Disability Insurance For Psychiatrist (resident question)

[luckrules]

Hi everyone. If this has been asked before I apologize in advance, I did a cursory search and didn't find anything.

When I started residency I went to a financial planning group to request a quote on "own occupation" disability insurance. Despite being relatively healthy and young (28 at the time), I was surprised by the relatively high cost associated with the insurance. The salesperson was explaining this to me and and said that for psychiatrists, the decision to purchase additional disability insurance (I already have some disability insurance through my work, although I'm not 100% on the details) is a little different due to the nature of our work. For surgeons, or other cognitive specialists even, there are many more disabilities that might conceivably impede their ability to practice "at the top of their license" than we might experience. As our work requires more sitting down, talking to people, making treatment recommendations.

Some things have changed in my life (mostly turning 30, which I realize probably isn't going to make it any cheaper) and I'd like to get my financial ducks more in order. Is this disability insurance thinking true? Do you all own disability insurance and what level do you own it? How does the decision to buy disability insurance as a psychiatrist change vs. a surgeon or an internist?

Thanks everyone!

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[Sushirolls]

I don't have 'own occupation' disability insurance. I too was priced out of it. I also don't believe my previous jobs disability insurance included it.

STD is cheap and easy to purchase. LTD is more costly, and own occupation bumps it up even further.

I hope to revisit LTD in the future as my income stabilizes/rises and can also show the proof of income an insurance company would want.

I definitely locked in life insurance though, and got a much better policy then any previous employers ever offered.

 

[Candidate2017]

STD is cheap and easy to purchase.

 

[clozareal]

I bought own occupation disability insurance during residency for about $140/mo in addition to my employer group disability insurance. If I got disabled during training, the employer group disability insurance can definitely help but mine only covered about 50% of my take home pay. The quality of life would decrease dramatically if I got disabled during this period.

In terms of specialty, you get a specialty-specific policy in addition to own occupation. The premium would be different depending on specialty (they're categorized into different risk classes). Surgeons would have higher premiums because they would be in a riskier class than psychiatrists which are in the lowest risk class.

If you're looking for more information on disability insurance, the white coat investor has a ton of articles and podcast episodes on this and even recommendations on people who can help you. I looked at 5 different agents who gave me quotes on 5 own-occupation, specialty-specific insurance companies (the same 5 that offer it in my state) and the premiums between agents for each disability insurance company were almost exactly the same. The difference was in the discount offered (one offered 30%, most offered 20%) and the different optional riders you can get.

 

[luckrules]

I bought own occupation disability insurance during residency for about $140/mo in addition to my employer group disability insurance. If I got disabled during training, the employer group disability insurance can definitely help but mine only covered about 50% of my take home pay. The quality of life would decrease dramatically if I got disabled during this period.

In terms of specialty, you get a specialty-specific policy in addition to own occupation. The premium would be different depending on specialty (they're categorized into different risk classes). Surgeons would have higher premiums because they would be in a riskier class than psychiatrists which are in the lowest risk class.

If you're looking for more information on disability insurance, the white coat investor has a ton of articles and podcast episodes on this and even recommendations on people who can help you. I looked at 5 different agents who gave me quotes on 5 own-occupation, specialty-specific insurance companies (the same 5 that offer it in my state) and the premiums between agents for each disability insurance company were almost exactly the same. The difference was in the discount offered (one offered 30%, most offered 20%) and the different optional riders you can get.

Thanks clozareal. I've looked over some of the white coat investor blog posts but have not yet read his book. Mostly I'm curious how being a psychiatrist effects the calculus, as his blog sometimes seems to be more geared towards proceduralists or EM folks. What would be the kind of disability that would so impair us that we can't work? I think part of the input affecting my calculus was that I've had an extremely stable mental health diagnosis for years that require minimal intervention, but they wanted to exclude all mental health or substance abuse from the policy. So I had to think I'd have to be nearly dead or severely cognitively impaired to qualify for this policy. Is this naive thinking?

