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Disability Insurance for Physicians
At MCD Life we have contracted with companies that specialize in  physician disability insurance. We have been working with clients for over 20 years and understand that doctors have very specific needs, schedules, and preferences. Plans can be designed and tailored to your unique situation.
Your career as a physician is a direct result of hard work and a substantial investment of time and money and of course concern for loved ones and personal interest.A disability could render you helpless by taking away the one thing that you need to safeguard all of your assets: your income.
Other insurances such as Home, auto, life, and health insurance are valuable protections, but if you loose your income due to a disability (even a short one or partial) you could loose all that you have worked hard to build or severely deplete your liquid assets. Of course, the same seems to be true if you had no life insurance and died prematurely but here is a major difference. Not to sound careless but, if you die, your personal expenses are also gone. If you become disabled, not only may your entire income as a physician be gone, but your personal expenses are very likely to go up substantially due to the disability.
At any given age, the odds of becoming disabled are much higher than the odds of dying. Every year, 12% of the adult U.S. population suffers a long-term disability. One out of every seven workers will suffer a five-year or longer period of disability before age 65, and if you're 35 now, your chances of experiencing a three-month or longer disability before you reach age 65 are 50%, according to the National Association of Insurance Commissioners (NAIC), If you're 45, the figure is 44%. These odds would not be a problem if people had substantial savings that could be drawn on in the event of a disability. But that's rarely the case, and any money that has been set aside has likely been earmarked for goals such as college or retirement. In a 2007 NAIC survey, 56% of adults said they would be unable to meet their expenses if they couldn't work for a year.
Important Disability Insurance Policy Features for Physicians
- Own Occupation Rider
As a physician, one of the most important policy features to have in your disability insurance contract is an own-occupation definition of disability. In simple terms this means that if you are unable to work in your specialty due to an injury or illness the policy will pay you a benefit, even if you choose to work in another occupation. For example, if you get injured and can no longer practice as a Surgeon (perhaps due to hand-eye co-ordination problems), then the disability policy will pay you a benefit even if you can earn an income in another specialty or occupation. This definition can differs greatly from disability insurance policy to policy and group plans. Some may say you must not only be disabled from your occupation, but also unable to work in any gainful occupation. Having the ability to work in the fast food industry could preclude you from receiving a disability benefit if you choose the wrong plan for your situation.
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Cost of Living Adjustment (COLA) Rider
A COLA rider is designed to help your benefits keep pace with inflation after your disability has lasted for 12 months. This adjustment can be a flat percentage or tied to the Consumer Price Index. Ideally you want a COLA that is adjusted annually on a compound interest basis with no “cap” on the monthly benefit. Although important, if cutting the cost of coverage is an issue, this might be the first optional rider to consider excluding from your policy.
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Future Purchase Option Rider
This rider is a must for young physicians. It provides you with the ability to increase your disability coverage, regardless of your future health, as your income rises. It is important to know when you can increase your coverage, as well as by what increments, on any given option date. Some companies may allow you to use your entire option in one year as long as your then current income warrants the increase; Others, however, may limit the amount that you can purchase.
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Many other Riders
There are many other riders available and the three described above may come under many different names. Please be sure to ask about all available riders with full definition for EACH insurance company. Do not assume that because onecompany calls a rider a COLA rider, that the rider has the same definition in another company.
Possible Sources of Income in Case of Disability
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Social Security
Qualifying for Social Security benefits is very difficult because the disability must prevent you from doing any kind of work - not just your usual job. The definition ofdisability for social security states that one must be completely disabled with no hope of recovery for a period of at least one year, or have a disability expected to end in death.
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Worker's Compensation
Worker's Compensation only covers job related sickness or injury. In addition, these benefits are limited.
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Savings
Your Family or a Bank Loan If you saved 10% of your income each year, a one-year disability would wipe out 10 years of savings. With your savings gone, your other assets would begin to dwindle as well. Who would you turn to for financial assistance? Would family or friends be willing to help you out, especially after your savings depleted so rapidly? Even a bank wouldn't want to give a loan to a disabled person with no income and no guaranteed prospect of being able to repay.
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Loans
Taking out loans in case of a disability by a physician seems like a easy way to get your hands on cash. After all, up to now, you may have been bombarded by lenders with loan offers. Once you have been disabled though, and with a possible much more restricted income, lenders may not be as ready to lend you any money. You may have heard this saying before "Lenders only like to lend money to people who do not need any". Besides, when income has been been affected by a disability, a physician may not want to add on more debts.
In all cases, when deciding which plan to disability plan to select, always make sure to ask a lot of questions and consult with at least three advisors before making a final decision. Be well.
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