How much money have you spent/received on disability/life insurance?

[Mikkel]

I'm trying to figure out how much money the insurance companies make off of doctors.

Personally, I've never heard of docs ever having to use it over their entire careers.

$2000/month is what I hear people pay for same specialty coverage, kicks in at 6 months of disability, no maximums.

$2000/month, over 30 years = $720,000.

Invested at 6%, it would be worth $2,000,000 after 30 years.

At what age do people stop paying their premiums?


As a correlary, do people still buy life insurance? What percentage of young docs ever have to use it? 0.001%?

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[BLADEMDA]

I recommend life and disability insurance. But, buy the amount you need and no more.I used to have a lot of insurance but now have weaned my disability insurance to what I need which is $250 per month. Most of my life insurance was term which has expired.

So, consider 2-3 life insurance policies which will expire at say 15,20 and then 30 years. Disability can also be 2 policies so you can let one expire in your 50’s. The idea behind insurance is to take care of your loved ones in case of early demise.

 

[DM27]

I am in the early stages of my career and I pay ~$440 for a 10k a month benefit disability and ~$60 a month for a 750k benefit life insurance.

 

[thinkorswim]

I’m not sure where you get $2,000 per month from but that seems awfully high for a disability insurance premium.

I also think if you have any family or dependents, you’d be a fool not to have life insurance. It’s cheap.

For reference, I am early in my career. I pay about $500 per month for $10k disability benefit, and $110 per month for a $3 million, 20 year term life insurance policy.

 

[Mikkel]

The idea behind insurance is to take care of your loved ones in case of early demise.

I don't understand this part, doesn't the money saved allow you to self-insure?

 

[Mikkel]

I’m not sure where you get $2,000 per month from but that seems awfully high for a disability insurance premium.

I also think if you have any family or dependents, you’d be a fool not to have life insurance. It’s cheap.

For reference, I am early in my career. I pay about $500 per month for $10k disability benefit, and $110 per month for a $3 million, 20 year term life insurance policy.

Yeah, I thought it was really high too, but they all got $30-40k/month coverage "to maintain lifestyle without cutting back".

 

[thinkorswim]

I don't understand this part, doesn't the money saved allow you to self-insure?

That’s the eventual goal, but very few have a few million saved early in their careers. Hence why everyone recommends term life insurance, so that when the policy expires, your savings and retirement accounts are effectively your self-insurance.

Yeah, I thought it was really high too, but they all got $30-40k/month coverage "to maintain lifestyle without cutting back".

That’s crazy and sounds like their own problem. My disability coverage is enough to cover our monthly expenses, so that if I’m not working we can still live a normal life. We might need to cut back on nice vacations and make other sacrifices here or there, but as a whole not much would change.

 

[DM27]

I am not the most well versed on disability insurance. However, when I was increasing my rates I remember one calculation that had to be done was it could not exceed a certain % of your current income (even if you were using multiple policies), so I am assuming this is either something different, or whoever has coverage to this degree is making some serious bank.

 

[Mikkel]

if I’m not working we can still live a normal life. We might need to cut back on nice vacations and make other sacrifices here or there, but as a whole not much would change.

This doesn't make sense to me. If you're so disabled that you can't work anymore, how will you be able to live a normal life?

 

[DirtDocMD]

$1800 PER YEAR, here, for $180k a year disability(under age 50.Unless you’re over 60, I would think $500 a month would get you pretty decent disability AND life coverage.

 

[BLADEMDA]

I encourage 2 policies or talk with you agent about being able to reduce your disability policy costs as you get older and can self insure.

For example, age 32 you purchase 2 term life policies. One is a fixed 20 year term while the other is a 30 year term. Perhaps, you want $1 mil and $500k? Or 1.5 mil and another $1 mil? The point is that policy 1 will expire in 20 years while policy 2 stays in place for an additional 10 years. You want to buy term when you are young and healthy.

Disability could be similar. Buy 2 policies. Maybe the first one is for $150k of coverage while the second is for an additional $100-$150k. At some point like age 50-55 you should only need 1 of those policies.

 

[okayplayer]

$2,600/yr for a 3mill 30yr term life insurance policy.

$4,000/yr for about $10,500/mo in specialty specific disability insurance.

All from highly rated companies.

I would probably have more DI, but my wife is also a physician. On the other hand, if you don’t have a spouse or kids, you probably need less DI and potentially zero life insurance.

