That Dreaded Disability Insurance Selection

[futuremd16]

Hi all,

I will be starting my intern year this July. I know there are tons of disability insurance threads, but I just kind of wanted to get a poll since most of these threads were talking about definitions/legal aspects of the insurance.

I've spoken with a Northwestern Mutual agent who's definitely trying to sell the policy. I read up on it on WhiteCoatInvestor site and see the flaws of this policy's definition of disability. He did mention that MetLife is no longer providing policies in a few months, so that's out of the selection already.

Another financial advisor recommended Guardian to be the best for ophthalmologists but did say Principal is cheaper if I'm okay with having a 2 year limit on mental/nervous disorders.

A third advisor only recommended Principal.

No one has given me a Mass Mutual quote or even mentioned it. I don't know why?!

Who did you go or are with during residency?

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[MD Financial Services Scott]

My first question for you would be, "if you become disabled from your specialty (being the CPT codes you bill for that create the majority of your income once you are in practice) do you want to be paid 100% of the benefit you bought regardless of future income from any other occupation"? If the answer is "yes, I want 100% of my benefit" then the 7 companies 'today' are Met, Principal, Ameritas, Mass, Standard, Ohio, and Guardian. The answer is 'no' then you can certainly add Northwestern into the mix. Now you are correct in that Met is exiting the Disability business September 1, 2016 and Ohio along with Mass is kind of high cost per dollar of coverage in the physician space so that is why most don't look at them but there are certain circumstances that can make them appealing. Guardian is a great product on the Pro Provider series but the Pro Provider Limited has the same 24 month limitation. Keep in mind most carriers go by ICD-9 codes of 290-319 to determine if the M/N claim would fall under the 24 month M/N limitation but even that is waived if you are hospitalized for those conditions. After 23 years in this business I get a touch jaded in the way these products get positioned because the reality is you don't know if or when you might need something but for someone to tell you that you absolutely do need the M/N benefit is fascinating and you should ask them how many of their physician clients are on or have been on claim for mental nervous issues in excess of 24 months. Personally I would tell you 0 for me. I have had 1 mental nervous claim and that only lasted 7-8 months.....and that is after 23 years working with physicians disability insurance. Again I am not saying it can't happen and does not happen but that is just my experience. My other comment on that is that physicians are simply mentally tough compared to most of the other population, what other group of people can make it through med school, residency, fellowship and into practice, those pressures would crack most people but I have found the common thread for physicians is that they are mentally very tough and figure out how to get through things.
Anyway, that is just my opinion and experiences, hope it helps.

 

[EyeDR_oo]

This is a good thread, thank you for touching on it -- and thank you Scott for the detailed reply.

I did notice, universally in fact, that disability and life insurance agents always tend to come down hard on Northwestern policies (disability, life insurance, etc.). Is this because, Northwestern does not allow their policies to be sold by third party agents? And if it is truly an inadequate product, why do people still go with them?

With all the backroom dealings, I'm with futuremd16 in that I find it very difficult to decipher what is truly a better product versus what is made a convincingly better one.

 

[PBEA]

My first question for you would be, "if you become disabled from your specialty (being the CPT codes you bill for that create the majority of your income once you are in practice) do you want to be paid 100% of the benefit you bought regardless of future income from any other occupation"? If the answer is "yes, I want 100% of my benefit" then the 7 companies 'today' are Met, Principal, Ameritas, Mass, Standard, Ohio, and Guardian. The answer is 'no' then you can certainly add Northwestern into the mix. Now you are correct in that Met is exiting the Disability business September 1, 2016 and Ohio along with Mass is kind of high cost per dollar of coverage in the physician space so that is why most don't look at them but there are certain circumstances that can make them appealing. Guardian is a great product on the Pro Provider series but the Pro Provider Limited has the same 24 month limitation. Keep in mind most carriers go by ICD-9 codes of 290-319 to determine if the M/N claim would fall under the 24 month M/N limitation but even that is waived if you are hospitalized for those conditions. After 23 years in this business I get a touch jaded in the way these products get positioned because the reality is you don't know if or when you might need something but for someone to tell you that you absolutely do need the M/N benefit is fascinating and you should ask them how many of their physician clients are on or have been on claim for mental nervous issues in excess of 24 months. Personally I would tell you 0 for me. I have had 1 mental nervous claim and that only lasted 7-8 months.....and that is after 23 years working with physicians disability insurance. Again I am not saying it can't happen and does not happen but that is just my experience. My other comment on that is that physicians are simply mentally tough compared to most of the other population, what other group of people can make it through med school, residency, fellowship and into practice, those pressures would crack most people but I have found the common thread for physicians is that they are mentally very tough and figure out how to get through things.
Anyway, that is just my opinion and experiences, hope it helps.

northwestern allows for "own occupation" benefit, but I didn't know it was not 100% of benefit. Are you sure about that?

