One of my missions through this blog is to connect my readers with the good folks in industry- a win win situation. Today’s guest poster is one of them: Eric Bork of Pattern Life and Disability Insurance. Let’s take a look at the basics of Disability Insurance from someone who does it day in and day out.
You have likely heard other physicians talk about the importance of purchasing your own disability insurance policy. Many physicians hear this, and without too much additional thought, figure that their employer has a policy that will take care of them if they need it – unfortunately, this is not true for the vast majority of physicians.
Disability insurance is a key aspect of financial security, yet it is often overlooked by physicians. So why is disability insurance important to doctors?
Think of it this way: You have spent thousands of dollars and hours investing in medical school and your training.
After your training is over, your ability to earn a physician income is your biggest financial asset.
Your career and your income depend on your ability to work and perform your required duties.
Disability insurance is a type of insurance that replaces your income in the case that you are unable to work due to an injury or illness. A disability ranging from an injury to a terminal diagnosis can threaten your career and your financial stability. In order to protect yourself and those who depend on you, it is important to have disability insurance to cover the loss of income you would face in these unfortunate circumstances.
Why Do Doctors Need Disability Insurance?
Becoming a doctor is the ultimate personal investment—your most valuable asset is YOU.
Anything from a back injury to vision loss, or a hand injury to a mental disorder could threaten the career that you’ve built through years of work and training. It is worth noting that 1 in 4 physicians will have a disabling event at some point in their career.
If you have student loans, disability insurance is a no-brainer. This protection is particularly important for doctors with young families. Student loan debt cannot be discharged if you are injured and can’t work—even if you declare bankruptcy. Many doctors have hundreds of thousands of dollars in student debt. Imagine if you were a young attending with $500,000 in debt, starting a young family, and you suddenly lost your physician income..
Disability insurance protects you against financial hardship if injury or illness prevents you from working. If you were suddenly unable to perform the basic duties of your position and you didn’t have disability insurance, your thousands of dollars and hours spent on your career would be a loss.
What are the Benefits of Disability Insurance?
The main and most crucial benefit of disability insurance is the replacement of income in the event that you are not able to work. If you become disabled, your disability insurance will provide monthly paychecks that will replace your income to ensure that you are protected financially. Disability insurance will replace your paychecks and allow you to pay your car payment, student loans, mortgage, etc. This could save you from not only the grief of the loss of your career, but also the stress of having to change your lifestyle due to the loss of your income.
Why shouldn’t you rely on your Employer’s Policy?
Employer disability insurance policies, also known as group policies, are policies that are provided by your employer. There are many differences between individual disability insurance policies and employer policies.
One of the most important differences is that employer policies are not transferable! This means that you can’t take them with you if you decide to leave your employer. If you are solely relying on your employer policy and leave to go into private practice or accept another position, you won’t have any control over what kind of protection your new coverage offers. This is particularly important because group policies are a pre-tax benefit, meaning, you have to pay taxes on whatever benefit you receive (which in most cases, is only 60% of your income). When you purchase your own true own-occupation disability insurance policy, you can insure up to 100% of your income tax free! [Ed: this is why it is recommended you pay your Disability Insurance premiums with post-tax dollars- so that any payout will not be taxed again].
This is why it’s important to take advantage of your health and discounts early on and secure an individual policy so you can ensure you are protected no matter what your career path looks like. Opting out of getting an individual policy and switching employers could leave you in a bad position.
Why Earlier Is Always Better Than Later
When applying for disability insurance the main factors in determining your insurability and premiums are your health and your income. Once you have locked in your health, age, and training discounts, your premiums do not go up – this means that the earlier you request quotes and apply, the better!
Did you know that the average lifetime savings in premiums are $118,000 if the policy is purchased during training, as opposed to attendinghood?
Not only will you get a lower rate because of your age, but you are less likely to have health conditions that could result in policy exclusions of coverage.
There is a lot more that goes into a disability insurance policy that makes it more personal to you and your financial plan. Speaking with an unbiased, experienced broker who only sells true own-occupation disability insurance is the first step.
In order to have peace of mind that you get the right policy and the right amount of coverage to protect your loved ones, get started by requesting your free quotes with Pattern.
Pattern is a sponsor of this site. This post contains affiliate links: if you use these links to get your insurance quotes, I may be compensated, at no extra cost to you. Thank you for supporting those who support the educational mission of this site.