A doctor’s daily responsibilities are physically, mentally, and cognitively demanding. The nature of their work involves being on their feet most of the day, dexterous use of their hands for equipment and procedures, constant communications with patients and colleagues, and even potential exposure to hazardous conditions in their work environments like chemicals, biologics, radiation, and extreme temperatures.
Many of these factors can affect your health over time. When you select a disability policy, you are investing in security for your financial future.
So yes, doctors absolutely need long-term disability insurance also marketed as income protection insurance policies. But it’s also important to understand that not all disability insurance policies are created equal. If you aren’t sure about your current disability policy covers, or you aren’t reviewing and updating your disability insurance coverage regularly, the sad truth is that it might not be there for you when you truly need it.
To mitigate this risk and ensure you receive income replacement to support yourself and your family, doctors should think carefully about the appropriate amount of coverage. You should also consider disability insurance that defines your “own occupation” or “own specialty” as narrowly as possible, and consider a variety of other policy riders as well.
Navigating the nuanced language, loopholes, and exclusions when looking for a long-term disability insurance policy is a demanding task in and of itself. If you run into an questions or difficulties with a claim, an experienced disability attorney can help.
Definition of Disability: Why You Might Need Specialty Specific Disability Insurance
In the world of long-term disability insurance, the two most common definitions of disability are own-occupation and any-occupation.
- Any-occupation policies only provide benefits if you are unable to work in any job to which you are reasonably suited. If you can work any job—even one outside of the medical field entirely, and for far less pay—the disability insurance company can deny your benefits. This is the weakest form of disability protection. Note that many group policies start out as “own occupation” but transition to any occupation after a period of time, typically two years. It’s important to make sure you understand what’s in your policy so you don’t unexpectedly get your benefits cut off.
- Own-occupation disability insurance means you are eligible for benefits if you have become disabled and are unable to perform the “material and substantial duties” of your current job. Under this definition, even if you can work another job, you’re still entitled to receive your disability benefits.
But here’s the tricky part for doctors: Who determines what the “material and substantial duties” are for your position? If your occupation is simply defined as “physician,” your insurance company might argue that you aren’t really disabled, even if you have a condition that prevents you from performing higher skilled (and higher paying) clinical work.
In these cases, specialty-specific own-occupation policies offer greater protection for physicians with specialized skills required to perform certain tasks. For example, if you work as a surgeon and are diagnosed with a condition that impairs your ability to precisely move your hands, you would no longer be able to perform procedures on multiple areas of the body.
In this instance, a specialty specific own-occupation policy could help make sure you receive your full disability payment, even if you’re still able to do patient consults or administrative work. Doctors who practice in a lucrative specialty field should strongly consider this type of coverage.
Why You Should Buy Disability Insurance Early in Your Career (and Revisit Your Coverage Regularly)
One trend that’s picked up over the last few years is that young professionals (including doctors) are increasingly choosing affordability over protection when they buy disability insurance. Although there’s no single explanation for this trend, many young physicians underestimate the risk of becoming disabled and opt for lower disability insurance premiums early in their careers.
While younger doctors are statistically less likely to become disabled, they also have more to lose, with decades of high salary work still to come.
Whether you are just starting your career, changing jobs, or receiving a promotion, it is important to get covered early on. Then, as your skills and wages increase, your disability insurance policy will need to grow with it. Revisiting your policy periodically can also help you assess what coverage best suits your needs.
Group Policies vs Individual Disability Insurance
If you don’t own your own practice, chances are your employer offers a group disability insurance policy. Is that coverage sufficient?
In most cases, the answer is no. Group plans give you no choice or flexibility in terms of how much coverage you get, policy terms, restrictions, or much else. You typically get far less protection with a group policy, and you can’t take your policy with you if you change employers. Plus, because your health status is evaluated at the time of the claim (rather than at time of purchase), unexpected denials are more common.
However, one advantage is that most group policies are subsidized by employers and offered at little (or sometime no) cost to employers. Depending on your circumstances, it may be cost-effective to accept your employer’s group coverage while also purchasing your own individual long-term disability coverage for more complete protection.
How Much Coverage Do You Need?
Generally speaking, you should buy as much coverage as you need to fully cover your living expenses and retirement savings, up through at least Social Security normal retirement age.
Depending on where you are in your career and what your spending habits look like, that could mean different levels of coverage relative to your income at different points in your career. Some doctors will need more and some need less, and those needs can change quickly. That’s why you should consider some additional riders as well.
