Hi, it’s John with your Financial MD Didactic Minute. Today, we’re going to talk about disability insurance. This is a topic that certainly has a lot of complex pieces to it. There’s a lot of different information that residents are getting. So, I’m going to try to give you the quick and dirty in the 2 minutes that we have today.
So, disability insurance, what is it? Well, it’s insurance that pays you a monthly paycheck if you become too sick or injured to work. Why do physicians care? Well, because obviously, your income is higher than most and you’ve gone through a lot of training, a lot of costs to get that income. So, most physicians want to try to protect it as much as they can.
What are the big things you want to look for with disability insurance? There are several good companies out there that have products specifically tailored to physicians. We look at Principal, Emeritus, MassMutual, Standard Guardian, those are all companies that have some products that are specifically tailored to physicians.
Here are a few of the pieces that you want to look for once you look at these companies. You want to make sure these are the riders on your policy, one, that they have true own occupation, which means that, if you can’t do this specialty that you’ve gone to school for a long time for, done a residency, possibly a fellowship and spent all this time for, this is what you want to do, you don’t have to go do another job just because you can. So, if you’re an orthopedic surgeon, if you can’t do that, or even a specific procedure that contributes to most of your income, the insurance company’s not going to say, “Well, you can work at McDonald’s, so we’re not going to pay you a disability benefit.” That’s what true own occupation is.
You want to make sure that it’s got a future increase for a benefits update rider. That means if you are in training right now in residency or fellowship, that you get a small benefit, something affordable, okay, get it now while you’re young and healthy. And then, as long as you have that rider on there, you can increase it when you go into practice as much as your income justifies, even if your health has gotten worse, they don’t look at your health again. So, that’s a big reason to get it while you’re in your training.
A few other riders you want to look at you want inflation rider about 3%. You want to get a partial or residual rider because most claims are not a full and total disability, they’re just a partial claim. So, you want to make sure you have the ability to do that. Now, some may want to put what’s called a catastrophic rider, which doubles your benefit if you get certain disabilities. But, you know, that’s up for debate of whether that’s necessary or not. Some companies have student loan riders, which is kind of nice. Some companies may have a mental nervous limitation. So, if you have a mental health or substance abuse claim, they’re going to limit it to a 2-year payout, which may be important to you. So, that’s something to look at as well.
You also want to make sure that you get the discounts that you’re entitled to. Most of you are in a residency program where a lot of these companies can offer discounts on disability insurance. So, again, shoot us any questions if you want some further clarification or you need help just looking for disability insurance, go to financialmd.com. Again, this is John with your Didactic Minute, and we’ll see you next time.