Yes, it is painful to pay the premiums. It is cheaper to pay the premiums once a year than monthly in my experience. Once I’m FI I’ll stop paying them and let the policies lapse, but that is probably 10 years away.

 

[ProRealDoc]

I pay $286 a month for an $8,500/month benefit. premium is paid with after-tax dollars. My 30-yr term life insurance costs me $136/month for a 1.5 million payout.

 

[BLADEMDA]

$2,600/yr for a 3mill 30yr term life insurance policy.

$4,000/yr for about $10,500/mo in specialty specific disability insurance.

All from highly rated companies.

Yes, it is painful to pay the premiums. It is cheaper to pay the premiums once a year than monthly in my experience. Once I’m FI I’ll stop paying them and let the policies lapse, but that is probably 10 years away.

A better way to structure that life insurance would be with 2 policies. Policy 1 would expire at 20 years while policy 2 would last 30 years. This way you have all the life insurance you will ever need. The second policy could be for $500k or so which is fairly inexpensive if purchased at age 32.

 

[okayplayer]

A better way to structure that life insurance would be with 2 policies. Policy 1 would expire at 20 years while policy 2 would last 30 years. This way you have all the life insurance you will ever need. The second policy could be for $500k or so which is fairly inexpensive if purchased at age 32.

Yeah, I think you are spot on. Blade’s got the right idea here @Mikkel.

 

[VA Hopeful Dr]

A better way to structure that life insurance would be with 2 policies. Policy 1 would expire at 20 years while policy 2 would last 30 years. This way you have all the life insurance you will ever need. The second policy could be for $500k or so which is fairly inexpensive if purchased at age 32.

That would work, but if you get a policy when young life insurance is so cheap its not a huge difference.

For example, I pay $26/month for a 30 year 1 million dollar policy. Sure, I could pay half that for a 30 year 500k policy and then probably a quarter of that for a 20 year 500k policy that would suffice. But is the extra $120/year or so I would save really worth having multiple policies?

 

[NICMAN]

I have three policies. Disability x2 of $20k/month pre-tax for a premium of about $8,500/year (paid for by my company but any distributions would be taxed) and a 3 million term life for $1000/year.

Once we have a couple million in savings we are going to drop the life insurance and one of the disability insurance plans.

 

[BLADEMDA]

Don’t be sold more insurance than you need. Anyone who finished Medical School and a Residency should be able to figure out his/her needs. The idea is to protect your family and loved ones with the insurance policy.

I own other types of life insurance policies. I don’t recommend them. But, if you are truly interested in whole or variable life then look for low commission products like TIA-Cref. Again, I recommend a back door Roth over a variable or whole life insurance product.

 

[BLADEMDA]

That would work, but if you get a policy when young life insurance is so cheap its not a huge difference.

For example, I pay $26/month for a 30 year 1 million dollar policy. Sure, I could pay half that for a 30 year 500k policy and then probably a quarter of that for a 20 year 500k policy that would suffice. But is the extra $120/year or so I would save really worth having multiple policies?

That’s up to you. I hate paying money for nothing. Term Life is a product I will (likely)never use

 

[NICMAN]

I also have kids and a wife who put me through school who wants to insure for those tough years of school that she stuck with me and protect the financial future we have built together.

 

[BLADEMDA]

I also have kids and a wife who put me through school who wants to insure for those tough years of school that she stuck with me and protect the financial future we have built together.

That’s the point of life insurance. I recommend term life typically around $1.5-$2 mil but some want $3 mil. The time to buy it is when you are young (30-35). Typically, 20 years is enough time to self insure to some degree. I like 30 year policies in case you need a little longer to truly self insure. When I was young I had about $3.5 million in life insurance policies. These days I have $750k of life insurance which is more than adequate.

 

[MD Financial Services Scott]

I'm trying to figure out how much money the insurance companies make off of doctors.

Personally, I've never heard of docs ever having to use it over their entire careers.

$2000/month is what I hear people pay for same specialty coverage, kicks in at 6 months of disability, no maximums.

$2000/month, over 30 years = $720,000.

Invested at 6%, it would be worth $2,000,000 after 30 years.

At what age do people stop paying their premiums?


As a correlary, do people still buy life insurance? What percentage of young docs ever have to use it? 0.001%?

