Can Your Disability Insurance Really Provide Support for Your Standard of Living?
Can Your Disability Insurance Really Provide Support for Your Standard of Living?
- October 5th, 2009By Calvin R. Rasey, President, Physicians Financial Services II, LLC.
With all the different types of Disability coverage’s available to me as a physician, how can I tell which one will provide my family and I the income protection needed to support our standard of living?
In today’s economic environment we are all looking for the best ways to stretch those hard-earned dollars, but often times the old adage we get what we pay for rings true and disability protection in no exception. Many physicians are tempted to look for the least expensive plans thinking they are getting a great deal, but the proof is in the policy not the premium. The least expensive policies are typically the worst policies, because when a disability occurs it is possible your insurance company could pay you nothing.
What makes a good disability policy is the definition of Own Occupation. Unfortunately, not all disability companies use the same language when it applies to this definition. A true Own Occupation contract states; if you are unable to do the martial and substantial duties of your regular occupation (if you can’t see patients in the same manor you did yesterday) you will be viewed as 100% disabled and collect 100% of your benefit through age 65 or 67, even if you work in a different field. Don’t let the insurance company pull the wool over your eyes and say they have this definition when they actually may only offer it for the first two or five years. Then after that period they say if there is anything you are educated or qualified to do they will discontinue paying. Some companies use tricky or complex verbiage such as any occupation, main duties of any occupation, not gainfully employed or must be under the care of their physician to restrict them of paying claims. You chose your specialty for a reason and for whatever that reason; make sure that your income from your specialty is protected.
There are a few other things to keep in mind when purchasing disability protection. The terms non-cancelable and guaranteed renewable for example. A non-cancelable contract allows you to pay a fixed premium throughout the entire term of the plan. With the term guaranteed renewable contracts your premiums can increase over time. Also does the contract have a residual or partial disability benefit that would pay you if you choose to work in your occupation for less then full time bases? Next I feel having a recovery benefit to help you come off a disability and build your income back to what it was prior to the disability is very important. Lastly remember most good contracts discontinue benefits at age 65 or 67 so choose the amount your family needs today but also include additional dollars to invest for when you get to the end of your benefit period.
If you work for a large group or practice they may offer a group policy. Usually you cannot opt out of taking the plan. Group policies typically offer a monthly benefit and consequently they often lack the important provisions of a personal policy. For example
• Your group policy may require you to be totally disabled and not able to work in any capacity before you can receive any benefit.
• The benefit may be taxable income to you.
• Your employer can cancel your policy at any time.
• The policy definitions are usually inferior to individual policies.
• If your only partially disabled your group policy may not pay.
• Group policies typically are not portable.
I am urging all physicians to examine their disability coverage as soon as possible because insurance companies are changing policies rapidly, if you’re covered by a group policy through your employer cheek to see if it actually meets your needs. If you don’t have the time or inclinations seek the help of a disability specialist that is completely independent and only has your best interest in mind. Someone, who can analyze and interoperate the often-confusing definitions. Remember your most valuable asset is your ability to bring in an income, guard that asset with the best protection available and if you don’t have enough protection get additional coverage now!
For more information about the author or Physicians Financial Services II, call 502-893-7001 or 800-928-8834 or visit www.physicianassetservices.com.
Physicians Financial Services II LLC
