disability insurance

[amyl]

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just curious, to all in PP out there, how much does disability insurance run you for a year to cover a PP type salary? does your group pay for this?

 

[Mman]

Mine is paid for by the group and I'm not really sure what it costs in total. It is specialty specific paying $15,000 a month for as long as you are out of work after 60 or 90 days (I can't recall exactly).

 

[Frank Rizzo]

was a thread on disability insurance not too long ago...

 

[Pilot Doc]

just curious, to all in PP out there, how much does disability insurance run you for a year to cover a PP type salary? does your group pay for this?

Depends on the policy, your age and how healthy you are, but it's expensive. Probably $10K/yr give or take for a robust policy.

You can't actually get a policy that "covers" a PP type salary, though. Most policies limit you to $10K/month, although if you paid for the policy with after tax money, the proceeds aren't taxable, so that will be equivalent to $200K or so of taxable income. You may be able to get additional policies that will cover a few K a month in retirement contributions. Last I checked, policies for more than $10K month required much higher income amounts - i.e. no one will write a policy that pays $15K/month if you're making $350K.

 

[MR Insurance]

Last I checked, policies for more than $10K month required much higher income amounts - i.e. no one will write a policy that pays $15K/month if you're making $350K.

Just a correction to this post. There are many insurance companies offering greater than $10,000 monthly benefits for Physicians, especially with incomes of $350,000. Most carriers are able to provide $15,000/month of benefit and some are able to go to $20,000 total.

Another note: There was mention of having premiums paid by someone's group or practice. All should be aware that when Disability insurance premiums are deducted, the benefits paid during a claim are taxable as ordinary income.

If your practice is paying for the premiums, speak to your accountant or tax advisor about different strategies that can avoid this potential concern. For example bonusing each Doc the premium dollars used to pay for the premiums.

 

[RedAnesthesia]

On a related note, did any of you or know of anybody getting disability insurance during residency?

 

[Pilot Doc]

Just a correction to this post. There are many insurance companies offering greater than $10,000 monthly benefits for Physicians, especially with incomes of $350,000. Most carriers are able to provide $15,000/month of benefit and some are able to go to $20,000 total.
.

What income is required for $15K and $20K monthly benefits.

 

[MR Insurance]

On a related note, did any of you or know of anybody getting disability insurance during residency?

Not personally, as I am not in the medical field. However, many residents research and purchase Disability insurance during residency. There are a list of reasons why it makes sense to purchase coverage during residency rather than waiting, for example:
-Lock into a guaranteed level premium when you are young and premiums are less costly
-take advantage of your good health in order to qualify for full coverage without dealing with exclusions
-allows you to guarantee your ability to purchase additional coverage in the future if you include the Future Increase rider on your policy.

A big concer for residents is pricing. If the level premium schedules are not affordable, ask the advisor you work with to show you a graded premium schedule. This structure requires very cheap premiums in the early years and continues to increase each year. You can exchange this to a level premium at anytime.

Tips on purchasing coverage:
-Look for True Own Occupation coverage (pays you a benefit when unable to perform your medical specialty, even if you are working in some other capacity)
-include the Future Increase Option
-review the Residual Disability benefits very closely, especially if you are considering PP.

 

[MR Insurance]

What income is required for $15K and $20K monthly benefits.

This will depend greatly on the insurance company you go with, but on average it is fair to say that a $340K-$350K salary will qualify a person for $15K of monthly benefit. Depending on the advisor you work with and how much pull they have with the insurance companies, you may even be able to get it with a $330K salary, but not always promising.

The key to getting more than $15K of coverage is to purchase the additional $5,000 of benefit from a different carrier. The maximum benefit most insurance companies offer is $16,000, but they will participate up to $20,000 - which means the risk must be split up between two companies.

I noticed that you are in residency still. For residents I think it would be fair to say that $5,000 - $7,000 is probably the largest benefit you will find as an Anesthesiologist. However, by including the Future Increase Option, you can guarantee your ability to increase your coverage to $15,000 after residency.

Hope this helps 🙂

 

[Sergio99]

Hello,

Ideally, you should get disability and life insurance as early as you can. While you are young and healthy you can get very good deals. As age creeps up on you, the premiums get higher and the benefits lower. Also you should think prospectively and provide for yourself enough to sustain a good standard of living.

The catch is that while you are making a beginner's income, it will be hard to buy much insurance, because insurance companies will object to your buying a policy for more than you earn now. However, as your income increases, your age will also increase, and additional insurance will be more expensive to buy, unless you have a policy rider that allows for increases in value at the same price.

Another catch is that you may buy something decent now, but as inflation increases, your disability insurance becomes less than adequate, and then again, buying more insurance will be more expensive, because you will be older.

If you buy enough insurance, at the beginning it will look like excessive, but as time goes by, you will be happy you did.

Another thing is that, while you are young, it makes sense to buy some "whole life" insurance, even if it is a small amount, because it will increase in value on its own over the years. The agents will try to convince you to buy other kinds, such as "universal life" or whatever their product is called, because "whole life" is not as profitable for the insurance company.

Greetings.