Disability Insurance

[laurachon]

Hi. I am intereted in purchasing disability insurance in the state of California to "lock in a rate." I was wondering if anyone had any advice on this or any experience they'd like to share. Thanks

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[NotAProgDirector]

I don't think this is going to work the way you want it to. You can only buy disability insurance for you current salary, not for some potential future salary. From your other posts I take it that you are a student, or perhaps a new resident? Insuring your resident salary can be done, but would it really be helpful? I expect that there may be disability policies where you can "renegotiate" the payments based upon your new salary, but that might defeat the purpose of locking in a rate. I guess the benefit might be that should you develop some catastrophic illness between now and finishing your residency / fellowship that you'd be able to continue your policy (where you would be unable to obtain a new policy), and even if the rate is obscene you might be willing to pay it (or perhaps there would be some cap on the maximal rate increase).

Anyway, it should be clear by now that I really don't know what I'm talking about. We'll see what others say.

 

[Smurfette]

As a resident you can get disability insurance with a "future increase option". This would allow you to increase your monthly income benefit once your salary goes up (i.e. you become an attending). However, when you use your FIO, your monthly payments will go up (these are not locked in).

Now, the younger and healthier you are when you get your policy, the cheaper the policy. That's the advantage to getting it sooner---they can't up your payments based on any new medical problems diagnosed after the policy starts. If you get the FIO, you do not need to submit new medical info or go through the physical and labwork again to up your policy benefits; the monthly payments go up based only on your new monthly benefit value and not your age or health. Other than that, you may want to look into whether your GME office offers a disability insurance option (mine did) as the policies are often cheaper this way. Most physician positions offer some type of disability insurance as well, so this is a possibility for coverage in the future for you as well.

If you get a policy as a resident, you should look for a portable policy (will stay with you if you leave your current job, so long as you continue to make payments) as well as one that is specialty specific (i.e. if you are a surgeon and lose your index finger, you may not be able to operate, but you could technically practice medicine. The specialty specific policies will pay you disability payments if you cannot be a surgeon or whatever your exact specialty is; other policy types will pay you disability payments if you cannot practice medicine).

I am simplifying things a bit here. The nuances of disability policies are complicated and you should talk to an agent who deals with physician policies. Keep in mind that agents get a commission on each policy they set up; they also have a financial interest in YOUR policy, for the lifetime of the policy. Hope this helps.

 

[MR Insurance]

Hi. I am intereted in purchasing disability insurance in the state of California to "lock in a rate." I was wondering if anyone had any advice on this or any experience they'd like to share. Thanks

In reference to the amount of coverage - residents can qualify for Special Limits Programs that are offered by most major carriers, which allow you to obtain specific benefit amounts REGARDLESS of your current income. Most carriers offer $4,000 /month of benefit during years 1 and 2, and $5,000 monthly benefit for years 3 and 4 of residency. For graduating residents and first year attending the benefit can range from $6,000 - $7,500, depending on your specialty, but regardless of the current income.

As mentioned, the Future Increase Option is also a great way of “locking” in coverage. However this rider does not lock in the rate, rather it locks in your insurability. It secures that you can increase your benefit in the future without additional medical screening.

 

[DrDISpecialist]

In reference to the amount of coverage - residents can qualify for Special Limits Programs that are offered by most major carriers, which allow you to obtain specific benefit amounts REGARDLESS of your current income. Most carriers offer $4,000 /month of benefit during years 1 and 2, and $5,000 monthly benefit for years 3 and 4 of residency. For graduating residents and first year attending the benefit can range from $6,000 - $7,500, depending on your specialty, but regardless of the current income.

As mentioned, the Future Increase Option is also a great way of “locking” in coverage. However this rider does not lock in the rate, rather it locks in your insurability. It secures that you can increase your benefit in the future without additional medical screening.

One of the challenges in California is the availability of coverage in that state. Typically only a select few carriers even offer True Own Occupation coverage. Standard and Guardian are the only two that offer True own occ and Principal will offer a solid Transitional Occ.

Rates are usually much higher in the state of California as well compared to the rest of the country because of the state benefits that are offered. If you intend to leave the state and practice somewhere else, it might be a good idea to pursue new coverage after your residency. It's still a good idea to get covered while you're in residency to protect you "insurability" but even with resident discounts, the rates will likely be higher (depending on your specialty).

