Disability insurance as medical student?

[throwaway7856]

I am a non-traditional female student in my M2 year and will be in my early thirties when I graduate medical school. I am starting to get freaked out about getting disability insurance seeing as I'm older and could come down with something, though I'm currently healthy with minimal PMH. I could afford to pay ~$100-150/month in premiums for the next couple of years. Would that be a good idea or should I wait until residency?

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[SurfingDoctor]

I wish I was thirty....

 

[LucidSplash]

I am a non-traditional female student in my M2 year and will be in my early thirties when I graduate medical school. I am starting to get freaked out about getting disability insurance seeing as I'm older and could come down with something, though I'm currently healthy with minimal PMH. I could afford to pay ~$100-150/month in premiums for the next couple of years. Would that be a good idea or should I wait until residency?

Are you planning to pursue private practice or locums? If not, then you will be covered by an institutional policy with no underwriting needed.

While the disability insurance you can get as a student or resident is the least expensive you will get in your career, part of that is because the amount of coverage you can get is linked to your income. I ported my residency policy when I graduated and I continue to pay $80/month for $4000/month x5 years of coverage. But I do not consider this anywhere near the amount of money I would need to sustain myself and my family into perpetuity. I no longer have student loans, so that’s a help, but it definitely isn’t going to put my nephews through college.

So while a small policy can’t hurt, it’s not going to hold a candle to the policy you’ll want for what your earning potential will become after you finish training.

 

[throwaway7856]

Are you planning to pursue private practice or locums? If not, then you will be covered by an institutional policy with no underwriting needed.

Not sure. But I thought that institutional policies tend to have stingier benefits and that the benefit is taxable, whereas you don't pay taxes on benefits from individual policies.

But I do not consider this anywhere near the amount of money I would need to sustain myself and my family into perpetuity. I no longer have student loans, so that’s a help, but it definitely isn’t going to put my nephews through college.

So while a small policy can’t hurt, it’s not going to hold a candle to the policy you’ll want for what your earning potential will become after you finish training.

Thank you for the insights! I will have ~200k in student loans. Can't one purchase riders so that you can bump up your coverage once you become a resident/attending without further medical evaluation? Right now I live alone with no dependents--I am more worried about locking in a good rate now considering that women pay more in disability insurance at baseline, as well as the possibility of pregnancy/having a family to support in the future.

 

[LucidSplash]

Not sure. But I thought that institutional policies tend to have stingier benefits and that the benefit is taxable, whereas you don't pay taxes on benefits from individual policies.


Thank you for the insights! I will have ~200k in student loans. Can't one purchase riders so that you can bump up your coverage once you become a resident/attending without further medical evaluation? Right now I live alone with no dependents--I am more worried about locking in a good rate now considering that women pay more in disability insurance at baseline, as well as the possibility of pregnancy/having a family to support in the future.

You are correct that if your employer pays the entirety of the premium, the benefits are taxable. However this is still better than no longterm disability insurance. Depending on any pre-existing conditions, you can still get disability insurance but may have a rider excluding your pre-existing condition. I have autoimmune nephropathy and my personal own occupation policy has a rider which excludes anything renal, which obviously could be just about anything as renal failure can result from any serious illness. My employer policy has no riders. My personal policy breaks down to about $380/month which includes a discount for paying for the 3-year policy in full in a lump sum.

The rate you lock in now will not be for a policy that is enough to pay your expenses later. Whether you can buy a rider to increase benefits depend on the policy. Not all policies will have this option.

You can always get quotes for a policy and ask about options for increasing coverage later. It is important to ask for an own-occupation policy. You do not want a policy that won’t pay out if they determine you “could” work in a field other than the one you’re ultimately trained in. But I don’t believe you can get an own-occupation policy until you’re done with training. My small residency policy is not own-occupation. So in theory if they decided I could, for example, do wound care or teaching instead of being a surgeon, they could decide not to pay out.

 

[Tenk]

Wait for residency. Stay away from whole life insurance or non term disability insurance. Stay away from Northwestern Mutual.

