Disability insurance is the single best way that physicians can protect their future income if they become ill or injured and cannot work. And while there are hundreds of different policies out there that offer different benefits and terms, there is one thing that almost all have in common:
You’ll need to undergo a health screening before the insurance company starts the underwriting process.
But that is not the case with GSI.
GSI policies do not require a health screening or medical examination. That can certainly make it easier to get coverage, but that doesn’t necessarily mean that it’s better.
Not sure which type of policy is right for you?
Here’s what you need to know about GSI vs. Non-GSI policies and if your insurance policy should have a health screening.
What is GSI Insurance?
GSI insurance is Guaranteed Standard Issue disability insurance. These policies supplement any traditional disability insurance you may already have through an employer-provided group long-term disability plan.
GSI plans are multi-life group plans that employers can offer to all (or none) of their employees. They do not require any health screening or any medical examination of any kind. Your insurance premiums and monthly benefits are not contingent on your health conditions.
What is Non-GSI Insurance?
Non-GSI insurance is not guaranteed. To get a non-GSI policy, you’ll need to have a medical evaluation, and your insurer will need to review the reports of your health screening, medical history, blood work results, and medical records.
Non-GSI insurance plans require you to jump through a few hoops to get coverage, but they offer a variety of excellent benefits that GSI policies do not.
The Pros of Non-GSI Insurance
Non-GSI plans are flexible and customizable. You can choose your waiting periods, elimination periods, and select the true own-occupation definition of disability. You can add various optional riders to make your policy more comprehensive and protect yourself with more generous benefits.
Non-GSI plans are individual disability insurance policies that have nothing to do with your employer. And that means that you can take them with you from job to job without ever having to worry about a lapse in coverage or benefits.
Pros of GSI Insurance
GSI insurance can be a useful tool in protecting the future income of physicians who have pre-existing conditions and medical concerns.
Here are a few of the main reasons why Guaranteed Standard Issue disability insurance may be a good option for you:
As its name indicates, GSI insurance is GUARANTEED. With a short and easy application form, you can sign up for GSI insurance, skip the need for a health screening or medical exam, and get coverage quickly. As long as your employer offers it to you, you’re approved.
It is Way More Reliable Than a Group Plan
If the only disability insurance you have is that from an employer group plan, GSI can replace the income that the group plan doesn’t protect. Most employer group plans pay a limited benefit amount for a limited period of time, so that GSI can fill in that income gap. This allows you to receive more benefits per month than if you only had your employer’s group coverage.
For a physician or high-income earner that doesn’t already have an individual disability insurance policy and has a pre-existing condition, GSI is an excellent way to get yourself added protection if you become too ill or injured to work.
Cons of GSI Insurance
GSI insurance allows you to enjoy additional coverage if you have a poor medical history and can’t pass an insurer’s health screening. But the simple, easy, and guaranteed process comes at a price. Here are some of the drawbacks of having a GSI policy that you wouldn’t have if you had your own individual disability income insurance protection.
It May Cost More
GSI insurance plans are convenient, easy to apply for, and guaranteed. But that doesn’t make them any less expensive. If you are healthy, it’s better to go out on the open market and compare quotes from various insurers that will underwrite an individual policy for you.
In the open market, you can usually get better rates, pay lower insurance premiums, and get more coverage and benefits. Getting disability insurance on the open market requires you to turn over your medical records, but you can get more and spend less on benefits than with a GSI policy.
Your Employer Calls the Shots
It is entirely up to you what type of policy you want and which insurance company you want it from with an individual policy. With a GSI plan, your employer makes that decision.
It’s similar to the way your employer provides you with health insurance. Most employers choose one insurance provider and then give you the option to enroll in a healthcare plan with the one provider they’ve selected. GSI policies work the same way.
Benefits Depend Upon Enrollment
GSI policies have restrictions and limitations, including how much income they will replace if you become disabled. The amount of income replacement offered typically depends upon how many employees are enrolled in the plan.
In most cases, the more employees enrolled in the GSI plan, the higher the income replacement limit is.
With a GSI plan, each employee has the same type of coverage. Some GSI insurance providers, such as The Standard, offer varying coverage amounts based on age and occupation. Others have a standard coverage limit for all employees.