 

[MR Insurance]

One of the challenges in California is the availability of coverage in that state. Typically only a select few carriers even offer True Own Occupation coverage. Standard and Guardian are the only two that offer True own occ and Principal will offer a solid Transitional Occ.

Rates are usually much higher in the state of California as well compared to the rest of the country because of the state benefits that are offered. If you intend to leave the state and practice somewhere else, it might be a good idea to pursue new coverage after your residency. It's still a good idea to get covered while you're in residency to protect you "insurability" but even with resident discounts, the rates will likely be higher (depending on your specialty).

MetLife will also offer True Own Occ in CA.

 

[caffeinegirl]

I had disability insurance as a resident and fellow. Once I went into practice, I bought my own DI through http://www.doctordisability.com/
Highly recommended! They will create charts with plan comparisons and you can choose whichever you want. Very smooth process!

 

[DrDISpecialist]

I had disability insurance as a resident and fellow. Once I went into practice, I bought my own DI through http://www.doctordisability.com/
Highly recommended! They will create charts with plan comparisons and you can choose whichever you want. Very smooth process!

There are a lot of good websites out there that can provide a lot of useful information for you.

This forum is a great place to get some real answers to your questions or concerns so continue asking questions of your colleagues and peers. Regardless of who you choose to work with, just make sure you get all your options and you enjoy the person who helps you. Ultimately they will be the person you need to count on when a disability happens.

 

[DrDISpecialist]

MetLife will also offer True Own Occ in CA.

Met's standard definition is "your regular occupation" which states you must not be gainfully employed but classes 4A-6A are protected via an endorsement in the contract. I'm only skeptical because it doesn't specifically state in the contract that they can work in another capacity, the "Usual Occupation" definition replaces the "Your Regular Occupation" definition and it is much more broad leaving room for interpretation which is never good if left up to the insurance carrier.

 

[Keg]

Not my site, but I've found it helpful; here's a link to a physician finance blog limited to the entries regarding disability insurance:

http://whitecoatinvestor.com/?s=disability+insurance

 

[MR Insurance]

Met's standard definition is "your regular occupation" which states you must not be gainfully employed but classes 4A-6A are protected via an endorsement in the contract. I'm only skeptical because it doesn't specifically state in the contract that they can work in another capacity, the "Usual Occupation" definition replaces the "Your Regular Occupation" definition and it is much more broad leaving room for interpretation which is never good if left up to the insurance carrier.

Read it again. There is no mention of "not being gainfully employed".
I'm not interested in debating this, and I don't think anyone here will benefit from reading about the specifics of MetLife definition of disability. The bottom line is that for most physicians in CA, MetLife will be true own-occ, however funky the exact wording might be. Met might not be the most favorable carrier anyway, which makes this even more pointless.

Additionally, throwing out names like "your regular occupation" or "your usual occupation" will only add to the existing confusion on this issue.

To be helpful you need to provide accurate and concise statements that simplify this stuff.

 

[DrDISpecialist]

Read it again. There is no mention of "not being gainfully employed".
I'm not interested in debating this, and I don't think anyone here will benefit from reading about the specifics of MetLife definition of disability. The bottom line is that for most physicians in CA, MetLife will be true own-occ, however funky the exact wording might be. Met might not be the most favorable carrier anyway, which makes this even more pointless.

Additionally, throwing out names like "your regular occupation" or "your usual occupation" will only add to the existing confusion on this issue.

To be helpful you need to provide accurate and concise statements that simplify this stuff.

You're correct in that MetLife won't be the most favorable in most cases, so I agree there is no need for a debate.

The only reason I mention the definition is because if your "usual" occupation is a physician, that could mean if someone can't do surgery but they can still do family practice or the like, then there is a risk of not being covered by that definition because they are still a physician. Though it may be a small risk that someone is willing to accept, it's a risk that they should be aware of so they at least know their options. Simply put, there is a risk with that product that you won't see with the others in CA. If the intention of this forum is to educate then I think something like that might be worth knowing.

I've never known a doctor to exclude any risks from a patient if one existed regardless of how small or unlikely.

I appreciate your input to my comment though. I might not have been as clear as I should have so thank you for bring it to my attention. Keep up the great work and try to keep comments as constructive as possible.

