). Family shouldn't have to worry about the financial stress that is easily incurred when taking care of sick loved ones. If something like that were to ever happen to me (God forbid), I want my family to be as stress free as possible where finances are concerned.

Sure, my disability policy is expensive...but it provides incredible peace of mind. I have some colleagues who don't believe in disability insurance and I just can't wrap my brain around their mindset. If they had a car accident on the way to work and suffered a debilitating back injury or paraplegia...their life is irrevocably turned upside down and they have little to no ability to recoup lost future income.

For residents, the best time to start your policy is while you are young and in residency. You don't have to take out much, but that's the only time they will do a health screening and examine you. You will always have the option later on of increasing your policy without having to repeat health screenings or blood work. It gets much more expensive the older you get. I was a few years older than my fellow residents and my policy was noticeably more expensive even though I was in very good health. Also, many times you can get a discounted rate while you are in residency. For myself, I took out a small amount in residency and had a low monthly premium and I upped it significantly (I think to 8-10K/mo initially) after residency. A few years later I maxed it out to 16.5 and have kept it ever since.

I can't second this enough for other health care professionals reading this.

 

[seniormd]

Hi All,

I would like to purchase life and disability insurance while in residency. Any recommendation of a good source for self-education on the matter?
Is there any physician-tailored insurance out there that is popular in the healthcare industry?

Thanks.

Beware of the AMA. They offer policies that they claim to be own occupation but they aren’t. They will use phrases like coverage for “what you’ve been trained to do”.