Typical premiums for disability insurance when you come out of training are around $20-$25 per month for every $1,000 of benefit. I have been in this business for 26 years and never have we had a client with a $2,000 per month premium. In addition, if one were to buy a combo max here in 2019 the max benefit might be $35k which would take about $1,300,000 of income net of business expenses to qualify for. Most people end up with $10-$15k of coverage at $200-$400 per month, so if your friends are paying $2k per month have them shop that coverage because they can probably reduce it by 50% or more.

 

[Mikkel]

Typical premiums for disability insurance when you come out of training are around $20-$25 per month for every $1,000 of benefit. I have been in this business for 26 years and never have we had a client with a $2,000 per month premium. In addition, if one were to buy a combo max here in 2019 the max benefit might be $35k which would take about $1,300,000 of income net of business expenses to qualify for. Most people end up with $10-$15k of coverage at $200-$400 per month, so if your friends are paying $2k per month have them shop that coverage because they can probably reduce it by 50% or more.

What percentage of your doctor clients go on permanent disability?

 

[BLADEMDA]

Don’t feel bad about being taken advantage by a slick salesperson. I know my policies were more expensive and provided less coverage than many others. That was the era of pre Internet. I recommend you e mail several agents for quotes. Don’t trust anyone in the business of insurance without doing your due diligence. These products are lifelong in many cases and you may have those policies longer than your current spouse

 

[anbuitachi]

i mean im sure each persons risk of disability is different. i pay 125$ a month for a 6000$ coverage. not even sure how useful it is. I think once i save enough to survive, i'll just cancel the plan.

 

[Mikkel]

Don’t feel bad about being taken advantage by a slick salesperson. I know my policies were more expensive and provided less coverage than many others. That was the era of pre Internet. I recommend you e mail several agents for quotes. Don’t trust anyone in the business of insurance without doing your due diligence. These products are lifelong in many cases and you may have those policies longer than your current spouse

That's what I feel like, slick salespeople who take advantage of emotions to sell a product you'll be highly unlikely to use, and peer pressure to convince you to buy as much insurance as possible.

If someone told me to spend $200 every month on lottery tickets, part of me thinks it's a good idea, because there's a small chance that 36,000 lottery tickets purchased over 30 years could pay out millions, but my reasonable self tells me chances are good that I would never win anything.

 

[BLADEMDA]

That's what I feel like, slick salespeople who take advantage of emotions to sell a product you'll be highly unlikely to use, and peer pressure to convince you to buy as much insurance as possible.

If someone told me to spend $200 every month on lottery tickets, part of me thinks it's a good idea, because there's a small chance that 36,000 lottery tickets purchased over 30 years could pay out millions, but my reasonable self tells me chances are good that I would never win anything.

Buy the amount you need ....no more. Contact at lease 2 agents (I prefer 3) for disability quotes. Make sure you are reading the fine print about the policy and the company is highly rated. A good agent should explain all those things to you.

 

[Mikkel]

i mean im sure each persons risk of disability is different. i pay 125$ a month for a 6000$ coverage. not even sure how useful it is. I think once i save enough to survive, i'll just cancel the plan.

I eat well, I exercise, I drive safely, I have no family disease risk factors, I live in a safe neighborhood, I operate firearms safely, I perform my risky hobbies as safely as possible.

I don't foresee any major risk that would damage me so significantly that I wouldn't be able to practice anesthesia anymore.

I also have never personally heard of any anesthesiologists who have gotten so disabled that they went on permanent disability.

If the annual chance of permanent disability is 0.002%, even $100/month feels like a waste.

 

[anbuitachi]

I eat well, I exercise, I drive safely, I have no family disease risk factors, I live in a safe neighborhood, I operate firearms safely, I perform my risky hobbies as safely as possible.

I don't foresee any major risk that would damage me so significantly that I wouldn't be able to practice anesthesia anymore.

I also have never personally heard of any anesthesiologists who have gotten so disabled that they went on permanent disability.

If the annual chance of permanent disability is 0.002%, even $100/month feels like a waste.

Most other people in other jobs dont separate job specific disability insurance. i thinkk the only reason its recommended for medical professionals is b/c we spend a ton of time training, have no savings, tons of debt, so it's in a way a safety net in case something does happen. i dont think we are at any higher risk of getting disabled than eg investment banker

 

[Mikkel]

Most other people in other jobs dont separate job specific disability insurance. i thinkk the only reason its recommended for medical professionals is b/c we spend a ton of time training, have no savings, tons of debt, so it's in a way a safety net in case something does happen. i dont think we are at any higher risk of getting disabled than eg investment banker

I agree with that.

