Do I Really Need Disability Insurance?

[Pure Anergy]

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Before you knee-jerk respond with, "of course you do, PA, you idiot," hear me out.

I'm single, no kids, no house, no med school debt, no other debt, no one whose financial quality of life would in any way be impacted by my sudden demise, and no future prospects of having any of the above. It seems obvious that getting life insurance would therefore be a total waste, and I'm not planning on getting it.

But disability is a little different, right? I still need to support myself if I get disabled. But thing is, I don't really care about preserving my ability to be paid as an EP. I have more than enough for my own needs living on my residency stipend, and I'd even be ok with working in a different capacity in a different specialty (or even not working as a physician at all). I like EM, but I'm not gaga in love with it where I'd be miserable doing anything else. So it seems to me that what I really need is catastrophic disability insurance in case I'm not able to work at all and need long-term care in a nursing home kind of thing.

What I want to know is, does anyone see any glaring deficits in my logic? Anything I've missed? Thanks in advance.

 

[winkleweizen]

Would u be able to live off 60% of our resident salary? That's what most residency disability programs are. Keep in mind that that 60% is also taxable.

 

[Apollyon]

I'm single, no kids...and no future prospects of having any of the above.

Bummer, dude!

 

[Birdstrike]

Before you knee-jerk respond with, "of course you do, PA, you idiot," hear me out.

I'm single, no kids, no house, no med school debt, no other debt, no one whose financial quality of life would in any way be impacted by my sudden demise, and no future prospects of having any of the above. It seems obvious that getting life insurance would therefore be a total waste, and I'm not planning on getting it.

But disability is a little different, right? I still need to support myself if I get disabled. But thing is, I don't really care about preserving my ability to be paid as an EP. I have more than enough for my own needs living on my residency stipend, and I'd even be ok with working in a different capacity in a different specialty (or even not working as a physician at all). I like EM, but I'm not gaga in love with it where I'd be miserable doing anything else. So it seems to me that what I really need is catastrophic disability insurance in case I'm not able to work at all and need long-term care in a nursing home kind of thing.

What I want to know is, does anyone see any glaring deficits in my logic? Anything I've missed? Thanks in advance.

Get a policy. You worked too hard for too long to end up broke and penniless because one of your drunk former patients broad sides you going 65. You don't have to get a huge policy, but get something. If you get dependents later, then upgrade it. If not, at least you've got some coverage. It's not that expensive. Mine doesn't cover my whole take home, but enough to stave off foreclosure, and catastrophic stuff like that.

 

[Pure Anergy]

Would u be able to live off 60% of our resident salary? That's what most residency disability programs are. Keep in mind that that 60% is also taxable.

Sorry, I should have made clear that I'm talking about as an attending. I graduate in two months.

Bummer, dude!

They don't have gay marriage in this state.

Get a policy. You worked too hard for too long to end up broke and penniless because one of your drunk former patients broad sides you going 65. You don't have to get a huge policy, but get something. If you get dependents later, then upgrade it. If not, at least you've got some coverage. It's not that expensive. Mine doesn't cover my whole take home, but enough to stave off foreclosure, and catastrophic stuff like that.

I'm living on around $50,000 per year as a resident with plenty to spare. So is that a reasonable amount then? Would I even be allowed to buy that? I guess if I did it before I graduate residency then I could, right?

 

[deleted109597]

You're allowed to buy as little disability insurance as you want. You just can't exceed a certain amount, which sucks for the high earners.

You can always move to a state that does recognize your relationship. And just because you aren't married doesn't mean you don't want to provide for them in case of catastrophe as you do in life. There are some rules about who can be a beneficiary, but I bet there are routes.

 

[Old_Mil]

After hearing you out,you might consider just skipping the private disability insurance and going with Social.Security disability should anything happen to you. I would add that this would be advice that applies specifically to your case based on what you've said and not to most graduating physicians who absolutely must have private disability policies.

 

[Pure Anergy]

You're allowed to buy as little disability insurance as you want. You just can't exceed a certain amount, which sucks for the high earners.

Ok, maybe that's what I should consider doing then.

You can always move to a state that does recognize your relationship. And just because you aren't married doesn't mean you don't want to provide for them in case of catastrophe as you do in life. There are some rules about who can be a beneficiary, but I bet there are routes.

I'm not interested in moving to another state, and I'm not a provider for anyone except myself.

After hearing you out,you might consider just skipping the private disability insurance and going with Social.Security disability should anything happen to you. I would add that this would be advice that applies specifically to your case based on what you've said and not to most graduating physicians who absolutely must have private disability policies.

Right, I understand that most physicians need disability insurance (and life insurance too, for that matter). It makes complete sense to me that people with spouses and dependent children need life insurance, and that people with households that require a six figure income to maintain need to protect their cash flow. But for someone with a more alternative lifestyle, it doesn't seem to make sense. None of the presentations on this that I've attended ever seem to pertain to a situation like mine.

