I recently had the opportunity to talk with Eric Bork of Pattern Insurance. Pattern is an independent insurance brokerage that caters specifically to physicians. Eric shared some great insights about physician disability and life insurance that every doctor needs to consider when selecting an insurance policy—and when reviewing already existing policies to see if any updates are needed.
When should physicians start thinking about disability insurance?
For disability insurance, the answer is yesterday! Nobody can predict what illness or accidents you may face in your life when they might occur. You will never be younger and healthier than you are now, so that is the ideal time to purchase disability insurance. This will allow you to get coverage with fewer health restrictions, if any, and the cheapest rates possible. Protecting your future income after all those years in training is crucial for any doctor at any point in their career.
What about life insurance? What about doctors who have never been married and don't have children?
Life insurance is a little different and depends on each individual's circumstances. If you have any dependents or are married, you need life insurance right away. If you are single with no dependents, it can still be a good idea to get life insurance as it is cheaper while you are young. However, your needs should be discussed with a financial professional before deciding what is best for your situation. Overall, term life insurance is very cheap and can fit in every doctor’s budget.
Do the costs and benefits differ by specialty? What if a doctor has a completely non-clinical role like chart review?
The cost of disability insurance does vary by specialty, along with many other factors including your state, income, and age. Certain specialties are deemed as more risky for potential disability, so they are all separated in what are known as occupation classes by the insurance company.
Insurance companies also look specifically at your duties when applying for coverage to assign the right occupation class. However, the great thing about getting a true own-occupation policy, is that if your duties change over the course of your career, you would be covered according to your specific duties prior to the time of disability. This can work to your advantage if you get a disability insurance policy in training while less specialized with a cheaper occupation class. Even as you add specialization or additional duties over your career, your policy will now cover you even at the cheaper rate.
How about doctors who have an inconsistent salary and can't even estimate their salary in advance? Such as doing locums clinical work or expert witness, which are both sporadic projects?
This can vary a little with each insurance company. Insurance companies will typically look at some income documentation to determine how much coverage you are eligible for. This could include paystubs, tax returns or even employment contracts. If you have inconsistent pay, the insurance company will most likely look back at your entire prior year taxable income to come up with an appropriate benefit amount.
Do physician moms who work part time or step away from work for a while still need to get life and disability insurance?
Life insurance is absolutely a must if you have young children.
Anyone who makes an income that is relied upon by themselves or other family members should get disability insurance. In other words, if you or anyone else would have financial difficulty if you became disabled and couldn't earn your income, you should protect that income with disability insurance.
How does specialty specific insurance come into play when a doctor becomes disabled and could do something that isn't physically demanding—like telemedicine? What if there are jobs but the doctor can't seem to find a job or the new job pays less than the in-person job? Can he or she collect some disability payment long term or temporarily?
This is the exact reason why you want to get a specialty specific or true own-occupation disability insurance policy. If you cannot perform the specific duties of your specialty, you can collect a disability payment, even if you can work in another job. This would include telemedicine, teaching, etc. You could get the full benefit from your disability policy as well as the entire income from your new job. The other great thing about a true own-occupation policy is that if you can’t find a job or choose not to work in a different job, you do not have to. You can still collect a full benefit as long as you cannot perform the material and substantial duties of your specialty at the time of disability.
How does divorce affect rates? Should doctors adjust the policy when this happens?
Divorce is not one of the factors that affects the rates of disability insurance. However, it can affect how much coverage you need. For instance, if you are married and living in a two income family where your income makes up 50% or less of the total family income, you could opt for less coverage than if you were divorced and single and solely reliant upon your own income and without the support of your spouse's income.
How can you keep an open mind when assessing different policies?
The first thing to do is to educate yourself and determine what you absolutely must have in a policy and what you absolutely do not want in a policy. Once you know these things, you can begin to narrow down the options. One thing to avoid is talking to any insurance agent who represents one insurance company. Even if they say they are unbiased but are employed by a single insurance company, they will have a conflict of interest and most likely be incentivized to sell that company's policy. Find an independent broker who works with all of the major companies and who has a long track-record of working with doctors and being trusted by doctors. Between educating yourself and finding a trusted, unbiased broker to work with, you will be able to discern what is really best for you and avoid getting "sold" something that's not in your best interest.
If you are ready to talk to an unbiased, independent broker who specializes in own-occupation disability insurance, visit www.patternlife.com.
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