As a dentist or physician, it is crucial to your career to prepare for the worst-case scenario, in this case, getting sick or hurt and not being able to work. With various options for disability insurance, there is a plan for everyone.
We understand that the topic of disability insurance coverage lends itself to a list of questions, concerns, and confusions. It is not uncommon for a new doctor to feel a sense of shock when first exploring disability insurance. This blog can serve as a resource for physicians and dentists at any point in their career to find information regarding disability insurance and the common questions we encounter as financial planners for physicians and dentists.
Disability income insurance is a helpful way to safeguard your most important asset as a doctor: you and your income. In the event that you cannot work due to injury or illness for an extended period of time, you should have a way to support your family, pay your bills, and ensure you do not go into severe financial debt. Disability insurance provides you a way to safeguard things that are dear to you. You can learn more about disability income insurance here.
You have worked so hard to complete school and start your new life in your dream career. You have invested countless hours of studying, long nights in clinical rotations and residency, and not to mention incurred a large amount of debt to put yourself through school. The last thing you want to do as a new white coat is not taking disability insurance seriously and not having a concrete plan in place should you need it. Our resources on disability insurance for new doctors can help answer your questions. But what do you do when you’re ready to purchase an insurance plan? Our advisors can give you unbiased advice specific to your scenario and needs to provide the best options for you.
There are two common types of disability insurance: short-term and long-term. As you can imagine, short-term insurance is meant to be used for a period of 3-6 months for minor illness and injury, such as a minor procedure that does not require physical therapy. Long-term insurance is meant to be used in scenarios where short-term insurance and time off from your employer run out. Short-term disability insurance is generally provided by your employer. Long-term disability insurance coverage may be covered by your employer if you are full-time, and is also available through an insurance broker or exchange. You can find more about the pros and cons of long-term vs. short-term disability insurance in our blog.
While your employer most likely will supply a disability insurance plan as part of your benefits, these plans rarely cover more than 60% (closer to 40% after taxes) of your income. That can be extremely hard to live on when you have created a budget to support your lifestyle, especially when you factor in increased medical bills due to illness or injury. We are often asked if this will be enough to maintain financial security during the doctor’s leave. Unfortunately, there is no catch-all answer for this. For some with excess savings and an emergency fund, it can work out, and for others, it simply will not be enough. One option is to obtain supplemental disability insurance coverage. By adding supplemental disability insurance, you may be able to raise covered income close to 80%, a much more manageable amount when you must take prolonged time off. We’ve outlined the basics of supplemental disability insurance here.
There are several things you need to know as a physician or dentist before you decide to purchase a specific plan. The first of these is knowing what your insurance provider classifies as a disability. Every disability insurance contract includes a definition of disability. The most frequently used definitions are own-occupation and any occupation. A policy with the own-occupation disability definition protects your income if an injury or illness renders you unable to do the duties of your occupation. As a result, 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 this inclusion, you may not be able to collect benefits if you can work in another field. Looking for more information before you buy? Our blog can help!
Whether you are new to disability insurance or looking for a different policy, our Disability Insurance Guide can provide you with key considerations, benefits, and misconceptions about disability insurance.
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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