It’s easy to take your good health for granted, but even people in the best shape are only one illness or injury away from their way of life—and financial stability—changing in an instant. The stakes are even higher for medical professionals, as physicians and doctors possess specialized skill sets, are exposed to certain diseases more frequently than those in other professions, and often have significant student debt to repay. Disability insurance for physicians is specifically designed to provide security in the event that you become severely impaired and are unable to do your job, so you don’t have to bear the brunt of higher medical bills on your own.
But which provider should you turn to when looking for coverage? In this article, we’ll go through the ins and outs of a disability insurance plan, outline the offerings of the big 5 disability insurance companies, and present the opinions of fellow Sermo members to help you hone in on what to prioritize when selecting a policy.
What is a disability insurance plan and why is it important for physicians?
Disability insurance provides income if the policyholder is prevented from working due to a disability. Insurance policies can be purchased individually or via employer-subsidized plans. To prove that you qualify for disability insurance, applicants will often have to demonstrate or explain how the severity of their disability stops them from working on a regular basis. Some plans will limit the scope of the disability to how it affects their ability to continue in the same line of work rather than working at all. The amount of salary covered by the policy depends on several factors, including the length of the insurance plan.
There are several details to consider when choosing a disability insurance plan, but a Sermo survey found that the most important factors by far are the definition of disability, which took 44% of the vote, and long-term disability coverage, which accounted for 30% of votes. Sermo members can attest to the importance of protecting yourself with disability insurance as soon as possible.
“Disability insurance is important when you are starting out, right after residency. I had a patient a few years ago [who] was a disabled general surgeon. She was out of work 3 years. & at 42 had no insurance,” explained a US-based dermatologist. “As time goes by & you develop more financial stability, you may opt for less insurance. The one you need, though, is malpractice insurance. That one you can’t go without. One’s specialty is quite essential, as well as the elimination period and cost.”
Short-term vs long-term disability
Disability insurance is characterized in two forms: short-term and long-term insurance. Each claim is filed separately, but short-term insurance can transition into long-term care for more serious health problems.
Short-term disability insurance covers temporary injuries, illnesses, and conditions for a shorter period of time. Examples of conditions covered by this type of insurance include minor surgeries, broken bones, pneumonia, mental health episodes, and postpartum recovery. The benefit period for short-term disability is usually between 3 and 6 months or until you can return to work. The payout will typically reimburse you for between 60-80% of your income.
Long-term disability insurance provides coverage for permanent or severe disabilities that demand an extended absence from work (over 6 months is a traditional marker) or leave you unable to work altogether, such as life-threatening illnesses, heart attacks, and most forms of cancer. Depending on the language of the policy, policyholders can receive benefits until they can work again, hit retirement age, or reach a predetermined date. Long-term disability payouts tend to cover between 50-60% of your salary.
What does disability insurance cover?
The definition of disability is a primary concern for many doctors looking to purchase disability insurance. The best policies have a broad definition that provides support for a wide number of afflictions. Here are the most common coverage terms you may find in a disability insurance policy:
Own-occupation definition
With this definition, your insurance policy will pay if you can no longer perform your current job. The policy will cover you if you are performing the duties of a specialized position at the time of the claim. However, if you transitioned into a different role with less hands-on time with patients, you may not be eligible under the definition of disability, as your job may not be limited by your performance in a medical specialty. This dilemma can be avoided with the inclusion of a specialty-specific clause that provides full disability payments even if you can still work as a medical professional in another capacity.
Transitional own-occupation
Your insurer will deliver a payout if you can’t work your current occupation anymore, but you can still work in another field. If your work in a new profession leads to a higher income than your previous job, then your monthly benefit will likely decrease in response.
Modified own-occupation
Your policy will only pay if you can’t work in your specialty and you are not working in another field. This is also sometimes known as “Own-Occupation, Not Engaged” or “Own-Occupation, Not Working”.
Mental disorders/substance abuse
Disability insurance policies can also include provisions to provide partial or total income replacements for mental disorders and substance abuse issues if they impede your ability to work. These claims can be more complicated as the symptoms of these issues are more subjective than a physical injury. The severity of your disorder may also come into question. It’s important to list specific conditions or substances in the policy to minimize these concerns.
Many insurance policies have limitations in place to restrict the length of time you can receive benefits for your condition. 2 years is the common amount of time for these limitations, but the exact terms will differ in individual policies.
Presumptive total disability
Individuals are often frustrated by the process of getting their claims approved by insurance providers, even if they meet all the stipulated requirements. But under the “presumptive total disability” definition, the waiting period will be waived and you can receive payments immediately. This provision is for disabilities that are obvious impairments and have little to no chance of a full recovery. However, 44% of physicians on Sermo identified this coverage as the biggest gap in current disability insurance for physicians.
