Why Doctors Need Own-Occupation Disability Insurance

When it comes to disability insurance for doctors, they don’t create all plans equally.

Most physicians and surgeons are well-aware of the importance of disability insurance. However, the key differences between employer-provided group plans and own-occupation insurance can be easy to overlook at first glance. These distinctions, often buried within subtle contractual language, can be the difference between comprehensive protection for your future and disastrous gaps in coverage.

Understanding the essential differences between these two most common types of medical disability insurance is critical to making an informed choice to protect yourself financially in the event of an injury or illness.

The Basics: Own-Occupation vs. Employer-Provided Disability Insurance

Choosing a comprehensive own-occupation insurance policy is one of the most important financial decisions that a new doctor can make.

Independent insurance carriers provide own-occupation insurance. Also known as regular occupation insurance, and provides individualized protection that follows doctors throughout their careers. They design this type of insurance protect your personal earning potential with regard to your specific occupation. The coverage provided by own-occupation plans is complete and continuous. Regardless of changes in employer and other career transitions.

Employer-provided group disability insurance is the default plan offered and often encouraged, by employers such as hospitals or medical groups. As the name suggests, they intend group disability plans to provide generic, one-size-fits-all disability coverage to large groups of employees within an enterprise. Rather than coverage that is tailored to protect you and your specialization. While employer-provided group plans can be useful as supplemental disability coverage or as a temporary stop-gap solution, they simply can’t provide adequate coverage to protect earning ability throughout a doctor’s career.

Defining “Disability:” The difference is the details

While own-occupation plans allow you to claim benefits if you are no longer able to perform your specialty, employer-provided disability insurance can refuse to pay out if you’re “not sufficiently disabled.”

A key difference between types of disability coverage is how the plans precisely define “disability.” And to what extent a policyholder must be disabled in order to receive benefits. One of the biggest pitfalls of group insurance plans is that they typically use a highly restrictive “any-occupation” policy to define disability. Under an “any-occupation” clause, it does not entitle you to receive benefits unless your disability renders you unable to perform any function of your current occupation. If you’re able to work at all, even if it’s at a reduced capacity or a lower-paying position, your insurance won’t pay out benefits to supplement your lost income.

Example

For example, if you are a cardiothoracic surgeon and a hand injury prevents you from practicing your specialization, an “any-occupation” clause could deny you benefits. With the justification that you can still perform consultations or teach in a medical college. Moreover, if a degenerative condition reduces your ability to take on a full workload, you can suffer years of income loss without receiving benefits. Because they deemed this only a “partial disability,” rather than a “total disability.”

By contrast, own-occupation plans offer coverage if you cannot perform the material functions of your specific occupation. If any disability, partial or total, prevents you from executing substantial aspects of your current occupation, you will receive benefits to supplement lost income. If that same injured cardiothoracic surgeon had an own-occupation plan, she could receive benefits while also earning income from a new position in the medical field.

Unfortunately, many doctors with group insurance plans don’t realize until it is too late that despite years of paying premiums, it is nearly impossible to qualify for “any-occupation” disability benefits. Own-occupation plans use a much broader definition of disability. As it relates to your specific practice, and therefore offer the most complete protection for your income.

Related: Group vs. Individual Disability Insurance for Physicians

The Own-Occupation Guarantee: Consistent coverage throughout your career

While employer-provided plans may seem convenient initially, they can’t guarantee the future of your coverage.

It’s common for young physicians to change employers within the early years of their careers. During these transitions, employer-provided coverage doesn’t move with you to your new job. And you may discover that your new employer doesn’t offer a group plan. Forcing you to purchase a more costly individual disability insurance plan later in your career. Furthermore, if an employer’s group plan covers you at the time you become disabled, you risk finding yourself uninsurable when you transition to a new employer.

Even if you remain with the same employer, group plans fail to offer the same guaranteed coverage as own-occupation insurance policies. Insurance companies can change the terms of employer-provided group plans at any time. Or even cancel the plan altogether. That means that even if they initially cover your specialty, with an employer’s plan, those terms are subject to change and leave you exposed at any time. And don’t get count on low premium rates either. Group plan rates regularly increase every 1-5 years. Making it impossible to estimate the true long-term cost of an employer-provided plan.

Gaps & Uncertainties

These gaps and uncertainties in group plan coverage are impossible to anticipate. Even for the employers themselves. The effectiveness of a physician’s disability plan can hinge on intricate language that the average insurance broker or human resource worker doesn’t fully understand. It takes a professional disability income specialist to fully anticipate potential risks and create a plan that can transition with you over the years.

Investing in a comprehensive own-occupation plan early in your medical career allows you to guarantee affordable rates of coverage and plan for your financial future. By ensuring rates and terms of coverage, an own-occupation plan protects your income and anticipate your needs at every phase of your career.

New physicians have many options to weigh when they begin their careers. But few choices have more serious long-term impact than the decision to purchase an individual own-occupation insurance plan. With a heavy workload and student loans to repay, young doctors can’t afford to lose out on income. Due to incomplete or unreliable disability insurance from an employer-provided plan. Own-occupation disability insurance offers maximum coverage and unparalleled peace of mind for doctors throughout their careers. With protection that is both specialized and complete.

If you have questions, contact us. To apply to disability insurance, click here.

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