 

[sia_simba]

I had metlife but cancelled my policy and signed up with guardian instead. Got preferred rating. Did my research before and guardian offered me better options with majority of the riders.

Depends on which specialty. A big deal is on the own occupation. In my opinion, if you are doing IM, FP, Peds, etc. any fields which don't usually involve any part of your limbs, I personally would not recommend getting it.

If you are in a surgical specialty, I would recommend.

Future increase option will allow you to increase your max disability based on your salary. But for someone to collect a full $16,500 you would need to be making close to $400k a year.

I am ob/gyn. If i get injured for whatever reason and I can't operate anymore, I can still see office patients and get the disability on top of that.

Too tired to go into details but that is just an example. Please no arguments or dispute unless you have Disability insurance occupation class 3M (surgical)

 

[surftheiop]

I don't think this is going to work the way you want it to. You can only buy disability insurance for you current salary, not for some potential future salary. From your other posts I take it that you are a student, or perhaps a new resident? Insuring your resident salary can be done, but would it really be helpful? I expect that there may be disability policies where you can "renegotiate" the payments based upon your new salary, but that might defeat the purpose of locking in a rate. I guess the benefit might be that should you develop some catastrophic illness between now and finishing your residency / fellowship that you'd be able to continue your policy (where you would be unable to obtain a new policy), and even if the rate is obscene you might be willing to pay it (or perhaps there would be some cap on the maximal rate increase).

Anyway, it should be clear by now that I really don't know what I'm talking about. We'll see what others say.

Our med school makes us buy disability insurance as students, I wonder what it would get us if something happened? (The premium is like $150 a year for reference)

Maybe it just refunds tuition if we get disabled?

 

[sia_simba]

Your med school is ripping you off if they make you buy disability insurance.

 

[MR Insurance]

Your med school is ripping you off if they make you buy disability insurance.

Disability insurance provides income replacement if you cannot work because of an injury or illness. I highly doubt it will just refund your tuition.

It does sound like a rip off, but if it is really good coverage at $150/year, that's a nice deal. Post some details about it if you want an opinion.

Most schools provide it for their students and sometimes even for residents and fellows.

 

[DrDISpecialist]

Our med school makes us buy disability insurance as students, I wonder what it would get us if something happened? (The premium is like $150 a year for reference)

Maybe it just refunds tuition if we get disabled?

Usually student policies are age-based premiums which means you'll pay less today but a lot more later in life. Some might have student loan pay off provisions but that's only if you are totally disabled from any job. Depending on what your school is making you purchase it might offer some decent protection but typically it is meant to be a cheap and affordable policy to get you SOMETHING while in school. $150 seems a little expensive for a student but more information would be needed to offer an opinion.

 

[fab4fan]

I had metlife but cancelled my policy and signed up with guardian instead. Got preferred rating. Did my research before and guardian offered me better options with majority of the riders.

Depends on which specialty. A big deal is on the own occupation. In my opinion, if you are doing IM, FP, Peds, etc. any fields which don't usually involve any part of your limbs, I personally would not recommend getting it.

If you are in a surgical specialty, I would recommend.

Future increase option will allow you to increase your max disability based on your salary. But for someone to collect a full $16,500 you would need to be making close to $400k a year.

I am ob/gyn. If i get injured for whatever reason and I can't operate anymore, I can still see office patients and get the disability on top of that.

Too tired to go into details but that is just an example. Please no arguments or dispute unless you have Disability insurance occupation class 3M (surgical)

There are other things that can happen to you that can make it next to impossible to work. If you get CA, the chemo regimen can leave you too exhausted to work. It can cause severe neuropathy which makes tying your shoes a feat, let alone doing direct patient care. You can wind up severely neutropenic and unable to see patients. The possibilities are endless. (Like I need to tell you guys what chemo can do to you; I'm just giving some examples of what I'm dealing with.)

I got it, and wouldn't you know, several months later I was dx. with CA. The disability insurance I purchased helped take a huge weight off my shoulders when it came to finances.

You just never know what can happen to you. Better to be safe than sorry.

 

[TrustMe]

Any one heard of or know about a "transitional occupation" option versus an "own occupation option". I am in the process of getting quotes and the broker recommended this option instead of "own occupation".

