Physician Disability Insurance: When to Apply
To lock in the most favorable rates, apply for own-occupation disability insurance months before joining a practice.
Disability insurance is one of the essential components of protecting a physician’s practice. Its cost is a function of many things, some of which include the physician’s age, health history, state of residence, and specialty. While there is no “one size fits all” disability insurance plan, leading experts agree it is best to lock in discounts where possible before it is too late.
3 Common Mistakes with Disability Insurance
#1 Assuming the Guaranteed Issue Program offered by a university or employer that does not require a medical exam is the best option.
In our experience we have found that this is not true in certain cases because there are better rates and packages available.
The results of our analysis have shown that those plans are more expensive and they have less features. The result is paying more and getting less. It is that simple.
Even the new AMA/MetLife program has been more expensive and provides less benefit for the residents and fellows we have worked with that are insurable.
Related: see why you should be wary of AMA disability insurance
In these cases we have found the Guaranteed Issue Programs or the AMA/MetLife program are best for people who are normally not insurable due to health history.
Those who are insurable and sign up for these types of plans may end up redoing the whole process over again once they find out that the plan is not as competitive, or they are stuck with the inferior plan because the rates go up significantly after finishing training.
In our experience, residents and fellows with good health histories that want to obtain disability insurance from MetLife or other companies that offer guaranteed issue programs should consider applying directly so that they have access to a more comprehensive plan that does not contain limitations.
Before moving forward with the assumption that a “no medical required” plan is better, do a little research to see how the leading companies would treat you. Contact us and we can help.
#2 Assuming that my current disability insurance plan is sufficient and there is no need to see how it compares to others.
Residents, fellows and practicing physicians accomplish two things by having their existing plan assessed. They…
- Get confirmation that their existing plan is better than others.
- Find out that their existing plan is not actually what they thought it was, or they find a better option with superior features and lower rates.
For example, 20 out of 20 physicians I have recently worked with who have disability insurance with Northwestern Mutual thought that it was a true own occupation plan.
This is NOT TRUE. Here’s why…
In every single case, after looking at the policy and its definition of disability it said, “the insured is totally disabled when both unable to perform the principal duties of the regular occupation and not gainfully employed in any occupation.”
It is unfortunate that all 20 of these physicians said the same thing, “the agent told me it was a true own occupation plan.”
Adding to the difficulty of understanding Northwestern Mutual’s plan, the title of the page that defines the definition of disability is “Medical Occupation Definition of Total Disability Option.”
Somehow there is a breakdown of communication and interpretation of what the definition really says.
A true own occupation plan would say something along the lines of the following: “the insured is totally disabled when unable to perform the principal duties of their own occupation, even if working in another occupation.”
There are only a handful of companies that provide true own occupation disability insurance plans and from our experience, we have found that most of them are less expensive and provide more benefit than Northwestern Mutual’s.
Those who want to research what these companies offer or want to see a comparison to what they currently have, can do so by simply completing the secure form here: Disability Insurance Request Form
#3 Waiting until after training is finished to get a plan started.
Waiting to start a disability insurance plan causes problems because of the following:
Rates can increase signficantly, especially for residents and fellows. The more time that passes the higher the probability is that they won’t be able get a comprehensive plan with the best rates and features.
Because of waiting to get their plan started, we regularly have to inform clients that the final approval they receive from the company has benefit reductions, increased rates, exclusions or they are denied due to health history changes.
Those that fall into this camp still have the opportunity to pursue guaranteed issue programs.
Our team of specialized financial planners and consultants provides assistance to residents, fellows and practicing physicians nationwide on their disability and life insurance planning and they would be happy to help.
Whether or not a doctor is confident if they are insurable, we can get them more information about the options and which may be best.
Those who want to have the leading companies surveyed and find out about the special discount programs we have can complete the online form here:
Disability Insurance Request Form
It is recommended as the best practice for residents and fellows to apply at least two months before finishing their training.
The underwriting process takes about 45-60 days to be completed and if the first company does not make a good offer, then submitting an application with a second might be worth considering. The issue here is that the second application would need to be sent in before it is too late to participate in the residency or fellowship discount programs.
For practicing physicians, it is recommended to apply at least two months before signing a new contract.
Once a new contract is signed, the new employer’s disability insurance program has to be taken into account which can reduce the amount of benefit the physician is eligible for. As outlined above, if the first company does not make a good offer, applying with a second company has to be done before signing the contract and if it is not started at least two months in advance, it will probably be too late.
We also have a special discount program for practicing physicians.