Disability Insurance for Medical Students?

[Terror Billy]

Hey guys so I and some others I know starting medical school recently been contacted by various agents to sign on for the $1000 per month (12 mo.) disability coverage. What I’m wondering is if A) is it really worth it? B) if it is, which is the best company to role with

I’ve gotten 1 quote for about $15-20 monthly through NW Mutual ... but also just saw the same plan offered from AMA underwritten through New York Life.

I apologize in advance if I sound stupid, I honestly wasn’t even aware such programs exist for medical students jumping into debt.

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[TMP-SMX]

$1000 a month seems excessive. Aren't medical schools required to provide group disability insurance to students? Beyond what I have with my employer I have a 6500 own-specialty policy with Guardian for $232 a month. If you become permanently disabled be happy that your school loans may be discharged. Do you have a family or other expenses we should know about? I do recommend getting a good disability policy prior to leaving residency (There's a discount for this). It really depends on what specialty you go into and what kind of riders are added on.

 

[Terror Billy]

$1000 a month seems excessive. Aren't medical schools required to provide group disability insurance to students? Beyond what I have with my employer I have a 6500 own-specialty policy with Guardian for $232 a month. If you become permanently disabled be happy that your school loans may be discharged. Do you have a family or other expenses we should know about? I do recommend getting a good disability policy prior to leaving residency (There's a discount for this). It really depends on what specialty you go into and what kind of riders are added on.

My bad I meant it pays out $1000 a month if you have to go on disability and it does so for 12 months. The cost of the policy is what I'm not sure about as I got basically a ~$180 quote annually from NW Mutual, but then did a quick google search to compare rates and saw AMA offers it for just $41 for the year. Not even sure it makes sense for me to purhcase a policy at this point as an M1

 

[TMP-SMX]

That sounds more reasonable. You have a base policy or no? It's an AAMC requirement to have coverage. Do you have expenses you need to protect now in case you become disabled? If not just do what you get through residency/med school then increase coverage to your own independent coverage prior to completing residency.

 

[Terror Billy]

That sounds more reasonable. You have a base policy or no? It's an AAMC requirement to have coverage. Do you have expenses you need to protect now in case you become disabled? If not just do what you get through residency/med school then increase coverage to your own independent coverage prior to completing residency.

Ahh okay I'll have to check with my school to see what type of base policy is offered, I wasn't aware we had on. But thank you, that makes sense, I honestly thought this might have been a scam since I'll be having not zero, but negative income

 

[Gunther Strength LTCP]

Hey guys so I and some others I know starting medical school recently been contacted by various agents to sign on for the $1000 per month (12 mo.) disability coverage. What I’m wondering is if A) is it really worth it? B) if it is, which is the best company to role with

I’ve gotten 1 quote for about $15-20 monthly through NW Mutual ... but also just saw the same plan offered from AMA underwritten through New York Life.

I apologize in advance if I sound stupid, I honestly wasn’t even aware such programs exist for medical students jumping into debt.

Hi Terror Billy, this isn't a stupid question. I personally am a Disability Insurance broker and I want to be forth coming with you so I don't come off as someone not reputable when saying the following. This is just advice from another young colleague in saying that it is very important and you want to obtain it as early as possible for reasons such as the following:
1. The premiums are age based.
2. You get a discount for being in school/residency/fellowship.
3. You want to lock it in before life events, god forbid, happen (such as a new medical history). This can either make your policy more expensive or can keep you from buying this entirely.

Why should you need it? There are tons of reasons such as protecting what you are currently on the hook for such as car, house/apartment, groceries, etc...
You really need to think in a mentality that "well I have car insurance to protect my car and coverage for my home but nothing covering me if i can no longer physically work" which is the most important thing to everyone which is their income.
There are many reasons why you should protect your income and please again do not look at what I am saying as it coming from someone that is in this field. I would just like to help you from a third party. (Which is why the universities ingrain this into all of their residency programs)

