In the Midst of the Coronavirus: Buy Disability Insurance!

As COVID 19 continues to spread throughout the country and leave lasting impacts on our economy, many of us are trying our best to cope with the changes. While this can take a huge toll on our mental health and leave us unsure of our next move, there’s one thing we need to do in the midst of the chaos: BUY LONG-TERM DISABILITY INSURANCE. Here are 6 things you need to know about disability insurance during this COVID 19 crisis:

1. Disability insurance helps to protect your income. The purpose of long-term disability insurance is to protect your income in case you become disabled or unable to work due to a physical or mental illness. This means if you get sick (i.e. with coronavirus, depression from the virus, or some other ailment) and are unable to work at your full capacity or generate your normal revenue, disability insurance will kick-in and help supplement your income until you recover and get back on your feet.

2. Many doctors are rushing to get it. As healthcare workers, we take care of patients who may have the virus and have come into contact with many others who have been exposed. With the nationwide shortage of personal protective equipment, we may be even more vulnerable to contracting the virus, or being an asymptomatic carrier of the virus than we realize. Due to our increased risk of exposure, many doctors, especially those who work in the Emergency Department or the Intensive Care Unit (ICU) have been rushing to get disability insurance. They want to make sure that their income is protected in the unfortunate possibility that they contract the virus or acquire a mental health disorder from treating others with the virus that could impact their income.

3. Pricing hasn’t changed & there are discounts available. Despite the risk of Coronavirus infection, the price of disability insurance hasn’t increased. In fact, many insurance companies are still offering a 10-20% discount to newer doctors who are still in residency training programs or fellowships. Plus, female attending physicians and a few resident physicians can still get unisex policies that will prevent them from paying more for disability insurance than their male counterparts. Although these unique features may only be available in certain areas from a select group of carriers, they can save so much money that they are worth seeking out. Remember, the cost of disability insurance varies by state as companies have realized that your risk of becoming disabled is increased or decreased if you live in certain areas. A policy in Georgia is much cheaper than a policy in California.

4. Companies are still accepting new applications. I called my insurance agent, Pradeep Audho from PKA Insurance Group, to follow up on some paperwork for my own on disability insurance policy. During our conversation, he mentioned something I found surprising: although more doctors were trying to secure disability insurance, the application process had not changed. There was no hold on claims or freeze on new applications even with Coronavirus spreading. The process itself is similar, if not easier than before. To get started, you just reach out to an insurance agent who can help you determine your desired policy amount and any added protections (or riders) you may need, such as extra payments to cover student loans, partial disability coverage, and a cost-of-living adjuster, etc.

5. The process of approval is easier than before. Despite the chaos, it’s easier to get approved now than it used to be. Once you figure out the payout and features of your desired policy, the insurance company will then assess your risk of getting disabled so they can determine the specific price to charge you for the policy. One way they assess your risk is by inquiring about your medical history. Many companies used to require a detailed medical exam for any policy with a payout greater than $6000 a month. Nowadays, things are much easier.  Most people can skip the detailed medical exam and get approved by filling out an online or telephone medical questionnaire for any policy that pays you up to $120,000 a year. While the process could change in the future, as of 3/30/2020 the process is the same as before, if not easier.

6. You can still get coverage, so get it now! The Coronavirus pandemic has been a sobering reminder that our health is not guaranteed. Although we may feel fine today, all workers need some form of long-term disability insurance to supplement their income in case they fall ill for an extended period of time and aren’t able to work at the capacity they used to. Companies are still accepting applications, many agents are offering discounts, and the process is easier than before.. If you’re unsure of where to look you can start with PKA Insurance Group or browse the list of trusted agents on the White Coat Investor page. You can also view prior articles on Disability Insurance and skim the 9 things I learned when I bought my own policy. Although we have lot on our plate, take a few minutes to apply for it now.

***Bonus: You may want to consider term-life insurance as well. As a single person with no children or family members who rely on my income, I don’t yet have an individual term-life insurance policy. However, I recognize that I’m in the minority. Many doctors have children and spouses who’s yearly expenses and savings goals are largely dependent on their doctor income. If this is the case for you, consider term-life insurance as well. Just like disability insurance, you can seek help from an insurance agent who will give you some price quotes. Plus, many policies with a payout under $5 million no longer require a detailed medical exam. The only change in the life insurance process is that insurance companies are taking a little longer before they confirm your policy. As of March 30, 2020, insurance companies may be hesitant to approve your policy if you have traveled internationally within the last 60 days and may require a 30-day waiting period if you have recently been exposed to the virus. Although there are a few more hold ups with term-life insurance than there are with long-term disability insurance, they are both worth looking into. In the midst of this crisis, be sure you’re protecting yourself, and your [future] income.

9 Things I learned when I purchased disability insurance

As an incoming resident physician, I need disability insurance. Although a group policy is offered through my employer, it doesn’t provide enough coverage to adequately cover my monthly expenses or insure my future income. Thus, I purchased an individual long-term disability insurance policy. This is what I discovered:

1.     Disability Insurance is expensive. Quotes from different companies from $100-250 per month.  Apparently, a substantial number of people use disability insurance, so companies raise the price to cover the payouts and ensure they aren’t losing money. Many companies offer “graduated” premiums (which allows clients to pay a reduced monthly premium for a few years in exchange for a higher premium later in life) to make it more affordable. I still opted for a “level premium” with a set rate and it’s $110 a month.