 

[luckrules]

I don't have 'own occupation' disability insurance. I too was priced out of it. I also don't believe my previous jobs disability insurance included it.

STD is cheap and easy to purchase. LTD is more costly, and own occupation bumps it up even further.

I hope to revisit LTD in the future as my income stabilizes/rises and can also show the proof of income an insurance company would want.

I definitely locked in life insurance though, and got a much better policy then any previous employers ever offered.

Thank you for sharing your experience. I hope that you can get back into it as well. I'm guessing LTD is the type that we are most often advised to purchase?

 

[clozareal]

Thanks clozareal. I've looked over some of the white coat investor blog posts but have not yet read his book. Mostly I'm curious how being a psychiatrist effects the calculus, as his blog sometimes seems to be more geared towards proceduralists or EM folks. What would be the kind of disability that would so impair us that we can't work? I think part of the input affecting my calculus was that I've had an extremely stable mental health diagnosis for years that require minimal intervention, but they wanted to exclude all mental health or substance abuse from the policy. So I had to think I'd have to be nearly dead or severely cognitively impaired to qualify for this policy. Is this naive thinking?

About 1/4 of doctors will take out a disability claim in their lifetime, most last about 1-2 years. Psychiatrists are human and not immune to the conditions that afflict the general population. The most common conditions leading to a disability insurance claim are joint/spine disorders (arthritis, back pain, injuries), cancer, MS, and GI issues (hernias, gastritis). Pregnancy related issues that lead to disability over 90 days are also sometimes covered. 90% tend to be illnesses and 10% tend to be injuries. You can talk with your insurance agent more about the breakdown of claims they typically see.

The thing about disability insurance is that you don't know ahead of time what kind of morbidity you'll have. If you did, that condition would be excluded, it lead to a higher premium upfront, or you would be uninsurable. Ideally, you would self-insure if you could financially afford it.

If you have a pre-existing illness, they tend to exclude that from the disability coverage. Otherwise, mental health and substance abuse coverage tends to be for 2 years only, with the most I've seen for 5 years.

Also, it doesn't have to be a total disability. If you have a residual or partial disability benefit, then you can still claim the loss of your income for part-time work as a psychiatrist.

 

[FlowRate]

Disability insurance is indeed expensive. I think WCI said rates tend to be 2-5% of the benefit amount. I believe the rates for the plan I'm considering are about 4% of the benefit. Your odds of using it for longer than 2 years are pretty low but, if that does happen, you're kinda screwed unless you used other means to hedge against that possibility (e.g. aggressive early career investing.)

 

[MD Financial Services Scott]

Hi everyone. If this has been asked before I apologize in advance, I did a cursory search and didn't find anything.

When I started residency I went to a financial planning group to request a quote on "own occupation" disability insurance. Despite being relatively healthy and young (28 at the time), I was surprised by the relatively high cost associated with the insurance. The salesperson was explaining this to me and and said that for psychiatrists, the decision to purchase additional disability insurance (I already have some disability insurance through my work, although I'm not 100% on the details) is a little different due to the nature of our work. For surgeons, or other cognitive specialists even, there are many more disabilities that might conceivably impede their ability to practice "at the top of their license" than we might experience. As our work requires more sitting down, talking to people, making treatment recommendations.

Some things have changed in my life (mostly turning 30, which I realize probably isn't going to make it any cheaper) and I'd like to get my financial ducks more in order. Is this disability insurance thinking true? Do you all own disability insurance and what level do you own it? How does the decision to buy disability insurance as a psychiatrist change vs. a surgeon or an internist?

Thanks everyone!

As a Psychiatrist one thing I have all of my clients think about is the need for true own specialty coverage that allows you to go do another occupation outside of Psychiatry and still get paid. That all sounds good until you try to think about what job you could do outside of Psy but that the skill set to that job still does not allow you to do PSY. My point is many folks in primary care get either over sold or they over buy what they need out of contract and thus waste/spend about 20% more on a contract than is needed. As a Psychiatrist, in all states but CA, male gender, our rate for our clients at 30 years old is about $20 per month per $1,000 of benefit and might be as low as $16. If female, it is typically pretty easy to find unisex rates but we have a bit more work to come up with the blended costs so certainly more variable. If you happen to be in CA, add about 20% to the rates to price adjust for that state.
Hope that helps, Scott.