When it comes to who you should work with when it comes to the insurance companies... There are about 6-7 companies that offer the true own occupation definition of disability for physicians and I would definitely look at options from all of them before I made a decision on NW. And this is a wink wink to make sure and read the language they are offering you because the language is different with every policy and even though your colleagues might have gone with company A that that doesn't mean that it is the one to go with. At the end of the day, it is who makes sure and gets your claims paid smoothly for the cheapest rate you can. Take a look at Principal, Ameritas, Ohio National, Mass Mutual, Standard, and Guardian.
I do not want to state my recommendation on here because this could be looked at very poorly but I just want you to check out all of your options before making a decision. Even the association plans I suggest reading through for possible "gotcha's". (Which happens in policies more than you think)

Again just as someone that is a third party that is a young professional. Do research, do research, do research, and then commit when ready. It is VERY important but some frivolous riders aren't always and can add cost that doesn't have to be added. They may be something you don't value or may be a want rather than a need.
Thanks for reading.

 

[MD Financial Services Scott]

Hey guys so I and some others I know starting medical school recently been contacted by various agents to sign on for the $1000 per month (12 mo.) disability coverage. What I’m wondering is if A) is it really worth it? B) if it is, which is the best company to role with

I’ve gotten 1 quote for about $15-20 monthly through NW Mutual ... but also just saw the same plan offered from AMA underwritten through New York Life.

I apologize in advance if I sound stupid, I honestly wasn’t even aware such programs exist for medical students jumping into debt.

As a Med Student you will be really limited on options for coverage and carriers as not all of the carriers will offer you options due to as you said "negative income" and not actually being employed. When you are ready to acquire coverage, coverage will cost about $15-$18 per month $1,000 of benefit, I would probably pick up as a MS4 or for typically the best rate during your intern year. Once you are ready to buy a policy by buying a very small policy that will limit what increases you get with most carriers due to the fact those increases are tied to a multiple of the benefit you are purchasing (i.e. you buy $1k of benefit the max increase with some carriers would be $3k). Other carriers don't use a multiple so they simply allow increases to the policy max ($17-$20k per month with most carriers with todays limits).

As for the reasons AMA is problematic once you know your specialty here they are:
You have a "Total and Continuous" clause in the waiting period vs. a 15-20% loss of income to trigger benefits.
They don't have a true own specialty definition that protects you in your medical specialty regardless of post disability earnings.
They change the rates by about 30% at 40, 45, 50, 55, and 60.
They change the terms anytime they want.
They can cancel the policy.
What you buy is not necessarily what you get at claim time (they do that calculation of what you get paid out of what you bought at claim time), you are buying a max potential distribution, not a distribution.
Most employer group plans have a "Benefit Offset Provision" saying the group plan does not have to pay you if you have been buying a group plan, association plans are group plans....

Be careful what you buy, be sure to read what you buy, ask a lot of questions, and question even the slightest little thing, you don't want a surprise on claim day because it is not like a birthday celebration!

 

[Raryn]

Hey guys so I and some others I know starting medical school recently been contacted by various agents to sign on for the $1000 per month (12 mo.) disability coverage. What I’m wondering is if A) is it really worth it? B) if it is, which is the best company to role with

I’ve gotten 1 quote for about $15-20 monthly through NW Mutual ... but also just saw the same plan offered from AMA underwritten through New York Life.

I apologize in advance if I sound stupid, I honestly wasn’t even aware such programs exist for medical students jumping into debt.

When I last looked into it, buying disability insurance as a medical student was a dumb idea. Because they have no idea what specialty you're going in to, the company will price it out as if you were in the highest risk class (surgical subspecialist or something) for being disabled. If you're going to be a psychiatrist or something, this will lead to a significantly more expensive policy than you will be able to buy when you're actually a physician.

 

[NITRAS]

When I was a resident I got disability insurance, which I have kept. I also have a plan through my employer. If I get disable, I'll be at a strong percentage of my income. Also remember, after tax disability insurance payments are after tax, and pretax disability is taxed.

Is the plan your talking about only cover you with 12 months of income? I'd forget about it.

If you truly become disable, you need income for the rest of your life. You need long term disability insurance or have wealth to support you.
If you have dependents, you need to have life insurance or wealth to support your dependents.