Would social security disability really be sufficient as a catastrophic disability plan?

 

[dpmd]

Ok, maybe that's what I should consider doing then.


I'm not interested in moving to another state, and I'm not a provider for anyone except myself.


Right, I understand that most physicians need disability insurance (and life insurance too, for that matter). It makes complete sense to me that people with spouses and dependent children need life insurance, and that people with households that require a six figure income to maintain need to protect their cash flow. But for someone with a more alternative lifestyle, it doesn't seem to make sense. None of the presentations on this that I've attended ever seem to pertain to a situation like mine.

Would social security disability really be sufficient as a catastrophic disability plan?

No. The amount you would get is much less than the 50K you are living off of. I am in a different but similar situation. I do have a spouse, but he would be able to live quite well working in his current career field if I were to die or if I were to become disabled. So essentially all I really need to cover is myself. I do worry about a disability that would require costly care or where it would be better if my spouse could stay home with me, and I don't want him to have to put off retirement if I can't work, so I got a policy that covers our normal living expenses (which aren't much more than in residency) plus retirement contributions. I also got a small life insurance policy to pay off our mortgage just because the bundle was pretty cheap through my specialty organization. Since our current income exceeds expenses by a good amount I expect to have enough net worth to get rid of the policies (and be essentially self insured). You could probably do the same type of thing minus the life insurance (but remember to think about retirement because disability benefits stop at retirement age).

 

[MR Insurance]

I sell disability insurance so my opinion is obviously going to be different, but to help you based on your statements PA, there are a few things you can consider that haven't already been mentioned.
- Depending on your plans for post-training, your new employer may actually provide group disability insurance that covers 60% of your attending salary, which would be sufficient given everything you've mentioned.
- You could just purchase a relatively small policy ($3-4,000 in monthly benefit) to take care of basic expenses but then add a Catastrophic rider to cover the concern you mentioned of becoming catastrophically disabled and needing expensive care. Depending on the state you live in, many insurance companies will offer a Catastrophic disability rider which is used to enhance the policy and pay additional amounts if you become catastrophically disabled. Although the chances of this type of disability occurring may be significantly low, it does seem that it could be a good fit for you. The rider is dirt cheap and could be a great way for you to increase your total coverage against Catastrophic disabilities, without costing you a ton.
- If your concern is the cost, and you truly do live way within your means, you could always go with a company that offers graded premiums. Graded premiums start really low today and increase each year - by the time the cost increases to what a normal level premium would be today, you may be able to self-insure and just drop the coverage.
- Social Security disability is definitely not enough to cover you.

 

[Cerberus]

The premiums aren't even that bad assuming you don't have any significant medical history/smoke/jump off of buildings in your spare time. Mine is about 200$/Mo so 2,400$/yearly. I know of a recent grad who managed to get into an accident shortly after residency and who was out like 8mos. Without disability those probably would have been a hard 8 months.

 

[dpmd]

200 a month is considered not much. What kind of coverage does that get you? Through american college of surgeons I have life and disability (plus an accidental death and dismemberment policy which qualifies me for a discount that actually exceeds the cost of the policy-go figure) for about 800 a year. I am only replacing a portion of my income though and have a 90 day waiting period (because I have enough savings for that.)

 

[Pure Anergy]

- Depending on your plans for post-training, your new employer may actually provide group disability insurance that covers 60% of your attending salary, which would be sufficient given everything you've mentioned.

Good point. It looks like I have the option to get short and/or long term disability insurance. The long term can start after 30 or 90 days and covers 60% like you said. Premium would be like $140/mo for the 30 day and $90/mo for the 90 day. So as long as I had $15,000 on hand, I should be able to go with the 90 day.

- You could just purchase a relatively small policy ($3-4,000 in monthly benefit) to take care of basic expenses but then add a Catastrophic rider to cover the concern you mentioned of becoming catastrophically disabled and needing expensive care. Depending on the state you live in, many insurance companies will offer a Catastrophic disability rider which is used to enhance the policy and pay additional amounts if you become catastrophically disabled. Although the chances of this type of disability occurring may be significantly low, it does seem that it could be a good fit for you. The rider is dirt cheap and could be a great way for you to increase your total coverage against Catastrophic disabilities, without costing you a ton.

Thanks. I'll look into that.

- Social Security disability is definitely not enough to cover you.

I kinda figured it wouldn't be, but thanks for confirming.

Where do you guys keep your money to cover your living expenses to the point that the disability kicks in? Obviously it needs to be somewhere where you could get at it quickly if need be. So savings account? Money market? I kind of hate to leave $15,000 just sitting in a savings account.

 

[dpmd]

I have mine in an online savings acct. If there is a better liquid option I'm all ears.