 

[MD Financial Services Scott]

Yes that is correct, if you simply ask the question of the claims department, "if I can't do my specialty and I go do different occupation and have 20% or greater of the income I had prior to becoming disabled does my benefit go down"? The answer is yes and it could go to $0 based on the formula of % of income lost is % of benefit to be paid but if you have a true own specialty definition from one of the other carriers the answer would be "no, any income from another occupation does not affect your policy benefit".

 

[MD Financial Services Scott]

This is a good thread, thank you for touching on it -- and thank you Scott for the detailed reply.

I did notice, universally in fact, that disability and life insurance agents always tend to come down hard on Northwestern policies (disability, life insurance, etc.). Is this because, Northwestern does not allow their policies to be sold by third party agents? And if it is truly an inadequate product, why do people still go with them?

With all the backroom dealings, I'm with futuremd16 in that I find it very difficult to decipher what is truly a better product versus what is made a convincingly better one.

My opinion on the reason agents come down hard on NWM is because they have marketing material and a sales process that will tell you they have the best contract in the market but when you break it down it only protects income and not specialty. My feeling on that is simply you have put tons of time, money and differed income into doing a specialty and you should protect that as best you can. Think about the doc who is a surgeon but looses the use of their dominate hands thumb to some degree, are they a great surgeon any longer? Can they do surgery any longer? Did they just end their career? The fact is for my occupation you can lop off my thumb and I might miss the spacebar while typing and it could hamper my ability to hitchhike successfully but it does not affect my ability to do my profession that I have worked on for 2 decades. That is the reason having a contract that protects your investment in your specialty is important in the physician space. Personally other than physicians, litigation attorneys and professional musicians I know of very few other occupations that need true own specialty since most of the time if they can't do their specialty then they can't do anything.

As for Northwestern, that is correct you have to be a career employee of Northwestern to sell the products and they have some restrictions on what other carriers they can sell even though I don't know exactly what those restrictions are. Got to admit I have never seen a Northwestern agent recommend a company other than Northwestern where the other reps not involved with Northwestern seem to show the big 7 carriers all the time.

Hope that helps!

 

[EyeDR_oo]

Thank you again for the explanation. I understand the point you are making.

This is only a message to my fellow residents, not directed at Scott or anyone in particular:
A lot of us are bombarded with this information during residency, because they are right -- we do need this coverage and it is an important part of our fiscal health. However, with juggling all the things we do, it also makes us easy targets. I cannot tell you the number of calls I receive on a weekly basis from insurance reps. There are voicemails from people I have never even reached out to -- I believe they got the list from the hospital. I'm sure all the time they invest in making phone call after phone call is only secondary to their concern for my well being.

Not surprisingly, the policies of old were substantially better than the "flaming bag" we are offered today. Make no mistake, the insurance companies made a substantial profit on those policies, but why not keep digging. Also not surprisingly, the same foundation of thinkers that rated and wrapped the subprime market (insurance backed CMO) with AAA ratings is my current source of information. That went well. So please do excuse my skepticism, but "faith" in insurance companies and representatives offering up what is "best for me" has hit an all time low; and ironically, the lawyers that mandated my need to disclose that Alcon funded my attending 5 years ago on some minor project (Sunshine act), are nowhere to be found in this realm...or so it seems.

Sadly, it is just plain difficult to find a consumer breakdown, other than than those provided by the representatives, which of course, always points that final arrow in favor of their direction. So please be careful, conscientious, and diligent of what these people try to sell you, and do your homework. Every year it seems to be getting worse, and they peg us as (again ironically) uneducated buyers. There is always room for negotiation, especially when there is competition in the marketplace, and nothing in this world has a fixed price. Additionally, the hole we find ourselves in is because of those before us taking everything at face value. The more we accept out of the gate, the more we suffer as a collective.

Like any predatory animal, they have locked onto the science
(1) We are busy and distracted (any help provided seems like a godsend)
(2) We need to drink the water (so why not bring the well to us)
(3) We have a substantial, consistent, and secure future income
(4) Our expectations have been blunted

This also holds extremely true of financial planners that offer up their services to you in residency. Do not be fooled into thinking they are helping you (a small % now means a huge % for them later, and they justify it that way). Some of their policies are the worst in the marketplace, and they will rob you blind if you are not careful.

 

[KHE]

Mine is all through Mass and it does provide for an "own occupation" clause with benefits paid out at 100%. The premiums seem reasonable and the agent is nice.

None of that matters. What matters of course is will they pay off should something happen? I've never filed so I guess I don't really know.

What would be helpful would be to hear of people's experience trying to file claims. People saying that they use this company or that company doesn't seem to be that helpful.