 

[Merovinge]

Thank you for sharing your experience. I hope that you can get back into it as well. I'm guessing LTD is the type that we are most often advised to purchase?

Yes STD is a silly product, it's basically there for people who can't budget enough to have an emergency fund. 95%+ of physicians should be able to have an emergency fund. Remember all insurance's are net expected value loss to the purchaser, you are paying more for peace of mind and the cost to hedge via this type of insurance is much more then say the premium to hedge with securities or many other types of hedging one's bets.

Thanks clozareal. I've looked over some of the white coat investor blog posts but have not yet read his book. Mostly I'm curious how being a psychiatrist effects the calculus, as his blog sometimes seems to be more geared towards proceduralists or EM folks. What would be the kind of disability that would so impair us that we can't work? I think part of the input affecting my calculus was that I've had an extremely stable mental health diagnosis for years that require minimal intervention, but they wanted to exclude all mental health or substance abuse from the policy. So I had to think I'd have to be nearly dead or severely cognitively impaired to qualify for this policy. Is this naive thinking?

I was shocked when I got disability quotes a few years back. My wife, who is a specialty surgeon, was actually at the same risk class as myself. I'm maybe wondering if this was not entirely accurate based on what Scott is saying below, but we went with group policy for myself and then group + individual for my wife, thinking her likelihood of disability is statistically much higher and was nearly the same price. Once we reach FI in about a decade or so, we will drop her LTD.

I would definitely shop around for any place that will cover MH/SA likely as a "transitional occupation" setup, since you already have a diagnosis I'm not sure if this will be possible but is certainly worth hunting hard for. MH/SA make up a pretty significant portion of claims and if you are not able to have these covered it reduced the expected value of your policy by quite a bit while also not providing you full peace of mind, which is a significant reason for the product. Still, there are still plenty of conditions that will qualify: cancer is huge one, autoimmune disorders, some infectious diseases, accidents of course, etc.

 

[WisNeuro]

Yes STD is a silly product, it's basically there for people who can't budget enough to have an emergency fund. 95%+ of physicians should be able to have an emergency fund. Remember all insurance's are net expected value loss to the purchaser, you are paying more for peace of mind and the cost to hedge via this type of insurance is much more then say the premium to hedge with securities or many other types of hedging one's bets.

In some healthcare systems, such as mine, it's what they use to "give" people maternity leave.

 

[Merovinge]

In some healthcare systems, such as mine, it's what they use to "give" people maternity leave.

Oh it's fine as a benefit from an employer, good in fact, I'm only speaking about purchasing an independent STD plan for oneself.

 

[WisNeuro]

Oh it's fine as a benefit from an employer, good in fact, I'm only speaking about purchasing an independent STD plan for oneself.

Agreed, it's not very hard to set aside 6 months living expenses as any type of professional, barring ill-advised crushing levels of debt. Furthermore, one should probably have at least another 6 months in easily liquidable investments as another backstop.

 

[MD Financial Services Scott]

Yes STD is a silly product, it's basically there for people who can't budget enough to have an emergency fund. 95%+ of physicians should be able to have an emergency fund. Remember all insurance's are net expected value loss to the purchaser, you are paying more for peace of mind and the cost to hedge via this type of insurance is much more then say the premium to hedge with securities or many other types of hedging one's bets.



I was shocked when I got disability quotes a few years back. My wife, who is a specialty surgeon, was actually at the same risk class as myself. I'm maybe wondering if this was not entirely accurate based on what Scott is saying below, but we went with group policy for myself and then group + individual for my wife, thinking her likelihood of disability is statistically much higher and was nearly the same price. Once we reach FI in about a decade or so, we will drop her LTD.

