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Why is Disability Insurance so Important for Medical Professionals?

Updated: May 21


Wondering what is Disability Insurance for Physicians? Disability Insurance for Physicians is a special type of income protection. In the event of a disabling event, this insurance acts as an income source for the individual. Unless a physician can self-insure in the event of an unfortunate circumstance that would take them from practice and income, this policy is a must to transfer that risk away.


What is Disability Insurance for Physicians?


What does this specialty specific insurance include, and how much does it cost? In this post, we will dig deeper into the topic of Disability Insurance for Medical Professionals to help you gain insight and make a decision.


 Types of Disability Insurance


Serving as a safety net in the event you become unemployed due to an illness or injury, Disability Insurance provides financial protection by paying you a portion of your earnings on a monthly basis. It eases you and your family from economic hardship caused by your unemployment.


There are several types of Disability Insurance you can take depending on your needs.

  • Short-Term Disability Insurance

  • Short-Term Disability Insurance covers disabilities or illnesses that last weeks up to  about three to six months. These plans are generally offered through your employer either as part of your employment benefit packages or for a smaller premium. While a Short-Term Disability has a less significant impact on someone’s finances due to the short time frame it is available, many financial professionals still think Short-Term Disability insurance is a good investment as it can build a bridge from a disabling event and when Long-Term Disability benefits may begin; to avoid burning through savings.

  • Long-Term Disability Insurance

  • In contrast as implied, Long-Term Disability Insurance covers disabilities that remain for a longer period of time and coverage typically lasts through age 65. Depending on your insurance contract, some policies will allow you to work and collect benefits (“Own Occupation”) and group sponsored plans typically only pay if you are not gainfully employed in any other job. The amount paid is generally based upon 60% of gross income and you benefits will be paid on a monthly basis after the waiting period expires; usually three or six months.

  • Social Security Disability Insurance

  • Run by the Social Security Administration and financed by taxpayers, this type of disability insurance has strict definitions of a disability. This is the reason not many qualify for this insurance. The payout amount is also notably lower than the average monthly salary of a physician. Most employer based Long-Term Disability plans offered through employers reduce their benefits if Social Security is paid to them; they will offset.

Should Doctors Get Own Occupation Disability Insurance?


While Disability Insurance is beneficial to any profession, it is especially important for doctors and any medical professions with a specialization they have worked hard to train for. 

Anyone suffering from a disability could inevitably face being out of work on a partial or full-time basis. Your financial responsibilities will not stop, but your income would come to a halt for an underdetermined amount of time. With Own Occupation Disability Insurance, you are creating a safety net that can protect you, your family, and your assets from falling into a financial crisis should an unfortunate event occur.


Filing for a Disability Claim


If you suffer from a disability that prevents you from working and are planning to file for a Disability Claim, the important thing to know is the time frame you can file a claim according to your policy. Regardless of your policy, it is crucial to be well-informed about the time frame for filing. Many insurance providers require a 20- to 30-day time frame that starts on the date of the disability.

Moreover, you also need to ensure all qualifications stated in your insurance policy are met. If anything about the policy terms is vague, get in touch with your insurance company immediately. Often times, employer sponsored plans have many restrictions. Own Occupation plans complete their medical underwriting up front, so any exclusions due to your pre-exiting conditions will have been presented already so no surprises should exist to determine if your claim is eligible if and when the time comes.


When to Get Specialty Specific Disability Insurance


With any insurance, especially Disability Insurance or Physician Income Insurance, the best time to get one is now. Your current health is considered now and will play a large role on whether or not you are eligible to receive coverage. For some it may be too late to get it; depending on one’s medical records. Since everyone is at risk of accidents, illnesses, and unfortunate events , transferring the risk to the insurance company to provide income protection is imperative. For physicians, Disability Insurance serves as one of the foundations towards financial health.


Questions


Why do doctors need Disability Insurance?


Doctors spend most of their 20s educating and training. During this point of time they accumulate high student loan balances and light to no savings accounts and typically don’t have access to employer based retirement accounts. Disability Insurance can provide a continued source of income, but even more importantly, an Own Occupation contract will protect their specialty or sub-specialty that they are trained in. In the event a physician needs to go on claim, this benefit will pay in addition to any other income source they may find. The hope is that between the two sources of income, that this will restore a financially whole experience in the event of an unfortunate event. It acts as a financial safety net that can prevent you from losing momentum on build your financial wellness and household health.


How does Own Occupation Disability Insurance work?


Disability Insurance pays a portion of your income in the event you cannot work due to a disability. If you are fully disabled, “totally disabled” the insurance benefits you have purchased will pay in full. If partially disabled, your residual rider will pay a portion of the benefits depending on your income loss. At application, the insurance company allows for you to insure up to 50-60% of your monthly earnings depending on your total income. For a W2 employee, they base this off your gross income but if self-employed, your expenses play a factor on how much is allowed at time of approval. As income increases, you can usually increase this benefit too.


Whether you are a young physician or a doctor with years of experience, one common question you may ask is, what is Disability Insurance for Physicians and why is it important to have a plan in place? Disability Insurance is one way to protect yourself and your family from falling into a financial trap in case you lose your ability to generate income to a disability. As physicians, you are at risk of accidents, diseases, and injuries that can leave you disabled. With Disability Insurance, you can still receive a portion of your income if you are forced to stop working in your specialty.


For more information about Disability Insurance call JCT Insurance Agency at (626)354-2000 or email jctfinancialsvc@gmail.com

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