Physicians Disability Insurance - Which Riders Are Important?

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Getting disability insurance for a physician is not

, I would say, as simple as getting disability insurance for a truck driver. Not that truck drivers don't deserve the best of the best. But certain professions are considered to be high a risk (truck drivers) and may not qualify for all the riders disability insurance plans may offer. Yet, these riders can be of great importance - particularly to physicians.

Let me put it this way. You make $250,000 per year, your advisor says I can get you about 65% (maybe more) of your income covered. That's about $160,000 (give or take) in disability insurance benefits. So you are fortunate, you get approved, you get your policy, everything looks to be in order then...you become disabled. Now, you do what most people would do, you call the insurance company to file a claim. They ask you a whole bunch of questions and you are told that, although your hands shake and you can no longer perform surgeries, since you can work as a nurse, no benefits are payable (or maybe a little). What happened? You got a basic policy that was lacking a few important riders.

If only you had known about the Own Occupation Disability rider. That rider allows you to collect benefits even if you are able to perform duties other than the one you were trained for (such as surgery). Please make sure to read the exact definition in your approved policy for this rider as definitions can vary greatly.

How about the Residual Benefit Rider? If you have not heard of that one, it's OK. It is included in many disability insurance policies. Nevertheless, included does not always mean that the rider is as it should be. Basically, this rider (which all physicians should have) will pay a partial (or full) benefit due to a partial loss of income or even a partial loss of work time (partial can vary so please check). This can be important as I assume that you have gotten used to your whole income and losing some income because you are able to only do some of your work would be a problem.

Here is another one for you. So you got this great policy with some of the good riders but you did not think of inflation. Yes, inflation! In other words, what can happen to your insurance is that its benefit may not keep up with the cost of living increases. The COLA (Cost of Living Adjustment) rider allows for certain inflation adjustments so that your disability benefits keeps up with inflation (you may have different inflation choices - 2%, 4%...).

One last one, particularly important to physician, is the Future Increase Option Rider (it comes in many names, so ask). The Future Increase Option Rider allows you to purchase additional coverage each year (or at other intervals) until a certain age, without additional medical underwriting. You may still have to meet other requirements (such as income). With this rider though, if you become medically less insurable, you can better guarantee that your coverage will keep up with your future income needs.

A warning!!! You may have heard of no exam disability insurance. It is also sometimes called simplified disability insurance. We do not recommend these plans for physicians. They tend to be too basic in their coverage. In other words, they may not pay what you need when you need it. For example, most physicians should have a benefit period to age 65. The simplified disability insurance plans tend to only offer 6 months to 5 years benefit periods. One advantage of simplified plans is that they are usually easier and faster to qualify for. The only time we can see that a physician may consider them, is if they have no time for the regular disability insurance plans (with extended underwriting) and they need some coverage ASAP. That sounds OK, but the same physician should put on his or her calender to replace that coverage with a regular disability insurance plan with all needed riders ASAP.

I hope this helped you understand the basics of disability insurance for physicians. As we say in all of our articles, ask, ask and ask more questions. Be well.

by: Michoel Philippe Deray

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