Cosmetic surgery/transplant surgery
Some insurance policies will provide coverage if your disability is the result of complications stemming from corrective cosmetic surgery or donating an organ or body part. If the procedure is deemed to be purely cosmetic and not “medically necessary” under the terms of your policy, then you may not be covered by your insurance.
What does a disability insurance plan NOT cover?
Most insurance policies have clauses that allow insurers to deny coverage under certain circumstances. Here are some common exclusions:
- War or act of war – the consequences of wartime combat or a stint in armed services will not be covered by most policies.
- Active military duty – in a similar vein, if you are on active military duty, then you will not receive a payout if you are injured while on the frontline.
- Normal pregnancy – as transformative as pregnancy is to the human body, the routine events of a pregnancy will not meet the definition of disability for any insurers.
- Foreign travel – there are a wealth of reasons to explore the world, but do so with caution: if you suffer a serious injury or illness while traveling, do not expect to use disability benefits during recovery.
- Mental/nervous disorder – the conversation around mental health has evolved in recent years, but insurance companies have yet to catch up. 49% of physicians in the Sermo survey agreed that a lack of mental/nervous disorder coverage represents the biggest gap in most disability insurance policies.
- Medical exclusions – any pre-existing medical conditions you have when the policy is issued will likely be left out of the calculus for disability benefits. This is further incentive to purchase a policy when you are still healthy and don’t yet have pressing medical issues affecting your daily life.
5 Best disability insurance companies for physicians
There are many potential insurers on the market, but there is a collection of companies that stand out as the best providers of disability insurance for physicians. The “Big 5” disability insurance companies are:
- MassMutual
- Ameritas
- Guardian
- Principal
- The Standard
They’ve earned this distinction because they are the only providers with a true own-occupation definition of disability. Here is a rundown of the other benefits they deliver to policyholders:
MassMutual offers the widest range of options to provide comprehensive coverage for physicians. The company has two insurance plans—Radius and Radius Choice—both of which allow you to customize the elimination and benefit periods to your liking. You can further tailor your policy with riders like a Cost of Living Adjustment (COLA), mental health coverage, catastrophic disability, and an extended partial disability rider if you are able to work on a part-time basis. Radius Choice also comes with a presumptive total disability benefit and a recurring disability benefit that waives the elimination period entirely if you file a claim related to a previous disability.
Ameritas coverage comes with many built-in benefits to deliver comprehensive coverage to physicians. Ameritas policies include a good health benefit that reduces your elimination period by 2 days for every year you don’t receive benefits, a surgical transplant benefit that waives the elimination period if you are disabled following a surgery, and a COBRA premium benefit that pays up to $1,000 a month towards your plan to maintain your current health insurance. Ameritas plans are also upgraded with riders such as COLA, the Future Increase Option, and an automatic increase rider to raise your benefit by 4 percent a year for up to 5 years. And if you’re happy with Ameritas’ disability insurance options, the company also offers life, vision, and dental insurance.
Guardian offers comprehensive benefit options such as specialized coverage for serious conditions like cancer or heart attacks, occupational rehabilitation support, and extensive mental health coverage to ensure that physicians can meet all their needs with their insurance plans. There is also variety in how you can access the company’s insurance offerings. Guardian insurance can be purchased as:
- Short-term disability
- Long-term disability
- Individual disability income insurance
- Group coverage
- Supplemental disability insurance policies
- Hospice care benefits to waive the elimination period if hospice care is needed
Guardian also features optional riders and a customizable elimination period.
Principal stands out among fellow disability insurance providers thanks to a range of benefit periods that range from 2 to 5 years and can be maintained up to the age of 70, keeping you protected well into the future. The company also offers discounts for residents and fellows and a monthly payout up to $35,000.
Another selling point for Principal is its gender-neutral policies that help female physicians avoid paying higher premiums for built-in tools such as a death benefit, recurring disability benefit, and a waiver of premium benefit. Plans can be personalized with optional riders, including a short-term residual disability benefit rider, which enables you to collect benefits even if you are able to work, but have lost over 20 percent of your pre-disability income.
Last, but not least of the “Big 5” is the Standard. The company’s disability insurance, known as Platinum Advantage, is detailed with no-cost riders, automatic benefit increases, and optional riders. Standard policies are also portable, meaning any physician can keep their coverage plan after taking on a new position. In addition, Standard premium rates tend to be more affordable than the company’s competitors.
If you’re interested in exploring your options outside of the “Big 5”, Sermo members also vouched for Lincoln and Northwestern Mutual as legitimate places to buy disability insurance in this post discussing the most popular disability insurance companies.
Every insurance company has its pros and cons that demand evaluation. The most important thing, as this infectious disease expert explains, is that the policy you choose meets all or most of your most important needs and suits your current situation, “Choosing an insurance company is a very important decision, and more than important, I would say crucial, because it will depend on your income and financial security during periods when you can’t work. You must carefully read the clauses of the insurance company’s contracts. To know exactly the coverage”.