For anesthesiologists:

Absolute disability

Wheelchair-dependence
Loss of hand fine motor function
Cognitive dysfunction
Aphasia
Double blindness
Complete deafness


Relative disability:

Chronic pain
Partial blindness
Partial deafness
Partial loss of fine motor
"Getting dumber/forgetful with age"
Walking with a limp



What are some accommodations that employers offer to partially disabled anesthesiologists?

No call
Assigned eye cases only
Assigned cases only in supervisory role with other physicians available for backup


There might be a decrease in pay, but even a 50% reduction in pay could still be tolerated.

 

[Mikkel]

The most common reasons for short-term disability claims are:

1. Pregnancies (25%) i currently identify as male, so no worry here
2. Musculoskeletal disorders affecting the back and spine, knees, hips, shoulders, and other parts of the body (20%) i take care of my body
3. Digestive disorders, such as hernias and gastritis (7.8%) no issues here
4. Mental health issues including depression and anxiety (7.7%) no issues here, and medications can help
5. Injuries such as fractures, sprains, and strains of muscles and ligaments (7.5%) injuries can heal, short term disability can be handled by savings

The most common reasons for long-term disability claims are:

1. Musculoskeletal disorders (29%)
2. Cancer (15%) if I'm going to die soon, long term disability won't pay out much
3. Pregnancy (9.4%) i plan to identify as male for the foreseeable long term
4. Mental health issues including depression and anxiety (9.1%) treated with medication
5. Injuries such as fractures, sprains, and strains of muscles and ligaments (9%) most injuries heal over the short term, and those who do not might be committing insurance fraud

 

[Mikkel]

I hope @MD Financial Services Scott can provide his company's statistics on permanent disability rates for his physician clients.

 

[Mikkel]

Where do your disability insurance premiums go?

insurance fraudsters
insurance company payroll
executive bonuses
company real estate and investments
stock holders

 

[okayplayer]

Where do your disability insurance premiums go?

insurance fraudsters
insurance company payroll
executive bonuses
company real estate and investments
stock holders

Yes. But if you are in the early stages of your career and you want to protect your family in the event something happens to you, I’m not sure what the alternative is? You’re playing Russian roulette if you have multiple small children and a spouse and don’t have DI and life insurance.

We all pay malpractice insurance to protect us against low probability catastrophic events (malpractice carriers also profit from issuing these policies). This is the same thing.

 

[Mikkel]

Yes. But if you are in the early stages of your career and you want to protect your family in the event something happens to you, I’m not sure what the alternative is? You’re playing Russian roulette if you have multiple small children and a spouse and don’t have DI and life insurance.

We all pay malpractice insurance to protect us against low probability catastrophic events (malpractice carriers also profit from issuing these policies). This is the same thing.

Malpractice litigation is the only occupational hazard we have every single day.

It's not like we're working at a construction site under heavy machinery or lifting heavy boxes for a living. Obviously they need disability insurance because that's their occupational hazard.

 

[Mikkel]

You’re playing Russian roulette if you have multiple small children and a spouse and don’t have DI and life insurance.

Russian Roulette is a 16.67% game of chance.

Insurance companies don't reveal their physician permanent disability rates because it would undercut their entire sale.

A 1 in 10,000 chance of involuntary permanent career ending disability (not even taking into account the risks those individuals voluntarily took (smoking, obesity, risky behavior) is extremely rare.

Paying $200 every single month to hedge is like buying $200 worth of lottery tickets every month to win the jackpot, because that windfall would forever improve your family's and descendants well-being.

 

[DM27]

You're making an argument that is to a degree so intuitive it does not have to be made. If the likelihood of disability was so high that disability insurance was needed and used at an appreciable frequency, it would not exist or the premiums would be so high that it would be financially crippling for any individual to have.

The more salient question is for each individual what degree their risk tolerance is for playing the odds (which are in their favor) that they will not be in a position where they are no longer able to work due to a disability and have enough savings to bridge the gap or stay unemployed in medicine indefinitely.

Asking whether disability insurance is worth having because of your degree of using it during your life is totally moot because it would not be a financially viable industry if the use rate was even slightly significant.

My personal reason for having it is simply for the peace of mind that I can still contribute to my family in a meaningful way if I become injured to a degree that I can no longer perform my job. I have it knowing (and hoping) I will never use it.