2.     The definition of disability is important. The definition of disability is variable. Some people might consider themselves disabled if they can’t work full-time, while others may only consider themselves disabled if they are unable to work at all. The broader the definition of disability, the harder it is to claim the benefit. Physicians need “own-occupation” disability insurance so that if we are unable to meet the specific demands of our own specialty (i.e. Surgery) we will get compensated, even if we can technically still do the work of another specialty (i.e. Family medicine). As a family medicine resident who plans to specialize in sports medicine, I still opted for an own-occupation definition of disability.   

3.     Gender bias is real. Disability insurance is more expensive for women than it is for men. Insurance companies claim that women are more likely to get disabled and seek payout from disability insurance (due to factors like pregnancy) so they charge us more for it. To avoid paying such high premiums, I purchased a “unisex” policy (which is the same price for men and women). These policies offer similar coverage and tend to be cheaper than gender-based policies for women.

4.     Some companies are better than others. When I contacted a few disability insurance brokers, I realized that one company was vastly cheaper than the others. Mass Mutual was the only company that offered an individual unisex disability insurance policy for female resident physicians. Since unisex policies are cheaper for women than gender-specific policies, the monthly premium for disability insurance from Mass Mutual was vastly cheaper than any other company. On the flip side, Principal offers discounted gender-specific policies for men, so many male residents purchased individual disability insurance policies through that company instead.

5.     Certain “riders” or added protections are essential. When I shopped for disability insurance, I had the option to buy additional protections. As a resident physicians with high-income potential there were 3 main riders I needed: 1) a cost-of-living-adjustment rider (so that my payout will increase with inflation each year), 2) a residual & recovery rider (so that I am compensated for any partial disability until I am back to my full productivity), and 3) a future purchase option (so that I can purchase more disability insurance after residency when my salary increases without having to re-qualify or pay a much higher price). Since I have a substantial amount of student loans, I also purchased a student loan rider so that if I get disabled before I pay off my debt, the disability insurance policy will pay me an extra $1700 for up to 10 years to cover my student loan payments.

6.     There is a limit on how much individual disability insurance we can buy. By law, resident physicians can only purchase an individual disability insurance policy with a max benefit of $5,000 per month. (They don’t want to incentivize us to become disabled by compensating us more than our current salary). We can purchase more disability insurance as attending physicians, but we need to have an individual disability insurance policy as residents so that we are fully covered now and can upgrade our coverage later for a cheaper price.

7.     It’s cheaper if you’re healthy. As I filled out the disability insurance policy application, I answered a TON of personal questions. Insurance companies take a very thorough history to determine our risk of being disabled in the future. I was asked about my own medical history and that of my family. They wanted to know if I had broken any bones, got in any recent car accidents, and whether I had ever smoked cigarettes. I was also asked if I had plans to travel out of the country or engaged in any high-risk behaviors like rock climbing or sky-diving. They wondered if I had ever gotten pregnant and the result of my last “wellness check” from the physician. Because I was young and healthy, my rate remained low.

8.     The price varies by state. I currently live in Florida, but I will begin residency in Atlanta, GA. Apparently, my disability insurance premiums are lower with my Georgia address than they are when I use my Florida address. Insurance companies look at hobbies, accident rates, and other data and determined that we pose a greater or smaller risk to them depending on where we live. California is one of the most expensive places, Georgia is one of the cheapest.

9.     Be wary of group policies through professional organizations. As physicians, we can buy into the group disability insurance policy through the American Medical Association or our specialty-specific organization. These policies seem cheaper and looked enticing. However, after doing some research I saw several drawbacks. First, the premium was not “level,” meaning the cost of policy could increase every few years as I aged. Secondly, they did not offer sufficient “future purchase options” so I couldn’t upgrade my coverage as often as I’d like (i.e. when my salary increased as attending physician). Lastly, buying into these group policies would negate or significantly reduce the payout from any disability insurance coverage I already have from my residency. Group policies usually cancel each other out, individual policies do not.  

Bonus: Many residents are eligible for the guaranteed standard issue policy at their institution. Every doctor needs their own individual long-term disability insurance policy. However, there is a special version of policy available to many pysicians-in-training. It’s called the guaranteed standard issue (GSI) policy and it allows physicians-in-training to get their own individual long-term disabiity insurance policy for a lower rate and with guaranteed approval. They get to skip the medical underwriting portion of the application can instead be guaranteed approval at a lower rate. Unfortunately, many insurance agents don’t tell clients about this policy so be sure to ask about it. These GSI policies are usually available to residents, fellows, and other physicians who just finish training with the past l3 months.

My point? Disability insurance is a must for resident physicians. It’s a bit expensive, especially for females, but we can get around that issue by purchasing a unisex policy and/or opting for a graduated premium. When we buy this insurance, we need a definition of disability specific to our own specialty, with the 3 main riders for complete coverage. Purchasing this policy in residency is cheaper and gives us the protection we need. Be mindful of what address you use on the application since the price varies by state and remember that group policies through professional organizations may be insufficient.