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disability insurance: when to purchase

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deleted573262

I will be a ty intern in 2020 and start pgy2 in 2021. I want to get disability during residency as I understand this allows lower rates given a younger age. I am considering getting a plan beginning of intern year, beginning of residency, or end of residency. I can't think of many instances when an own-occupation plan for a dermatologist will kick in.I want to hear what other people have done. I am glad to learn from you all about the optimal timing for this plan. Thank you for your time.

edit: plan is for my spouse, s/he is on the fence.
 
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asmallchild

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I will be a ty intern in 2020 and start pgy2 in 2021. I want to get disability during residency as I understand this allows lower rates given a younger age. I am considering getting a plan beginning of intern year, beginning of residency, or end of residency. I can't think of many instances when an own-occupation plan for a dermatologist will kick in.I want to hear what other people have done. I am glad to learn from you all about the optimal timing for this plan. Thank you for your time.

I got mine after completing fellowship but in retrospect, I agree, get it as early as you can.

Plenty of websites you can refer to and I would recommend doing your homework as it has been a while since I've looked into this. But from what I could remember, here are a few important pointers:

- buy from an independent agent
- buy own-occupation disability policies
- disability insurance is expensive and I'm sure you have plenty of other uses for your money at this stage in your career. It is fine to get a smaller policy and then upgrade as your income (and expected expenses) increase
- a good agent should explain to you the intricacies of the policies and how cutting corners could potentially affect you (and if you are OK with those effects). There are also typically a ton of riders where you'll want your agent to walk you through. One in particular you'll want to pay attention to is one for future purchase option which allows you to get a larger benefit without having to re-answer questions about your lifestyle or undergo another round of testing.
 
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anonperson

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I will be a ty intern in 2020 and start pgy2 in 2021. I want to get disability during residency as I understand this allows lower rates given a younger age. I am considering getting a plan beginning of intern year, beginning of residency, or end of residency. I can't think of many instances when an own-occupation plan for a dermatologist will kick in.I want to hear what other people have done. I am glad to learn from you all about the optimal timing for this plan. Thank you for your time.

The earlier you get it, the better.

Disability insurance will only get more expensive, especially as you age.

In addition, you want to get it before any new health issues pop up, or you may not even be insurable.
 
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OraclePL

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In general the earlier the better. It’s not just about locking in cheaper rates, but you’re never going to be more vulnerable that early in your residency when you likely have a mountain of debt and relatively low income. Protect your future earnings as soon as possible.

However I recommend talking to a good advisor beforehand because there are exceptions. For example if you have a health issue that could get you declined, you want to be very careful because getting rejected by a disability insurance company can screw you for the rest of your life. Everyone’s different which is why financial advice is hard to give when we only have a small piece of information.

But in general - Get it early. Take advantage of any residency discounts. The most important part is making sure it’s a true own occupation, guaranteed renewable, non-cancelable policy. You do want a future increase option so you don’t have to get a new policy and undergo new underwriting when you’re at an attending‘s salary. You may want to consider the cost of living adjustment rider if you’re young, but this is not necessarily mandatory for everyone. A partial disability rider is also a good idea.

There are only about five or six companies that offer true own occupation definitions. Make sure to talk to an agent who works with all five of the companies.
 
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asmallchild

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How much does this usually end up costing per month for the types of plans you all have?

Depends on too many factors. How much disability insurance do you want? Some people need to carry multiple plans in the event they want to replace a very large income. What pre-existing factors are in your health history that may make you a riskier candidate? That's way the general advice is to get it as early as possible (hopefully before any conditions arise that may preclude you from getting disability insurance or make it cost-prohibitive)
 

doctalaughs

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I believe I pay about 190/month for 6.5 k replacement a month. That is only one of my (smaller) policies as I have several. Got first one during residency a long time ago (almost 15 yrs) and added several others over time. Aim for at least 60% replacement income (I have 80% replacement which pretty expensive but plan to start dropping some soon — as my net worth and years of earnings remaining is reaching that tipping point to not need that much). The earlier in your career you are, the more future earnings you have to protect. This is of course balanced by the fact it’s hard to pay that much a month as a resident or a new attending. But when you think of it, that extra (luxury) car payment is totally worth every penny.

It astounds me how many physicians are under-insured. Disability, car, house, umbrella, malpractice, life (term NEVER whole).... when I add it up that’s gotta be a modest mortgage payment. But again, very worth it.
 
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MD Financial Services Scott

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The younger you buy it the less it is, generally speaking for most male residents (typical age of 27-32) and not in CA then it is about $19-22 per month per $1,000 monthly benefit assuming you don't live in CA, which if that is the case add 15-25%. Females residents are usually $24-$30 per month per $1,000 of monthly benefit. The only reason some of my female clients wait is that once out of residency they may join a group that I already have a unisex rate in place so the cost can be considerably less for them by waiting.
 
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smartparts

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I think getting disability insurance early is a good idea and in general agree with everything already said by others. Some other things to consider:
1. Does your program/future employer have disability insurance as part of your benefits? For me, I had $5000/month and just paid a tiny fraction of each paycheck towards it during residency. I did not think I needed any additional coverage. My future employer again offers $5000 at essentially no cost but it does not kick in until 6 months of disability. I purchased an additional $5000/month that starts at 3 months.
2. How much does your significant other make? For most two physician couples, if you can live off your SO's paycheck (after accounting for loans/mortgage, kids etc), you may not need a huge ($10k+) policy.
3. Right now, many insurers have waived the medical underwriting (which usually includes bloodwork, urinalysis, and a basic physical) because of COVID-19. If you're worried that the underwriting would increase your premiums, now is a good time to sign up!
 
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