 

[okayplayer]

Dude, I don’t understand the point of your post. If you don’t want it, don’t buy it.

 

[psychbender]

Used to have $15,000 per month with modified own occupation for about $5600 per year though my old employer. I let it lapse, and went with the company that most in my new group use. Given my reduced income from changing jobs this year, I was only able to get $8,250 per month with true own occupation for $2800 per year. Next year, it'll bump to $10,000 per month for the same cost, and I believe the option to purchase more, depending on how much more I make this year. I probably won't get any more, as $120,000 per year is enough, considering we have no debt.

 

[Mikkel]

Dude, I don’t understand the point of your post.

It's in the thread title.

 

[thinkorswim]

Malpractice litigation is the only occupational hazard we have every single day.

It's not like we're working at a construction site under heavy machinery or lifting heavy boxes for a living. Obviously they need disability insurance because that's their occupational hazard.

Umm, I hope you know disability insurance covers you in the event of accidents or injuries outside of work too. You never know what can happen.

This doesn't make sense to me. If you're so disabled that you can't work anymore, how will you be able to live a normal life?

Is this serious? I meant normal life financially.

You seem to have a great aversion to disability insurance. No one is forcing you to buy the stuff, so if it's a risk you're willing to take then that's your decision. I don't get what you are coming on here and arguing with us about.

 

[Mikkel]

You seem to have a great aversion to disability insurance. No one is forcing you to buy the stuff, so if it's a risk you're willing to take then that's your decision. I don't get what you are coming on here and arguing with us about.

I'm trying to decide whether to buy more coverage than I already have. I have $5k/month now.

 

[thinkorswim]

I'm trying to decide whether to buy more coverage than I already have. I have $5k/month now.

Ok. Well that's something I don't think any of us can help you decide. It would all depend on your monthly expenses, additional income from a spouse or other business, childcare expenses, retirement savings, etc.

Personally, I think having enough to cover at minimum your monthly living expenses (mortgage, bills, and and discretionary) is enough. But I also have a spouse to help for additional income and savings in the event of my disability. Others will have different answers and reasons for their amounts.

 

[nimbus]

I personally know anesthesiologists who went out on disability for lymphoma, Parkinson’s, and chronic back pain with failed back surgery. Oh and macular degeneration as well.

 

[kidthor]

I know of a mid career anesthesiologist who lost an arm mountain climbing, then eventually retrained in psychiatry...

 

[BLADEMDA]

I'm trying to decide whether to buy more coverage than I already have. I have $5k/month now.

I don’t know your situation but that’s low. I have more than double that at this point in my career and I can self insure. I recommend you consider your needs/expenses and I’m thinking $10k per month should still be quite reasonable to purchase for you. The cost for $10k per month should be around $2500 per year (maybe less) depending on the policy.

Once you hit your F U money plus savings/investments then you can always cancel the policy (stop paying on it)

 

[Splenda88]

i mean im sure each persons risk of disability is different. i pay 125$ a month for a 6000$ coverage. not even sure how useful it is. I think once i save enough to survive, i'll just cancel the plan.

Attendinghood life must be great. I am seeing people here with 10k+/month payout in disability insurance... I don't think it is risk having 6k/month payout. Shouldn't people downsize anyway if they become disable? 6k/month is enough money for a family of 4 people to live comfortably almost anywhere in the country except part of the Northeast or the West coast.

After 10 years of being an anesthesiology attending, your networth should be at least a million $ so you won't need these things.

Maybe the numbers I am seeing for anesthesiologist attending are not correct... If you guys are making 400k/year, you should be able to invest/save 75k/year.

 

[MD Financial Services Scott]

What percentage of your doctor clients go on permanent disability?

Not many end up on claim for very long, that is why I am not a fan of COLA, it takes about 12-14 years On claim for that to be a better option than just buying more coverage day one for our clients.

 

[MD Financial Services Scott]

i mean im sure each persons risk of disability is different. i pay 125$ a month for a 6000$ coverage. not even sure how useful it is. I think once i save enough to survive, i'll just cancel the plan.

That is a great rate to product ratio, good job! I don't often see people with a good value ratio but you have one.

 

[Splenda88]

I hope @MD Financial Services Scott can provide his company's statistics on permanent disability rates for his physician clients.

He won't... Disability insurance as you said above is like playing lottery.