A Tale of Two Doctors – and a Million Dollar Mistake

Why should you buy disability insurance before you start practice?  To lock in potential income benefits you will never be eligible for again.

Yes, you can get a discounted rate for disability insurance as a resident, but the reason to buy now is much more than that.  Buying as much disability insurance as you can afford before starting practice is a strategic move many fail to see.  Making this move now as a resident or fellow accesses disability benefits you may never be eligible for again as a practicing physician.

This story of two residents’ choices shows you how and could save you $1 million.

Tale of Two Doctors

Dr. Smith and Dr. Jones, both 33 years of age, are graduating residents in Emergency Medicine.

Dr. Smith decides to take advantage of the training discounts and purchased disability insurance before starting practice.  He chose a policy featuring true “own occupation”coverage and purchased the maximum benefit amount he could buy at the time, $7500/month.

Dr. Jones chose not to purchase disability insurance as a resident.

The doctors accepted positions as Emergency Medicine Physicians with annual salaries of $250,000 at City General Hospital.  City General offered disability benefits through a group plan that replaces 67% of pre-tax income, up to $15,000 per month.  At their current income, the monthly pre-tax benefit amount is $13,958.  Both doctors are required to participate in the plan.

Dr. Jones, now 34, decides to purchase private insurance to supplement the employer plan; but finds that, given his income and the benefits associated with his employer’s plan, the insurance companies will only approve benefits of $2940/month.  He purchases this plan.

The Million Dollar Mistake

If they were to be in an accident and become unable to perform their emergency medicine duties, which would have the strongest income protection?  Let’s see how their choices as residents affect their future possibilities.

Dr. Smith’s choice to purchase insurance results in an additional $4561 in cash in hand each month.  That translates to $54,732 annually and over 20 years – a total of $1,094,650.

Therein lies the million dollar mistake. Dr. Jones’choice not to purchase disability insurance as a resident limited the amount of future income he could protect and reduced his career disability benefit income by over $1 million.

Limited Opportunity – Fewer Restrictions for Residents

Don’t make the same mistake – act now to lock-in the maximum amount of income protection you can while in your residency. Once you start practicing, the benefit you are eligible for will be limited by your income and any employer-provided or other coverage.  Don’t miss the opportunity now to qualify for benefits that may not be subject to these future restrictions. Request a quote today or schedule an appointment with our advisors.

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