Riders and Other Policy Options
If you’re a recent medical school graduate, your salary and financial obligations are probably very different from a 45-year-old specialist in the prime of their career. As your career advances, you should make sure your long-term disability policy still offers the coverage you need.
Additional policy riders and provisions worth considering for physicians include:
- Cost of living adjustment (COLA): With a COLA rider, your monthly disability benefit will continue to increase (at a fixed or indexed rate) over time. This is especially important for young physicians, who could see the buying power of their monthly disability benefits decline significantly due to inflation over just a few years. If you’re still ten or more years from retirement age, the difference could be massive.
- Automatic increase benefit (AIB): With an AIB rider, your coverage (and premiums) automatically increase over time to keep up with expected increases in salary, without requiring you to manually update your coverage or submit updated medical information—even if you’ve developed unforeseen health issues in the meantime.
- Future increase option (FIO): This is similar to AIB, except that it allows you to voluntarily increase your coverage at regular intervals without needing to purchase a new policy or resubmit medical information. It’s especially great for young physicians, as it provides good control over how much disability insurance coverage to add, on a flexible timescale that can be adjusted to match their career growth.
- Residual disability: Usually offered as an additional rider, residual disability will pay you a portion of your full disability benefit if your earnings have been reduced by disability (typically by at least 20%). That portion could be as high as 100% if your earnings have been reduced enough (typically 80% or more). For example, if you have a progressive disorder that allows you to continue working, but only at reduced hours, residual disability benefits can make up for the lost income.
- Non-cancelable: With a non-cancelable policy, the insurance company cannot change your policy in any way (premiums, benefits, coverage), or deny a policy renewal, as long as you make payments on time. Although non-cancelable policies are more expensive, the advantage for physicians is that the insurance company can’t kick you off coverage, increase your premiums, or reduce your monthly benefit even if you develop a degenerative condition, suffer an unexpected loss of income, or switch careers after becoming disabled from your current occupation.
More Challenges When Choosing a Policy
Selecting a disability insurance plan that meets your needs is essential and an investment in both your health and financial well-being. Your policy’s terms will impact your eligibility, monthly benefit amount, and claim procedures.
However, a policy’s terms are not always clear-cut even to educated readers. Disability insurance companies know that many policyholders will not read the terms and conditions word by word and use this to their advantage. And because they frequently use complex terminology and phrasing, simply reading disability insurance language is not necessarily the same as understanding disability insurance language.
Some phrasing might lead you to believe you are getting one type of coverage when it could be the exact opposite. As a result, you could get stuck with a disability insurance policy that doesn’t fit any of your needs and denies your eligibility to benefits.
Below are a few common challenges that you may experience when choosing a policy:
Language can differ between policies or undergo modifications within a specific plan. One common example is found in own-occupation descriptions. Verbiage within a description might lead you to believe you are getting covered by an own-occupation plan, but certain words within that sentence or the next might weaken those protections.
Changes in the Definition of Disability
While most long-term disability policies begin with an own occupation definition of disability, it’s also very common for them to switch to an any occupation definition after a certain period (frequently two years). Two years might seem like a long time to find another good source of income, but it really isn’t—especially for highly paid professionals like doctors.
Loopholes and Exclusions
Loopholes and exclusions may also prevent you from collecting disability benefits. A list of the most common exclusions and limitations include:
- Pre-existing conditions
- Mental/nervous disorders
- Disorders resulting from alcohol/substance abuse or addiction
- Active military duty
- Foreign travel
- Disabilities stemming from certain activities that are deemed hazardous
Although the terms and conditions of an insurance policy can be complex, knowing what to look for in coverage will help you understand the levels of protection provided. We do encourage you to carefully read the terms and conditions of your policy on your own. But if you still have questions, an experienced disability insurance lawyer can help review the language in your policy, making it easier for you to understand.
Need Help With Your Physician Disability Insurance? Contact Bryant Legal Group
Bryant Legal Group, Chicago’s premier disability insurance law firm, regularly works with medical professionals and others with highly paid, specialized occupations. We understand disability insurance for physicians and can answer questions about your policy, suggest ways to help you better protect yourself, and represent you if you need to file a claim or appeal an unfair denial.
To request a consultation with one of our experienced disability attorneys, call (312) 561-3010 or complete this brief online form.
The content provided here is for informational purposes only and should not be construed as legal advice on any subject.