I would definitely shop around for any place that will cover MH/SA likely as a "transitional occupation" setup, since you already have a diagnosis I'm not sure if this will be possible but is certainly worth hunting hard for. MH/SA make up a pretty significant portion of claims and if you are not able to have these covered it reduced the expected value of your policy by quite a bit while also not providing you full peace of mind, which is a significant reason for the product. Still, there are still plenty of conditions that will qualify: cancer is huge one, autoimmune disorders, some infectious diseases, accidents of course, etc.

Yeah, a lot of reps bloat these contracts up with features that have low probability of payout but increases the compensation.

 

[oldiebutgoodie1211]

Why would we need disability insurance? In what disability would I not be able to sit down and talk to someone and write a prescription? Seems really rare and not worth the price..

 

[MD Financial Services Scott]

If you don't see any value in it then certainly don't buy it. The purchase needs to be right for you and bring value to you, as you perceive value. As you have mentioned it is more difficult for you to become disabled because of the things you do in your occupation. As a surgeon it is easier to become disabled but they also pay 20-40% more for coverage than does your specialty.

 

[Candidate2017]

Why would we need disability insurance? In what disability would I not be able to sit down and talk to someone and write a prescription? Seems really rare and not worth the price..

Inpatient, forensics etc all carry a risk of sucker punches/TBI. I've encountered a fair number of TBI patients who were previously very high functioning professionals who are now basically crayon eaters.

 

[oldiebutgoodie1211]

Inpatient, forensics etc all carry a risk of sucker punches/TBI. I've encountered a fair number of TBI patients who were previously very high functioning professionals who are now basically crayon eaters.

getting punched does not typically result in a TBI lol

 

[luckrules]

As a Psychiatrist one thing I have all of my clients think about is the need for true own specialty coverage that allows you to go do another occupation outside of Psychiatry and still get paid. That all sounds good until you try to think about what job you could do outside of Psy but that the skill set to that job still does not allow you to do PSY. My point is many folks in primary care get either over sold or they over buy what they need out of contract and thus waste/spend about 20% more on a contract than is needed. As a Psychiatrist, in all states but CA, male gender, our rate for our clients at 30 years old is about $20 per month per $1,000 of benefit and might be as low as $16. If female, it is typically pretty easy to find unisex rates but we have a bit more work to come up with the blended costs so certainly more variable. If you happen to be in CA, add about 20% to the rates to price adjust for that state.
Hope that helps, Scott.

Hey Scott, thanks so much for your insight, I really appreciate your perspective. I'm a little confused about the above. Are you saying that basically for psychiatrists we could consider something other than "own occupation" disability? This was I think essentially my question from the beginning, as another poster pointed out, its hard for me to imagine a disability that would keep me from practicing psychiatry but allow me to practice some other medical specialty. I hear you when you say its hard to tell what might happen, life throws curveballs, etc, which is why I'm trying to check my thinking to see if I'm being naive. Should I be thinking of something other than "own occupation" disability to try and avoid being "oversold"

 

[MD Financial Services Scott]

Hey Scott, thanks so much for your insight, I really appreciate your perspective. I'm a little confused about the above. Are you saying that basically for psychiatrists we could consider something other than "own occupation" disability? This was I think essentially my question from the beginning, as another poster pointed out, its hard for me to imagine a disability that would keep me from practicing psychiatry but allow me to practice some other medical specialty. I hear you when you say its hard to tell what might happen, life throws curveballs, etc, which is why I'm trying to check my thinking to see if I'm being naive. Should I be thinking of something other than "own occupation" disability to try and avoid being "oversold"

If I were in your position, I would certainly be looking at what is called an Own Occupation Not Working definition of disability. What that means is the carrier can never tell you what to go do so you control any employment that you might or might not take on post disability but if you do work then the benefits can be reduced. My point is that it would be hard to justify that you can do any job while then claiming you can't do PSY so the ability to work in a different occupation and still claim full benefits is massive long shot. If you want to give me a call or email I walk you through it for you specifically.