Also, anyone know much about disability insurance through Principal. Most people talk about Guardian and MetLife but Principal is a company this guy recommended as well (and he is actually under a MetLife umbrella).

 

[MR Insurance]

Any one heard of or know about a "transitional occupation" option versus an "own occupation option". I am in the process of getting quotes and the broker recommended this option instead of "own occupation".

Also, anyone know much about disability insurance through Principal. Most people talk about Guardian and MetLife but Principal is a company this guy recommended as well (and he is actually under a MetLife umbrella).

Simply put, if it is not a True Own-Occupation definition of total disability, then you are giving something up. The recommendation was probably made as a means of reducing the cost for you. Unfortunately, many agents get caught up in trying to provide the least costly policy, rather than the best policy.

Transitional own-occupation will pay benefits if you are unable to perform the material and substantial duties of your occupation but are working in a different occupation. The benefits payable will simply be reduced by any amount of income you are earning in your new occupation. This does not include medical specialty wording.

The broker likely recommended this because it avoids the restriction on benefits for mental/nervous conditions. If you were to select the real Own-Occupation definition with Principal, they will limit your benefits for mental/nervous related claims to 24-months.
**Some specialties will be limited regardless.

Post your medical specialty - perhaps I can give some basic insight. For starters though, make sure Guardian is in the comparison, and ask him to revise the Principal quote to illustrate Own-Occupation. You can't make an educated decision without knowing your options.

 

[TrustMe]

Simply put, if it is not a True Own-Occupation definition of total disability, then you are giving something up. The recommendation was probably made as a means of reducing the cost for you. Unfortunately, many agents get caught up in trying to provide the least costly policy, rather than the best policy.

Transitional own-occupation will pay benefits if you are unable to perform the material and substantial duties of your occupation but are working in a different occupation. The benefits payable will simply be reduced by any amount of income you are earning in your new occupation. This does not include medical specialty wording.

The broker likely recommended this because it avoids the restriction on benefits for mental/nervous conditions. If you were to select the real Own-Occupation definition with Principal, they will limit your benefits for mental/nervous related claims to 24-months.
**Some specialties will be limited regardless.

Post your medical specialty - perhaps I can give some basic insight. For starters though, make sure Guardian is in the comparison, and ask him to revise the Principal quote to illustrate Own-Occupation. You can't make an educated decision without knowing your options.

I am an anesthesiology resident. He got a true own-occ quote from Principal but it did limit the mental/nervous disability to 24 months. The transitional occ quote from Principal did not limit the mental/nervous claim length. My understanding is that Guardian limits the mental/nervous claim to 24 months as well (I have several friends that went that route). He also got me a quote from MetLife with true own-occ and NO limitation on the mental/nervous claim length. I nor my family has any history of alcohol/drug dependence or mental or nervous problems; however, I have seen anesthesiologists that have had otherwise healthy patients die in the OR unexpectedly and they were affected for the rest of their career. For this reason, I do not want to limit the mental/nervous option. I don't anticipate that, but I don't know how I would react if that were me. The MetLife quote was the same $$ at baseline as the Principal quote, but Principal is offering a 20% discount right now that is good for the life of the policy (age 65), this is why he recommended going with the transitional occ. through Principal. Will the transitional occ. policy still pay out in full if I do not go back to work, or is it just to cover the difference if I am employed in another field/career and will thus force me to return to work before it pays out a claim?

 

[MR Insurance]

I am an anesthesiology resident. He got a true own-occ quote from Principal but it did limit the mental/nervous disability to 24 months. The transitional occ quote from Principal did not limit the mental/nervous claim length. My understanding is that Guardian limits the mental/nervous claim to 24 months as well (I have several friends that went that route). He also got me a quote from MetLife with true own-occ and NO limitation on the mental/nervous claim length. I nor my family has any history of alcohol/drug dependence or mental or nervous problems; however, I have seen anesthesiologists that have had otherwise healthy patients die in the OR unexpectedly and they were affected for the rest of their career. For this reason, I do not want to limit the mental/nervous option. I don't anticipate that, but I don't know how I would react if that were me. The MetLife quote was the same $$ at baseline as the Principal quote, but Principal is offering a 20% discount right now that is good for the life of the policy (age 65), this is why he recommended going with the transitional occ. through Principal. Will the transitional occ. policy still pay out in full if I do not go back to work, or is it just to cover the difference if I am employed in another field/career and will thus force me to return to work before it pays out a claim?

