Residents who have opted to purchase a disability insurance plan over and beyond what their individual employers offer would be well served to understand the differences between policies offered in the marketplace. That advice comes from Brian Farmer, national account executive at AMA Insurance. “Much like car or health insurance, disability insurance policies vary widely in cost, coverage and benefits,” Farmer said. “That’s why you need to research your options and understand what to look for in a policy.”
He said that residents should first become familiar with the different definitions of disability, such as plans offering “any-occupation,” “own-occupation” and “own-specialty” coverage.
“Price is certainly a consideration, but don’t just settle for the cheapest plan—as it’s also likely to provide the least amount of coverage,” said Farmer, “and it might not adequately address your needs as a physician.”
“For instance, an ‘any occupation’ definition usually only pays you a disability benefit if you are unable to work at a job in any field,” he explained. “But chances are that working in a position outside the medical field isn’t what you had in mind as you embarked on your training.”
An own-occupation definition is preferred by many professionals, but it remains problematic for most physicians because no consideration is given to the striking differences among the many medical specialties, Farmer pointed out.
Say, for example, an orthopedic surgeon develops crippling arthritis in his hands and can no longer work in the operating room. He could still conceivably work in medicine—perhaps as a psychiatrist—but this would render him ineligible for a disability benefit under an own-occupation definition of disability. What’s more, he would likely have to retrain and incur debt associated with the training, and he could quite possibly experience a substantial loss of income.
An own-specialty definition, on the other hand, provides optimal coverage for physicians, Farmer noted. “It is intended to provide for disabilities that prevent you from practicing in your field of expertise,” he said. “This can give you peace of mind as you labor through your years of training and beyond.”
Another component of disability coverage that residents would be well advised to consider is a loan repayment benefit. “One of your biggest financial responsibilities as a young physician will be repaying your education loans,” Farmer said. “Having a medical school loan repayment benefit of $200,000, for example, in addition to your monthly disability benefit payment, could make a dramatic difference for you and your family, should you experience a permanent disability.”
As a rule, residents who purchase disability coverage will have to wait 30, 60, 90 or 180 days before benefits are paid, during which time they may be required to refrain from working at all—even if their coverage is specific to their own profession of medicine or specialty. If they can go without working for a longer period of time, they will be rewarded with less expensive premiums, Farmer said.
It is also important, when choosing a disability plan, to make sure that it permits policyholders to purchase coverage that grows commensurate with their increase in earning power as they transition from residency to practicing physicians. “A future increase option allows you to increase your benefit amount as your income increases, regardless of changes to your health that could negatively affect your ability to be approved for new coverage,” Farmer said.
There are some insurance policies that offer a larger benefit from the outset, despite residents’ lower salaries. These plans can typically be found through selected insurance carriers and through associations, including those offered by AMA Insurance. Associations have a good understanding of physicians’ careers, including their earning potential over 30 or 40 years, Farmer said.
Whatever disability plan residents purchase, they should understand the fine print of the policy, Farmer concluded. “You should have confidence that your disability insurance will not only protect your income now, but that it also will do so in the years ahead,” he said.