 

[michaelrack]

Why would we need disability insurance? In what disability would I not be able to sit down and talk to someone and write a prescription? Seems really rare and not worth the price..

Tbi , throat cancer. Arthritis/carpal tunnel etc making it difficult to use emr. Any pain conditions requiring chronic opioids. TBI that leaves you superficially normal but with subtle cognitive and judgment defects that lead to loss of medical license.

 

[Basis]

I bought 'own occupation' disability insurance in intern year. I might be slightly off on the terminology because there are a lot of difference kinds of insurance being described in this thread. But it's basically if I can't work as a psychiatrist I get the money. It was about $150ish for 5k monthly coverage. I can increase the coverage cap a bit each year after residency (and have been). I think it'd max out at about 13k monthly. I thought it was funny the application packet said they exclude coverage for substance use disorders for anesthesiologists.

 

[Merovinge]

I bought 'own occupation' disability insurance in intern year. I might be slightly off on the terminology because there are a lot of difference kinds of insurance being described in this thread. But it's basically if I can't work as a psychiatrist I get the money. It was about $150ish for 5k monthly coverage. I can increase the coverage cap a bit each year after residency (and have been). I think it'd max out at about 13k monthly. I thought it was funny the application packet said they exclude coverage for substance use disorders for anesthesiologists.

Gas docs have such a high rate of SA that no insurance will cover them for those beyond 2 years at this point is my understanding. I think its a great example of how important access is to things we like to think of as free will or choosing immoral choices (cheating, substance abuse, etc).

 

[MD Financial Services Scott]

I bought 'own occupation' disability insurance in intern year. I might be slightly off on the terminology because there are a lot of difference kinds of insurance being described in this thread. But it's basically if I can't work as a psychiatrist I get the money. It was about $150ish for 5k monthly coverage. I can increase the coverage cap a bit each year after residency (and have been). I think it'd max out at about 13k monthly. I thought it was funny the application packet said they exclude coverage for substance use disorders for anesthesiologists.

What company do you have that states that? All of the contracts I have seen for my 27 years in this business have always had a minimum of 24 month benefit which is mandated by the states. The only way you can get that excluded is due to a history or current usage. Certainly the 2 area of medicine hardest hit with substance abuse is Anesthesia and Psychiatry.

 

[clozareal]

Between the five major companies that I got quoted, two had 2 year coverage for SA/MH, one had 5 years, and two had no limitations.

 

[milesed]

I pay $18.00/month for coverage from month 6 to month 30 of a disability. It pays me about $2k/month in benefits if needed. I keep more than 6 months of money liquid so don't need short-term disability insurance.

 

[Stagg737]

Tbi , throat cancer. Arthritis/carpal tunnel etc making it difficult to use emr. Any pain conditions requiring chronic opioids. TBI that leaves you superficially normal but with subtle cognitive and judgment defects that lead to loss of medical license.

Don’t forget stroke. Had a guy that our team occasionally worked with who was still working in FM after a stroke. Only had one usable arm. I was at the station next to him writing notes once and it took him almost an hour to write a very simple note. I suppose if he had an EMR with dictation like Dragon it would not be such a big deal, but I can’t imagine having to continue working like that.

 

[ShawnSpencer04]

I would recommend trying out multiple online tools that give you free estimates of how much insurance you need, and how much it will cost.

 

[littlefred]

Between the five major companies that I got quoted, two had 2 year coverage for SA/MH, one had 5 years, and two had no limitations.

Care to share what companies and agents through PM? Looking to get DI.

 

[MD Financial Services Scott]

Depending on the state you live in there are 6 major disability carriers for physicians in the USA. These 6 carriers are the only ones that have a true own specialty definition of disability that will pay you 100% of your benefit which was bought if you can't do the specialty that you were doing at the time of claim regardless of how much income you make in a different occupation post claim.
Ameritas
Guardian
Mass Mutual
Ohio National
Principal
Standard