No, the transitional own-occ will not force you to go back to work. This is not determined by whether you go back to work or not though - instead it is whether you are physically/mentally capable of going back to work or not. I just want to be sure this is clear - these policies are specific to your ability to perform the material duties of your occupation as an anesthesiologist, regardless of whether you "decide" to do them or not.

The 20% discount is helpful, so it definitely makes it worth considering more carefully. Has the advisor you are working with checked for discounts with MetLife - they have discounts through a number of training programs as well.

Something else to consider.. Mental/nervous benefits are important, but true own-occ is more favorable right? So why not split the coverage down the middle? Do half of the policy using transitional own-occ and unlimited benefits for mental/nervous; and the other half using true own-occ. For true own-occ, Guardian is the preferred company since it also includes medical specialty language in the definition, amongst other added benefits, and they may have a discount too. Regardless of which company you go with though, I would consider going half and half. Could even be half Principal, half MetLife, to avoid giving up mental/nervous benefits at all.

True Own-Occupation with medical specialty wording is the most favorable when it comes to collecting though, that's the bottom line.

I know I kept this a bit ambiguous, but should hopefully provide some objectivity.

 

[TrustMe]

The 20% discount is helpful, so it definitely makes it worth considering more carefully. Has the advisor you are working with checked for discounts with MetLife - they have discounts through a number of training programs as well.

Something else to consider.. Mental/nervous benefits are important, but true own-occ is more favorable right? So why not split the coverage down the middle? Do half of the policy using transitional own-occ and unlimited benefits for mental/nervous; and the other half using true own-occ. For true own-occ, Guardian is the preferred company since it also includes medical specialty language in the definition, amongst other added benefits, and they may have a discount too. Regardless of which company you go with though, I would consider going half and half. Could even be half Principal, half MetLife, to avoid giving up mental/nervous benefits at all.

.

Why is Guardian so much better? I have been researching that and can't figure out what exactly is different about them that makes their policies that much better/different. I figure you know you have been dealing with this much longer than I have.

No discount through MetLife at my current location. Unfortunately.

 

[MR Insurance]

Why is Guardian so much better? I have been researching that and can't figure out what exactly is different about them that makes their policies that much better/different. I figure you know you have been dealing with this much longer than I have.

No discount through MetLife at my current location. Unfortunately.

First of all, there are arguments for every-which direction. Just in speaking with different advisors you will find different opinions.
For Anesthesiologists specifically there may not be as many arguments for Guardian, but for many specialties however, there are. You can make the judgment of which ones are most important.

- Guardian offers the true own-occupation definition without mental/nervous limitations, for most specialties.
- Guardian includes medical specialty wording in their definition. Although some may argue this is innately provided through an Own-Occupation definition, I would still rather have it, than not have it. It's just one less roadblock between you getting benefits.
- Residual disability with Guardian is more favorable. It requires a 15% loss of income and pays dollar-for-dollar on losses in the first 12 months, only switching to a proportionate benefit after 12 months. Principal requires 20% loss of income and a short list of other things, and will pay proportionately to your loss.
- Future Increase Options with Guardian are more flexible than Principal.
- Guardian offers a guaranteed 3% compounded rate if increase, while Principal is tied to CPI (I believe). Upon recovery and return to work, Guardian's benefit will remain at the COLA adjusted benefit at no cost.
- Presumptive disabilities (not as likely) do not need to be irrecoverable with Guardian.
- Guardian waives your premiums for the first 6 months following recovery.
- Guardian has a 5-year waiver of premium for claims that have been paid beyond 6 months. So for a reoccurring condition, multiple lapses from work may be paid without having to satisfy new elimination periods.
(I rushed through this – everything should be accurate, but I apologize if I was off on anything)

No one ever assumes that they will become disabled right? I own disability insurance and hope to God that I never have to use it. That said, if I ever had to use it, I want the claims process to be as simple as possible. So the goal should be to purchase the policy that you believe will pay in the greatest number of circumstances, and that will pay the largest benefit in each circumstance. In a lot of cases, Guardian offers exactly that. In others, it may not. That's the beauty of having a number of very competitive policies out there right now – you have your choice.

