March 16, 2018 – By Kathy Mueller, CLU, ChFC, FIC, LUTCF
Insurance Adviser, Wisconsin Medical Society Insurance & Financial Services, Inc.
As a physician, it’s important to plan for your future—and that includes finding the right income protection policy. Understanding the following terms can help aid in your search:
Non-cancelable vs. guaranteed renewable – – When you have a non-cancelable policy, the insurance company cannot change the contract, the contract language or the premiums. If you have a guaranteed renewable contract, the company agrees to renew the contract without making changes. However, they can increase premiums.
Definition of disability – For many physicians, especially surgeons and sub-specialty physicians, “own specialty” is very important. If you cannot perform surgery but can still do consults, you are not considered totally disabled per the “own occupation” definition (because you are still working in your occupation). Check the policy language to see how “own specialty” or “own occupation” is defined. Also, make sure that your “own specialty” definition is for the lifetime of the contract, not just two or five years.
Residual disability – This is a very important rider for physicians. If you can do some but not all of your duties as result of a disability (and have a reduction in income), the residual benefit will pay a partial benefit equal to the percentage of income lost. Some companies require that you are totally disabled first. Look for a company that does not require total disability before this benefit can be used. This rider will also pay if you can perform all of your duties but only on a part-time basis, due to a disability.
Business overhead expenses – This policy will pay the expenses of running your practice while you are totally (or residually) disabled. Expenses it will pay for include leases, employee salaries, telephone costs, accounting fees and insurance. This does not pay your lost income.
Retirement disability – If you are disabled, you will be unable to continue to contribute to your retirement plan because of your reduced income. With this rider, the insurance company will deposit the amount of money you would have contributed into a non-qualified retirement account.
Future increase options – If you are a student, resident, fellow or new in practice, this rider can be a great future benefit for you. It allows you to increase your monthly benefit—as your income grows—in the future, without having to qualify medically for it. You would just need to show income increases to justify the increase.
Loan repayment – For physicians who have medical school debt, there are a few companies that will pay your medical school payments for you while you are collecting disability benefits. An additional rider would be added to your disability policy for this.
As with all insurance coverage, please read the policy carefully as language differs between companies. Disability insurance can protect you against financial loss. Work with your insurance advisor to help you ensure the best coverage for you.