At the most basic level, disability insurance is intended to protect your greatest asset — you and your ability to make an income. As you are researching long-term disability insurance, you will want to consider adding extra features, also known as riders, to enhance your coverage for your specific needs and wants.
By adding disability insurance riders to your policy, you can:
That said, not all features are right for everyone and different policies — even from the same company — will not always have the same features. For example, an item sold as a rider in one policy may be included as part of another policy's base coverage.
It is also imperative to know which riders and features you want when you purchase a policy, as they could require additional underwriting to be added after you sign the contract.
This is one reason why speaking with a financial planner who has experience in physician and dentist disability coverage before you consider adding riders or additional features is critical. They can help you determine what type of policy best suits your unique needs and situation and what disability riders and features will help you most.
It is important to note that while some riders can significantly raise your premiums, you should focus on the coverage you need. Below you will find some of the critical components of disability insurance we often discuss with our physician and dentist clients.
A definition of disability will be included in every insurance contract. The most frequently used definitions are as own-occupation and any occupation. As a physician or dentist, your policy should include the own-occupation definition.
A policy that has the own-occupation disability definition protects your income if an injury or illness renders you unable to do the duties of your occupation. You may receive benefits even though you may be able to work in another area of dentistry, medicine, healthcare, or a different career entirely.
Without the own-occupation definition, you may not be able to collect benefits if you can work in another occupation.
Non-cancellable is one of the more common types of contracts, so you may already be familiar with it. This provision provides you with the most protection as a consumer.
Your insurance company cannot increase or change your rates or benefits as long as you are making your payments on time. This is not always the case in all disability insurance contracts. There are some policies where rates can change.
This feature offers security should you become partially disabled due to an injury or disease yet are still able to continue in your main field of work. In essence, you do not have to be fully disabled to collect the benefit.
Depending on your carrier, this may be listed under Partial Benefits or Residual Benefits as sometimes these terms are used interchangeably. Partial or residual coverage removes the "all or nothing" premise regarding disability insurance.
By providing a partial benefit if you suffer an illness or injury, you are able to collect partial benefits as you recover from any disability and transition back into the workforce. If you don't have this provision in your disability contract, you may have to be fully disabled before you can qualify to receive benefits.
In Spaugh Dameron Tenny's past dealing with claims, we rarely have someone who is fully disabled for an extended period of time. It is much more common for someone to be partially disabled.
For example, someone who has cancer may be fully disabled as they are going through treatment. Once the treatment is complete, they may be able to work again at a part-time level. This disability insurance rider casts a broader safety net by making it possible for someone who has experienced an injury or illness to gradually return to work and still be paid partial benefits.
Your disability contract includes language that specifies how to qualify for partial or residual disability benefits. Typically, these include a loss of time, loss of income, and/or loss of duties. Be aware of your contract requirements.
The key with this insurance rider is that you have the option to increase the benefit in the future without undergoing additional health evaluations. The rider allows for the future purchase of additional benefits subject only to the financial qualification and not health.
The future increase option is imperative for young physicians as it protects your future income you have not yet earned. If you want to increase your coverage and don't have this rider, you will need to undergo a new health evaluation and have a new policy underwritten based on your current health.
There can be several insurability options from which to select. Know the pros and cons of each before making that choice. Some future increase options come with an additional premium, while others are free. Choose which is best based on your specific needs.
Suppose you are a urologist who suffered a significant injury in a car accident. You are now in recovery and are ready to start doing what you love.
Once you are back to work, you probably will not be making 100% of what you were before you were injured, and it may take some time to build up your base again. In addition, you may not be ready to come back at the same work pace as before and need time to build up to that.
This is where the recovery benefit comes into play. It ensures that you can go back to work in a way that helps support your recovery following a disability event. Make sure you understand how long the recovery benefit will last based on your policy.
Many disability insurance carriers offer younger physicians or dentists, generally in training or fellowship, some type of discount if they purchase a disability policy during training. They do this to attract physicians and dentists early on in their careers.
While it can be beneficial to explore the disability insurance discounts that are available to you, it may also be challenging in this stage of your career to both find and afford the right policy that will grow with you. For this reason, it is crucial to work with a financial professional who understands and is familiar with these discounts
In this day and age, most dentists and physicians know that they need disability insurance. The challenging part is knowing what type of policy you need and what riders and features will protect you the best.
Instead of figuring this out by yourself, let our financial planners at Spaugh Dameron Tenny, who have experience and knowledge working in this area, guide you through this process. They can help you understand your options, answer your questions, and guide you in making the best decision based on your specific situation.
A disability income policy has exclusions and limitations. For costs and complete details of coverage call 704-557-8750.
John Dameron has been a financial planner and partner with Spaugh Dameron Tenny since 2002. With the help of the SDT team, John created a lecture series called Physicians Financial Focus, authored a book entitled The Residents and Fellows Financial Survival Guide, and has coached hundreds of physicians from residency/fellowship into practice. His expertise has also been featured on KevinMD.
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