Many physicians only purchase enough disability benefit to cover the cost of their most essential living expenses in the event of a disability. However, a long-term disability can have long-lasting impacts on your financial stability if it prevents you from investing money in your retirement savings.
A retirement protection rider supplements any missed payments to retirement accounts when the policyholder is on claim. For example, if a physician is unable to contribute to an IRA, 401(k), or similar plan due to a disability, the retirement protection rider will fund equivalent payments into an irrevocable trust during the disability claim. The policyholder may invest the benefits paid to the trust as they wish, similar to IRA contributions. When the policyholder reaches retirement age, the money in the trust is paid out to the policyholder.
Depending on your age, state, and retirement portfolio, it might make more sense to forgo the retirement protection rider, and instead purchase a larger monthly benefit amount which will allow you to continue to contribute to their retirement investments even while on a disability claim. Read more about retirement riders here and talk with your financial advisor to determine the best way approach to safeguard your retirement in the event of a disability.