Key aspects physicians should look for in disability insurance plans
Job-specific
General disability insurance is good, but the specific demands of life in the medical industry require a policy that is written with the duties of your medical practice in mind. A US-based gastroenterologist on Sermo echoed this sentiment, saying, “One important thing to take into mind is the definition of your specific work, say a surgeon (not just a physician), otherwise the claim can be made that you can do insurance work as a physician and not pay disability claim when you can not operate.”
Definition of disability
The definition of disability in your insurance policy dictates what conditions you are allowed to file claims for. A true own-occupation definition is the broadest definition and gives you the most opportunities to collect benefits if you can’t do some or all of your current job, even if you can work in another field later on.
If a policyholder is recognized as being unable to work because of their disability, they will be allowed to stop paying premiums in most cases under the “waiver of premium” provision.
Elimination period
The elimination period is the time period between the day you are disabled and the day you can begin collecting benefits. Depending on the insurer and the policy, this period can be 30 days or up to 720 days. The sooner your payouts kick in, the better.
“You need to have one that kicks in when you are no longer doing your job, not necessarily collecting,” explained a general surgeon working in the US on Sermo. “The reason for this is your AR, which will continue to trickle in for many months even if you are unable to work and therefore are still ‘earning’ according to the definition. If you have the type that says work rather than income, you will be better off.”
Built-in benefits
The type and amount of built-in benefits in your insurance plan will play a big role in the breadth of support you get from your policy. Some features can help the policyholder receive care after a shorter elimination period, pay lower premiums, or cover some expenses for a period of time.
Optional riders
Including optional riders in your policy may raise your premiums, but they provide ample value to your disability insurance by enabling access to a range of better benefits. Common riders many physicians opt for are:
- Cost of living adjustment rider – a rider that automatically increases your monthly benefit based on the rate of inflation.
- Future increase option – this rider lets you increase your disability coverage in line with raises in your salary.
- Student loan repayment – if you have outstanding school debt at the time of disability, this rider will cover your payments.
There are plenty of other riders that can help you in times of need, particularly as new conditions affect your body as you age. “I got disability insurance at the end of med school and was glad to have it, but when I became an attending, I couldn’t increase it enough to cover my needs. I still kept it because the new policy I bought included a GI exclusion rider because I’d developed heartburn in the intervening years,” said a US-based OBGYN. “So check on the future increase options of any policy you get. (My disabling chronic condition hit when I was 34. You just never know.)”
Amid all the details and personal choices in a disability insurance policy, the overarching priorities are clear. A Sermo survey found that 45% of physicians agree that long-term disability coverage is the most important aspect of any plan, followed understandably by a true own-occupation definition (35%) in second place.
The survey also showed that most participants (59%) feel that it is important for both physical and mental disabilities to be covered by their insurance. “…Mental health pathologies should be considered as an equal almost to physical ones, also considering that due to our knowledge about diseases our expectations about healing are more realistic (what in many cases doesn´t help with recovering from depression),” said a family medicine doctor.
Should you get a disability insurance policy?
Sifting through all the options and details of every potential insurance policy can be overwhelming enough for some to disregard the need for disability insurance, focus on the business aspects of their job, and hope they have the good fortune to avoid any serious injuries or illnesses. But the words of these Sermo members remind physicians that doing so would be ill-advised:
“You are seven times more likely to become disabled than die. Just make sure you buy “your specialty” coverage, so if you are a surgeon and can’t operate, they won’t expect you to become a GP. If you pay for it yourself, the benefits are non-taxable. Buy something like a 30 year term life policy if you have kids to educate. Cheapest you can find.”
“Any physician MUST get a long-term disability policy. You could become disabled in the most unpredictable way imaginable, and suddenly. You got the bucks, get the policy!
“Most people end up bankrupt after a prolonged illness or an accident, not because of lack of health insurance, but because of the lack of income during the illness. I believe it is necessary. The “waste of money” issue is the same as any other insurance. You can carry term life insurance for 30 years. If you don’t die at the end of the thirty years, the premiums are wasted money. What is the alternative? How do you foresee something like that? I have disability insurance, and I recommend it to my colleagues. It is a must, especially if you have a family. Same as every insurance, I pay the premiums and I hope I will never need it.”
Key takeaways
- Disability insurance is crucial to protecting yourself financially if you are horribly injured or contract a serious disease.
- Insurers such as the “Big 5”, Lincoln, and Northwestern provide doctor-friendly policies to support policyholders.
- Factors like the definition of disability, built-in benefits, optional riders, and others are key to determining the level of care you can expect from your policy
If you’re looking for advice and guidance on how to find the best disability insurance plan for you, Sermo offers plenty of opportunities to connect with your peers. Our community is composed of verified physicians from over 150 countries, and doctors can discuss any topic pertaining to the medical industry, share ideas with each other, and even take part in paid physician surveys to earn extra income. Sign up today to join in on the conversation.