Pricing should never be the first thing you look at with disability insurance, but once you've compared the policies and develop an opinion, the pricing will likely make your final decision for you. You seem to feel very comfortable with Principal, so if the price is right, that's what you should do. You've clearly stated that mental/nervous benefits are important to you (as they should be). Considering both MetLife and Principal can avoid the limitations, it only makes sense that you stick with them two.

Hope this helps.

 

[TrustMe]

Thank you for your responses. They have been very helpful in further assessing my needs and the options that are available. True own-occupation seems to be the way to go. I have several friends that are currently with Guardian and are not concerned about mental/nervous claims. It is my understanding that for anesthesiologists Guardian only offers 24 months of coverage for mental/nervous claims. I don't mean to keep coming back to that but that is the most common claim (according to the broker I spoke with as well as others whom are working through other firms) and I have seen the negative impact that this has unexpectedly had on others so for me it is am important consideration. After typing that out it appears that I need to go with MetLife as they have no limitation on that particular claim and also offer true own-occupation policies whereas Principal only offers no limitation with transitional occupation and Guardian only offers 24 months of coverage.

Thanks again for your help.

 

[MR Insurance]

Thank you for your responses. They have been very helpful in further assessing my needs and the options that are available. True own-occupation seems to be the way to go. I have several friends that are currently with Guardian and are not concerned about mental/nervous claims. It is my understanding that for anesthesiologists Guardian only offers 24 months of coverage for mental/nervous claims. I don't mean to keep coming back to that but that is the most common claim (according to the broker I spoke with as well as others whom are working through other firms) and I have seen the negative impact that this has unexpectedly had on others so for me it is am important consideration. After typing that out it appears that I need to go with MetLife as they have no limitation on that particular claim and also offer true own-occupation policies whereas Principal only offers no limitation with transitional occupation and Guardian only offers 24 months of coverage.

Thanks again for your help.

Glad I could help.

The mental/nervous limitation with Guardian is 24-months, yes. Unless you are hospitalized, in which case it may continue beyond.

I have a slight concern with your broker stating that mental/emotional conditions are the leading cause of disability claims (or perhaps I misinterpreted you). Click this link http://www.disabilitycanhappen.org/research/CDA_LTD_Claims_Survey_2010.asp and scroll down half way – there is a chart listing the most common contributors to disability and mental disorder, although high is not the leading contributor. This statistic may be higher for Anesthesiologists specifically, but do not disregard the threat that a musculoskeletal issue, cardio issue or cancer can pose on your ability to work.
It would be great to know where that statistic came from - if there is such statistical information.

Don’t get me wrong though, I still think it’s important to avoid the limitations, when possible. I’m assuming that you are not in California, is that right? In CA, the limitations would be there with MetLife also.

 

[MR Insurance]

http://forums.studentdoctor.net/showthread.php?t=857609
It's not just mental/emotional disorders...

 

[DrDISpecialist]

Glad I could help.

The mental/nervous limitation with Guardian is 24-months, yes. Unless you are hospitalized, in which case it may continue beyond.

I have a slight concern with your broker stating that mental/emotional conditions are the leading cause of disability claims (or perhaps I misinterpreted you). Click this link http://www.disabilitycanhappen.org/research/CDA_LTD_Claims_Survey_2010.asp and scroll down half way – there is a chart listing the most common contributors to disability and mental disorder, although high is not the leading contributor. This statistic may be higher for Anesthesiologists specifically, but do not disregard the threat that a musculoskeletal issue, cardio issue or cancer can pose on your ability to work.
It would be great to know where that statistic came from - if there is such statistical information.

Don’t get me wrong though, I still think it’s important to avoid the limitations, when possible. I’m assuming that you are not in California, is that right? In CA, the limitations would be there with MetLife also.

Great point Mr Insurance. Claims can vary widely but the most common are going to be musculoskeletal, cancer, cardiovascular issues, etc.

I read a research study done by one of the carriers recently (take it with a grain of salt because every carrier will be different) regarding claims on physicians. It stated that for Females, pregnancy was the number one claim. For males, Mental/nervous was the number one claim. Both had Cancer listed as their number 2. Females #3 was Mental/nervous and Males was back issues.

So to prove Mr Insurance's point, it can be any number of things but if the mental/nervous limitation is a concern for you then you should make sure it is included in your policy.