Do You Need Medical Fellowship Disability Insurance? Costs + Options

If you missed out on buying long-term disability insurance during residency, there’s still an opportunity to get affordable coverage as a medical fellow. In some cases, you might have access to guaranteed coverage through your fellowship program. 

Otherwise, an individual policy can provide comprehensive coverage for medical fellowship disability insurance that’s cheaper now versus waiting until you’re making an attending physician income.

Why you need disability insurance as a medical fellow

Disability insurance provides a financial safety net if you experience a long-term injury or illness that prevents you from working. For physicians, a “true” own-occupation policy provides the strongest income protection because it specifically covers the job duties of your medical specialty. But it also gives you the option to continue working in another field while collecting disability insurance benefits.

As a resident physician, you were likely pitched disability insurance from several sources — and for good reason. Disability insurance is the cheapest when you’re the youngest and healthiest. You also have a long medical career ahead of you, giving you ample time to experience a disabling event or medical condition. 

But if you neglected to buy disability insurance during residency, you can still purchase it as a medical fellow.

SLP Insurance works with physicians to find affordable specialty-specific coverage. Fill out the form below for a quick, custom quote. Or keep reading to learn what you should consider when buying medical fellowship disability insurance.

How much disability insurance can you qualify for as a medical fellow?

One of the primary perks of buying disability insurance as a resident is that you can qualify for a monthly benefit of $5,000, regardless of your income. This perk also extends to medical fellows. Even better, you can qualify for a benefit amount up to $7,500 if you’re within six months of completing your fellowship. But you might have access to this coverage limit sooner, depending on the insurance carrier.

Why are these disability coverage amounts important to medical fellows and residents? 

Normally, disability insurance companies limit disability benefits to around 60% of your gross income. But as a resident or fellow, you can access a set benefit amount based on a stable career trajectory that comes with a high future income as a physician. Here’s how that benefits you.

The average medical resident earns about $60,000 in their first year, according to the Association of American Medical Colleges (AAMC). If you buy a disability policy with a $5,000 monthly benefit, that’s the equivalent of 100% of your income (instead of only 60%). Additionally, the payout will be tax-free since you’ll pay for premiums with after-tax dollars.

Now, as a medical fellow, you have a higher salary. But it isn’t anywhere near what you’ll be making in the future. AAMC puts the average PGY5 salary at just shy of $72,000. If you were in a different profession, you might only qualify for disability benefits of $3,600 per month. But as a medical fellow, you can access benefits from $5,000 to $7,500, depending on the insurance carrier and your timeline for completion.

This is a substantial monthly benefit, at least until your income increases as an attending in your subspecialty. At that point, you can buy additional coverage that’s more in line with your high salary and future financial needs.

How much does medical fellowship disability insurance cost?

The cost of disability insurance varies by individual and insurance carrier. Premiums are based on a number of risk factors, such as age, gender, medical history and occupation. But you can generally expect to pay about 2% to 4% of your income for a “true” own-occupation disability policy.

As a reference point, let’s look at how much it might cost a trauma surgery fellow versus a pediatric cardiology fellow.

What should a medical fellowship disability insurance policy include?

Physician disability insurance policies should include a “true” own-occupation definition of disability. This should be a priority considering most physicians carry six-figure medical school debt. 

Plus, as a medical fellow, you’ve already spent four years in a residency program and are now tackling another one to four years of fellowship training. Don’t risk your medical specialty income with a weak any-occupation definition that often makes it challenging to qualify for benefits.

Additionally, consider which optional disability insurance riders realistically enhance your coverage without wasting money that you can use elsewhere.

For example, a future purchase option rider allows the policyholder to buy more coverage in the future without additional medical underwriting. Residents and fellows should include this provision considering you’ll experience a rapid income increase as an attending. 

Other policy riders include partial disability or residual disability benefits, catastrophic disability coverage and a cost of living adjustment (COLA). There are nuances to each optional disability rider. It’s best to speak with a knowledgeable insurance broker to discuss options that make sense for your situation and the related policy costs.

Types of medical fellowship disability insurance

Medical fellows can potentially find disability insurance through:

• Employer-sponsored group policy. You might have access to long-term disability as part of your benefits package. But this group coverage often has limited benefits and a narrow definition of disability that doesn’t sufficiently protect your medical specialty income.
• Group coverage with a professional association partnership. Organizations, such as the American Medical Association (AMA), provide discounted disability insurance options. However, it isn’t always cheaper. Plus, your premiums can change as you move into an older age bracket.
• Individual disability insurance policy. We recommend working with an independent insurance broker who searches the “Big 5” for own-occupation coverage. You’re less likely to get an inflated policy that is driven by large commissions.
• Guaranteed standard issue (GSI) policy with your fellowship program. GSI policies are a great option since they provide guaranteed coverage. But only select fellowship programs provide this opportunity.

Before you apply for coverage anywhere, explore GSI opportunities by checking with your fellowship program or contacting SLP Insurance. Our team compares your options to ensure you get the coverage you need at the most affordable rate.

Get medical fellowship disability insurance

If you didn’t buy disability insurance during your residency, your medical fellowship provides another chance to get coverage before it gets even more expensive as an attending.

The amount of coverage won’t be determined by your fellowship income. Instead, you can get at least $5,000 worth of disability insurance coverage — maybe up to $7,500, depending on your situation and insurance carrier. Plus, it might be a final opportunity to get guaranteed coverage with a GSI policy if you have an existing medical condition.

Fill out the form below to start the quote process for medical fellowship disability insurance.