disability insurance

[depeche2u]

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first time posting here, but have enjoyed all your insight. now that i am in my ca-2, i've been thinking about disability insurance. what comanies are recommended. what should i be looking for in a policy. thanks.

 

[doctordi]

Right now there are a few companies that offer good disability contracts. Guardian/Berkshire, Standard of Oregon, Mass Mutual, and Northwestern Mutual are the only ones I would look at. Guardian currently leads the industry in the benefits they offer, they can be more expensive but you get what you pay for. Regardless of company here are some things your policy must offer in order to be adequate.

Non-cancellable and guaranteed renewable
Cost of living adjustment rider
Future increase option
Specialty specific true own occupation coverage
Residual disability

I hope this is helpful.
Feel free to contact me with any questions

 

[cubs3canes]

When should I get the good disability insurance? As an intern when I only make 40 K or does it not matter what I make?

Cubs

 

[Pilot Doc]

When should I get the good disability insurance? As an intern when I only make 40 K or does it not matter what I make?

Cubs

If you can afford it, now is the best time because you are almost certain to be insurable. Your policy should include a guaranteed increase option where you can increase your coverage without any medical qualifications as your income increases. If you wait, there's the potential to pick up a disqualifying condition before you graduate.

 

[Pilot Doc]

Regardless of company here are some things your policy must offer in order to be adequate.

Non-cancellable and guaranteed renewable
Cost of living adjustment rider
Future increase option
Specialty specific true own occupation coverage
Residual disability

I'd quibble with a few of these

1) Cost of living - when I was pricing policies 6 months ago, the COLA rider was 30-50% of the base premium. I didn't end up getting it because my spouse has a high paying job so an inflationary erosion in my benefits wouldn't be a huge hit. Depending on your income needs & sources, this may not be a deal breaker

2) Spec spec own occupation - nice if you can get it. I wasn't able to find anyone writing this for general surgery. may be different for anesthesia. My policy is transitional own occupation - if you never go back to work - even if you could retrain for another job, you get full benefits; if you do go back to work, your benefits + your income cannot exceed your prior income.

I agree with the others

 

[bubalus]

Many residency programs include disability insurance during the residency, and many of these policies are portable and convertable to individual policies at the end of the residency. Interestingly, 5 specialties have the highest disability premiums: ortho, CT surgery, emergency medicine, psych, and anesthesia. I kept my policy from my intern year in medicine because my premium as an anesthesiologist would have been 50% higher. It's a little painful to have to pay for that now, but it will pay for itself in a few short years. It's probably not a bad idea to have the insurance sooner rather than later. There are multiple cases of residents becoming disabled and having to rely on their disability insurance. If you have a spouse or family, those are other things to consider.

 

[xjohns1]

Right now there are a few companies that offer good disability contracts. Guardian/Berkshire, Standard of Oregon, Mass Mutual, and Northwestern Mutual are the only ones I would look at. Guardian currently leads the industry in the benefits they offer, they can be more expensive but you get what you pay for. Regardless of company here are some things your policy must offer in order to be adequate.

Non-cancellable and guaranteed renewable
Cost of living adjustment rider
Future increase option
Specialty specific true own occupation coverage
Residual disability

I hope this is helpful.
Feel free to contact me with any questions

i also have been trying to figure out disability insurance and have found just how confusing some of this financial/insurance stuff is to me.

my gme office where i did my medicine prelim year arranged for a conversion option from the group policy to an individual policy as i left the program. according to the gme office, which seemed to officially sanction the offer, we were offered this conversion at a 30% discounted premium from principal life insurance company through lumsden and associates, the insurance brokerage firm that provided institutional disability policies at my program's college of medicine.

the advantages to getting this coverage now were said to be the following:
-30% discount
-origination of the policy in IL (where my prelim program was) vs later conversion from my anesthesia program in CA where premiums are supposedly much more expensive
-much better coverage (not sure exactly what this means) vs most group policies (which I now have through my anesthesia program)
-easier and cheaper insurability at a younger age.

the conversion program offers the following details:

-a 90-d elimination period followed by max monthly benefit of $4000 from day 91 to age 70
-automatic increase option (like up to max $15,000/mo as my income increases when i finish residency)
-6% COLA
-residual disability benefit
-mental/nervous disorder limitation
-extended total disability benefit - 50 benefit factor
-recovery benefit - 3 year
-presumptive diability benefit
-capital sum benefit of $48,000

...all for ~$150.00/mo.

the problem is i really don't understand what most of those concepts mean, and i realize i need to get more info from the insurance company to figure this out, but i'd be really interested in others' insights into the benefit of having such an individual policy in addition to my current program's group coverage. does it make sense to get this policy now to lock in this discount? am i likely to get equivalent or better coverage through a private group that i might join after residency for similar or no cost to me? any opinion on principal insurance company?

again, i'd be very grateful for any input.

 

[Pilot Doc]

the conversion program offers the following details:

-a 90-d elimination period followed by max monthly benefit of $4000 from day 91 to age 70
-automatic increase option (like up to max $15,000/mo as my income increases when i finish residency)
-6% COLA
-residual disability benefit
-mental/nervous disorder limitation
-extended total disability benefit - 50 benefit factor
-recovery benefit - 3 year
-presumptive diability benefit
-capital sum benefit of $48,000

...all for ~$150.00/mo.

That does sound like a good policy to me. The biggest reason to get a policy now is that you might become uninsurable before another good opportunity comes around.

What do all these items mean?

