AVMA Disability Insurance Review: From Coverage Options to Claims Process

Veterinarians, as an occupation, face one of the toughest decisions when deciding on long-term disability insurance. Many veterinarians are members of the American Veterinary Medical Association (AVMA), which provides access to a group plan called AVMA LIFE. This plan is known for its affordability, and is managed by New York Life (NYL), an A++ rated company (that’s on par with Guardian!). 

Why should you consider a more expensive individual disability insurance plan, possibly with a lower-rated company, over this group plan? At first glance, it doesn’t sound like a tough decision. But it’s more complex than it appears.

How does disability income insurance work?

After passing the underwriting process, long-term disability insurance replaces the insured’s income if they experience a covered disability. This typically involves an injury or illness that prevents them from working for a certain period (generally about 90 days, but varies from policy to policy). 

After this waiting period, the insurance company pays out monthly disability benefits until the insured recovers and returns to work or until the end of the benefit period (if they don’t recover). The most common benefit period is to age 65, but to age 67, 70 or even a five-year period is possible. Again, it depends on the policy.

Related: Understanding How Long Disability Insurance Lasts

AVMA LIFE group disability insurance: What is it?

The AVMA LIFE Trust group disability insurance policy works in a similar fashion. Here’s what to expect.

Benefit period

First, take the benefit period. I mentioned most policies go to age 65 or 67. The AVMA LIFE policy managed by New York Life Insurance Company goes to age 70, assuming the disability suffered was before age 62. That’s an unusually lengthy benefit period, and choosing a longer one would increase premiums on a private individual policy.

That’s a huge win for AVMA LIFE. 

Elimination period

For the elimination period (also called the waiting period), the insured can choose between 30, 60, 90, and 180 days. It depends on what you’re comfortable with and how big your emergency fund is.

Definition of disability and partial benefits

The definition of disability and partial disability benefits are two of the other most important features of a policy. The AVMA group plan has own-occupation as an option for the definition of disability, which is what I highly recommend to veterinary clients. If a disability like hand tremors prevented you from practicing veterinary surgery, for example, you could still work another job like teaching veterinary students at a university — but an own-occupation policy can still pay the full monthly benefit. 

A partial disability example is slightly different: If chronic back pain meant decreasing your working hours from an eight-hour day to a six-hour day, that drops your weekly hours from 40 to 30, and presumably results in a 25% decrease in income. A partial disability rider can step in and the policy can pay 25% of the monthly benefit to bridge that gap in income.

AVMA’s Basic Protection Package explained

The group policy isn’t available as just long-term disability insurance. It’s combined with the AVMA LIFE Basic Protection Package that offers three additional components:

• Rabies prophylaxis benefit: This benefit reimburses up to $600 for any rabies treatment given to the insured or their immediate family. 
• Decreasing term life insurance: It begins with a death benefit of $75,000 for those under age 36, and steps down the amount as you get older. The idea here is that your loved ones need more benefit during your younger years.
• Accidental death and dismemberment (AD&D): It provides up to $25,000 to help your finances if you suffer a serious accident.

As of 2023, the extra benefits of the Basic Protection Package were less than $5 in monthly premiums. Not bad, but it’s mandatory, so you can’t opt out. 

Can you get short-term disability insurance from AVMA?

Yes, you can purchase short term disability insurance as an add on. The coverage lasts six months for a covered disability, which can fill the gap until your AVMA long-term disability coverage kicks in.

A unique feature of this short term disability policy is that it can cover complications from pregnancy, whereas  long term policies tend to exclude most pregnancy complications.

Related: Short Term vs. Long Term Disability Insurance: Which Is Best for a Crisis?

Eligibility requirements for AVMA disability insurance

The AVMA policy is available to residents of all 50 states, plus Washington DC and Puerto Rico. The applicant must be an AVMA member or an SAVMA member. But SAVMA members must attend school full time and be in their 3rd or 4th year. They must also be working at least 20 hours a week (unless they’re an SAVMA member).

Drawbacks of AVMA group policy

Despite its benefits, the AVMA LIFE group plan has some drawbacks.

Lack of policy control

The biggest concern I have with a group plan like this is that the contract isn’t between you and the insurance company — it’s between AVMA LIFE Trust and New York Life. Both of them have the right to cancel this contract at any time. Leaving you without coverage. 

If you had an individual disability insurance policy, it’s typically noncancelable and guaranteed renewable. This means the insurance company can’t cancel your contract for any reason other than nonpayment of premiums, and they’re not allowed to raise rates… ever.

Loss of coverage

Remember the eligibility requirements? If you leave the AVMA for any reason, like a sudden passion for opening your own bakery, you lose access to your disability insurance. Conversely, a private policy is portable. It’s one of the primary differences between group vs. individual disability insurance. A private policy allows you to change professions and matches its definition of own-occupation to meet that new profession.

Related: What Age Should You Drop Disability Insurance?

Mental health exclusion

The AVMA group policy has a 24 month mental exclusion. That means it excludes any disabilities from psychiatric illnesses or substance abuse that last longer than 24 months over the lifetime of the policy. Most people see this as a non-issue, but veterinary medicine is one of the most stressful jobs out there. Some studies report that 80% of veterinarians experience clinical depression at some point in their career. 

Most individual policies provide unlimited mental coverage. You’d have the option to take the 24 month limit if you still wanted to, but you’d get a 10% discount for the trouble.

Own-occupation definition

The own-occupation definition also has a bit of a flaw. Remember when I said you can go work another job, and it’s fine? Usually it would be, but for the AVMA group policy, you must earn at least 25% less than your original occupation to qualify for full benefits. Partial disability benefits also require a 25% loss of prior earnings. Most private policies give you the option to make it 15%, if you wanted to.

No student loan rider

As far as I can tell, the AVMA Trust doesn’t have a student loan rider. A student loan rider pays a predetermined amount towards your student loans specifically if a covered disability is suffered before the end of the term (usually these last for five or ten years from the date the policy was purchased. 

Instead, AVMA has a separate product — Supplemental Disability Insurance they call Student Loan Disability Insurance. It functions the same, you just have to remember to buy it separately instead of adding it to an individual policy (note that Principal insurance company does not currently offer this rider).

Benefit caps and restrictions

Finally, the only way to increase your monthly benefit as your salary grows is through AVMA’s Future Purchase Option (FPO). This rider locks in your rates for future coverage, but you’ll have to pay extra premiums now for the option to exercise it in the future. 

If you’re in good health, an individual policy offers a benefit purchase option, which allows you to increase coverage every three years. More importantly, it doesn’t cost an additional premium. 

One more thing to note about the AVMA policy: The monthly benefit will max out at $12,500, no exceptions. And starting at age 50, AVMA policies actually reduce the maximum benefit they pay out. So, when people are more likely to get disabled, they’re lowering their liability.

Age	Maximum monthly benefit
Before 50	$12,500
50 to 54	$9,000
55 to 59	$6,000
60 to 69	$3,000

AVMA disability insurance: Next steps for veterinarians

If you’re in the veterinary profession, you have plenty of options for disability coverage. Comparing different insurance products can be challenging. If you want to explore individual disability insurance quotes to compare with AVMA LIFE, fill out the quote form below.