An individual insurance policy allows you to make changes throughout the life of the policy. These changes will affect your insurance premiums, but you usually can amend waiting periods, benefit periods, coverage amount, and drop or add riders as needed. GSI policies don’t offer nearly as much flexibility.
Some GSI plans allow you to make changes to waiting periods and benefits periods, but when that happens, those changes apply to all employees, not just you.
Some flexibility does exist within a GSI policy. But you usually aren’t the one who can make the call on changes. With an individual disability insurance policy, those decisions are yours and yours alone.
You May Not Be Able to Add Riders
Depending on the type of GSI plan your employer chooses, you may or may not be able to add riders to your policy.
Why is this so important?
Because riders allow you to tailor your policy to your specific needs.
When you take out an individual insurance policy, you’re likely to be presented with a slew of optional riders that you can add to beef up the benefits of your coverage. Every rider you add increases your monthly premium, but the benefits they provide can be immeasurable.
Enrollment in a guaranteed standard issue program may preclude you from adding the riders you want to your policy.
The COLA Rider
The Cost of Living Adjustment rider increases your monthly benefits over time to account for inflation. This is especially important for young physicians just starting their careers.
The FIO Rider
The Future Increase Option affords you the option to increase your coverage amount as your salary increases. It also protects you from enduring future health screenings and going through the medical underwriting process again, should you want to increase your benefits later in life.
The Student Loan Repayment Rider
For young physicians, the Student Loan Repayment rider is a must. Should you become ill or injured before you’ve finished paying off your medical school debt, this rider will cover those loan payments for you. Without it, you’ll still have to pay off your student loans, even if you’re unable to work or earn income as a result of a disability.
Enrollment in a guaranteed standard issue program may prevent you from adding the riders you want to your policy. Before you sign up for a GSI policy, weigh your options to know exactly what benefits you can get and which ones you cannot.
You May Not be Able to Change the Definition of Disability
THE most crucial element of any disability insurance policy is the definition of disability. How your policy defines disability determines what criteria you need to meet to collect benefits. No matter how much you pay in premiums, you won’t be able to collect one penny in benefits unless you meet that definition.
For physicians, the only acceptable definition of disability is true own-occupation. Under the true own-occupation definition, you will be eligible to collect benefits if your disability prevents you from doing some, part, or all of your job. Other definitions are far more restrictive and often don’t pay benefits unless you cannot work AT ALL.
Most insurance providers allow you to select the true own-occupation definition of disability as an additional rider. With disability insurance income through a GSI program, that rider and that definition may or may not be made available to you.
See also: Why Your Practice Needs a BOE Rider
When to Get Disability Insurance
Regardless of where you are in your career, it’s never too early to get long term disability insurance. And that’s because disabilities, illnesses, and injuries can strike at any time.
There’s no need to wait until you’re settled into your career to protect yourself with disability coverage. In fact, you can secure a policy when you’re still in residency or even as early as your last year of medical school. The younger you are, the better.
Don’t think you need disability insurance when you’re young and healthy? You do. In fact, that’s the PERFECT time to choose a policy.
Disability insurance is income protection. The younger you are, the more years you have to work, which means that your future income earning potential is much greater than someone in their 40s or 50s. As a young physician, you have more future unearned income to protect, and disability coverage offers you a way to enjoy a percentage of that income, even if you become disabled early in your career.
Another reason to get disability insurance while still in residency or med school is that you’ll pay less in insurance premiums when you’re younger and healthier.
By adding a rider such as the FIO, you can opt for a smaller amount of coverage now, pay smaller premiums, and then increase your coverage to higher levels as you advance in your career. With a Non-GSI plan, you can do so without ever having to endure a health screening or an additional medical exam.
See also: Nationwide Life Insurance Review
Who Should Get GSI Disability Insurance?
Unlike life insurance, which benefits your heirs when you die, disability insurance benefits both you and your family while you are still living. For this reason, every physician should have a long term disability insurance policy that protects their future income.
Afraid that you won’t be able to pass the health screening required for an individual disability insurance policy? For physicians with a pre-existing condition, such as cancer or diabetes, a GSI policy is a good option. And it may be your only one.
The bottom line is this:
Every physician needs disability insurance. Individual disability insurance is the best way to go, but if your health precludes you from passing a medical screening, a GSI policy is a viable alternative.
Not sure which policy is right for you? For more advice and guidance on selecting the best disability insurance policy, contact Physicians Thrive now.
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