90 day elimination - your benefit starts 90 days after the disability begins. 1st 3 months you're own your own. Assuming you can live off savings/vacation/sick time for 3 months, this makes your premium MUCH cheaper than a shorter elimination

Age 70 - good. The policies I have seen only go to 65

Automatic increase option - allows coverage to increase with your income WITHOUT any further medical underwriting. You send them a tax return, they send a letter back with your new coverage limits. Nothing else to it.

COLA - Once you become disabled, your benefit increases annually. THis prevents inflation from eroding your benefit if you have a lifelong disability. It is an expensive rider on a stand-alone policy.

Residual disability - If you go back to work but are still partially disabled, they pay partial benefits. (i.e. you don't have to be completely disabled to qualify.)

Mental/Nervous - clearly applies to disability due to psych issues. Could be good or bad depending on how it's written

Extend. Total Disab - no idea

Recovery benefit - I THINK, this means that for 3 years after coming off total disability, the 90 day qualification period is waved. e.g. You get MS. You're out 6 months with a complication. You go back to work and have to quit 3 months later. You get a check immediately, not after 3 months.

Presumptive disability - For certain conditions (blindness, loss of both hands, etc.) you are immediately presumed to be totally and permanently disabled and get a check without the 90 day wait.

So should you take the policy?

Definitely yes if
1) you have anything but a completely negative PMH and an expectation to remain that way, or
2) you have a family

Otherwise, it's a cost/benefit balance. I'd get it, but people have different priorities.

One thing to remember is that you can always cancel the policy if you find something better!

 

[doctordi]

I'd quibble with a few of these

1) Cost of living - when I was pricing policies 6 months ago, the COLA rider was 30-50% of the base premium. I didn't end up getting it because my spouse has a high paying job so an inflationary erosion in my benefits wouldn't be a huge hit. Depending on your income needs & sources, this may not be a deal breaker

2) Spec spec own occupation - nice if you can get it. I wasn't able to find anyone writing this for general surgery. may be different for anesthesia. My policy is transitional own occupation - if you never go back to work - even if you could retrain for another job, you get full benefits; if you do go back to work, your benefits + your income cannot exceed your prior income.

I agree with the others

I know that guardian/berkshire and standard of oregon offer specialty specific own occupation coverage to age 65 for all specialties including general surgery I don't believe any other companies currently offer this. Standard has offered this for some time and guardian just started offering it to surgeons recently.

As for the cost of living adjustment rider it is not for everyone but in most cases it does make sense and is very valuable if you suffer from a long term disability.

 

[doctordi]

i also have been trying to figure out disability insurance and have found just how confusing some of this financial/insurance stuff is to me.

my gme office where i did my medicine prelim year arranged for a conversion option from the group policy to an individual policy as i left the program. according to the gme office, which seemed to officially sanction the offer, we were offered this conversion at a 30% discounted premium from principal life insurance company through lumsden and associates, the insurance brokerage firm that provided institutional disability policies at my program's college of medicine.

the advantages to getting this coverage now were said to be the following:
-30% discount
-origination of the policy in IL (where my prelim program was) vs later conversion from my anesthesia program in CA where premiums are supposedly much more expensive
-much better coverage (not sure exactly what this means) vs most group policies (which I now have through my anesthesia program)
-easier and cheaper insurability at a younger age.

the conversion program offers the following details:

-a 90-d elimination period followed by max monthly benefit of $4000 from day 91 to age 70
-automatic increase option (like up to max $15,000/mo as my income increases when i finish residency)
-6% COLA
-residual disability benefit
-mental/nervous disorder limitation
-extended total disability benefit - 50 benefit factor
-recovery benefit - 3 year
-presumptive diability benefit
-capital sum benefit of $48,000

...all for ~$150.00/mo.

the problem is i really don't understand what most of those concepts mean, and i realize i need to get more info from the insurance company to figure this out, but i'd be really interested in others' insights into the benefit of having such an individual policy in addition to my current program's group coverage. does it make sense to get this policy now to lock in this discount? am i likely to get equivalent or better coverage through a private group that i might join after residency for similar or no cost to me? any opinion on principal insurance company?

again, i'd be very grateful for any input.

To add to pilot doc's response which was very insightful I have a couple of thoughts.

Are you a female? If you are then the 30% discount could be offered because they are giving you unisex rates. Unisex rates can often be obtained by agents who write a decent amount of disability through the program.

The mental nervous limitation of two years is pretty standard in the industry. However I know of two companies that do not limit your benefit and treat these disablers as any other sickness or injury. This catergorie accounts for the second leading cause of disability.

Benefits to age 65 or 70 is pretty standard as well however Guardian currently offers lifetime benefits.

Hope this helps.

 

[jwk]

A couple points I haven't seen yet...

Income from a disability policy paid for by your employer or group is TAXABLE income.

Income from a disability policy that YOU pay for is TAX FREE.

Also - in theory you can't buy more disability insurance than what you make. If you make $200k/year, you can't buy $400k, and if you have other disability insurance, they don't like you double dipping. However, they will take into consideration your other "losses" by being disabled. Using round numbers as an example (not my numbers 😉 ) :

If you make $100k / yr, employer provided coverage often covers 60% of BASE salary, in this case that would be at a max of $60k per year. That leaves $40k - you can buy a policy that covers that, PLUS, let's say you get 15% for a pension contribution - that adds another $15k. That $60k of taxable income off the employer plan means about $20k in income tax. That can be added back in as well. Right there you're back up to $75k.