 

[Dral]

My personal experience: I STARTED medical school when I was 33 and didn't even worry about this sort of thing. My n of 1 is that I made it through ok. Is it the right path? Well, in retrospect it was for me.

I'd say don't worry about it at this point unless you have other people who also depend on your income. Even then, I'd probably say to wait.

 

[throwaway7856]

Wait for residency

Can you please elaborate why? And I'm not looking to get life insurance yet.

 

[LucidSplash]

Can you please elaborate why? And I'm not looking to get life insurance yet.

For all the reasons already stated.

 

[NotAProgDirector]

On the taxation issue, I don't think it matters if your policy is personal or from your employer. What matters is whether it's paid for with pre tax or post tax dollars. If you buy it yourself, then it's always post tax. And if you claim on disability when you paid with post tax dollars, then there is no tax. I get disability insurance through my employer, but we are certain to pay for it with post tax dollars -- so it would (theoretically) be tax free should I need it.

Of note, the rules could change at any time, with no warning. And I could be completely wrong.

 

[Tenk]

Can you please elaborate why? And I'm not looking to get life insurance yet.

Policy premiums won’t start jumping up until your 40s-50s or if you have any medical conditions so there’s no point in not waiting a few years. You also might not get approved for the proper coverage since you currently don’t make any money. You want 100% if not over 100% of what you make as an attending in total disability coverage because if you become disabled you’ll actually usually need more money/month than you did when you were not disabled.

When calculating disability coverage, if you pay your premium with post tax money it will not be taxed in the event that your policy pays out. If you are using pretax money like through work benefits, you will be taxed.

 

[LucidSplash]

On the taxation issue, I don't think it matters if your policy is personal or from your employer. What matters is whether it's paid for with pre tax or post tax dollars. If you buy it yourself, then it's always post tax. And if you claim on disability when you paid with post tax dollars, then there is no tax. I get disability insurance through my employer, but we are certain to pay for it with post tax dollars -- so it would (theoretically) be tax free should I need it.

Of note, the rules could change at any time, with no warning. And I could be completely wrong.

Many employers pay for it outright. We don’t pay for it with pre or post tax dollars. It’s an included benefit. So in that case the benefits are taxable as income.

 

[NotAProgDirector]

Interesting. I just checked my paystub. My employer includes the cost in my paycheck as an after tax payment. So mine would be tax free.

 

[throwaway7856]

Thank you all for your thoughts! I am going to call around for quotes and see what I can find out.

 

[LucidSplash]

Thank you all for your thoughts! I am going to call around for quotes and see what I can find out.

This probably doesn’t apply as you’ve stated no pre-existing conditions but just FYI what you definitely do not want is to apply and be denied disability. If you think they are going to deny you then you withdraw the application. This doesn’t apply to requesting quotes, that’s not a formal application. But if you are ever denied disability insurance for any reason then you will need to disclose that on future applications and it usually leads to being denied coverage.

 

[RangerBob]

Getting disability insurance now is mostly only useful if you can lock in future rate increases (a future increase option).

The primary problem I see with getting private insurance as a med student is I don't think the insurance companies will consider you a physician--they'll probably consider you a student. As a physician you want "own-occupation" insurance (usually it's a rider). If you can get disability insurance as a med student with the future increase option and own-occupation insurance, then I think it's worth getting it early.

I took out an affordable/"ok" insurance policy as a resident. I wasn't quite ready to pay what the "Big 5" companies charged, and they were also more aggressive about ruling things out, such as excluding any claims related to my RUE because of a very mild hand sprain my intern year. Anyway, I took it personally and wanted to save money, so I went with a different company. Then I developed a medical issue that makes it much harder to get disability insurance (when I tried later one company denied me--that's bad, because now I have to disclose it if I apply for insurance again).

Basically stuck with the "ok" insurance policy. So I'm all in favor of folks getting disability insurance early.

Again, as a med student you want to actually verify you can get a future increase option and own-occupation insurance (and that it'll apply to when you change your job from student to physician). Otherwise you're just getting "normal" disability insurance, which is fine, but then you'd want to replace it with an own-occupation policy when you become an intern.