How to Choose Physician Disability Insurance: 10 Crucial Factors

Nearly everyone runs the risk of illness or injury that can reduce the ability to earn income. However, as a physician, you have the potential to see the end of your medical career if a serious injury or illness makes it impossible to do your job.

If you’ve started a family and have dependents, some type of disability income insurance is especially important. No matter your situation, getting some type of disability insurance can be a good idea. Whether through your workplace or an individual disability insurance policy (or both), ensure you get the right type of coverage and an adequate benefit amount.

1. Definition of disability: The fine print matters

Before comparing disability insurance coverage for income protection, make sure you understand the definition of disability and what it means for your coverage. 

There are different types of policies that can impact the type of pay benefits you receive if you become disabled.

What specialty own-occupation means for you

One of the most important things you can do is receive a payout when you can’t work in your specialty. Specialty own-occupation coverage provides benefits when you can’t work in your specific specialty — even if you can still do other work in general.

Own-occupation is tailored to physicians

As a policyholder, you want to make sure you can make up for lost income in your specific occupation. With own-occupation coverage, you receive benefits from your disability insurance plan if you can’t work as a physician. 

Even if you can work in another job, this type of policy is specific to your job as a physician, so you can still receive benefits.

Modified own-occupation has limits

Pay attention to this type of disability benefit. While you might be able to work in another profession, you can still collect pay benefits as long as you’re not working in that position. 

However, your benefits could stop once you begin working in another profession. This is an exclusion that could cost you if you don’t understand it.

Any occupation might not protect your income

With this type of disability policy, you won’t receive benefits if you can still work at any job. If you can’t work as a physician or under your specialty but can work in any other profession, you won’t receive your payout.

2. Policy cost vs. policy value

After getting a handle on different types of disability insurance and their definitions, compare costs. This is an important consideration since the cost of disability insurance can affect your budget each month. However, you also want to make sure you’re getting the best value for your money.

Different items influence the cost of your disability policy. Some items to pay attention to include:

• Individual policy vs. group disability coverage. Often, an individual policy costs more than getting group coverage as part of your employee benefits.
• Profession or specialty. Sometimes, your specialty can influence cost based on the potential risk of injury and the need to pay out. For example, someone specializing in general practice or family care might have a lower premium than a surgeon, who has a higher income and might be greatly impacted if an injury results in an inability to use their hands.
• Riders. You might add other riders to your policy, including total disability, partial disability, cost of living adjustment or other items. Additional coverage leads to a higher disability insurance cost, but might be worth it, depending on your risk profile.
• Payout benefits. Your maximum payout, monthly benefit, waiting period and whether you have short- or long-term disability insurance (or both) can impact your overall disability insurance quote.

Pay attention to the cost and what you receive for your premium. Paying for that higher cost might make sense if you can afford more coverage. However, if it doesn’t fit your budget, get what you can and consider additional coverage later.

Related: How to Compare Disability Insurance Quotes Like a Pro

3. Maximum monthly benefit calculation

Depending on your profession, you might have a different monthly benefit based on your income. For example, receiving a benefit of 60% of your income is relatively common. If you make $200,000 a year, you might have a monthly benefit of $10,000.

Not every disability insurance company has the same underwriting standards and benefits, so double-check to see if there’s a cap on your monthly benefit. It’s also important to understand the difference between the maximum payout as well. You might have different limits based on whether it’s long- or short-term disability coverage.

Your benefit might also rely on the outcome of a medical exam, depending on your overall current health.

Make sure your monthly benefit covers costs, like rent or mortgage payments, debt payments (including student loans) and other expenses.

4. Tax implications of policy types

Realize that different policies have different tax implications. For example, the benefits from an employer policy are considered income by the IRS and can be taxed. On the other hand, if you have an individual policy because you’re self-employed or you want additional coverage, your benefits aren’t considered taxable income.

5. Available riders to customize your coverage

Next, check to see what riders are available with your insurance company. Some common optional riders to consider include:

• Retirement age. Consider getting a policy that covers you until age 65. That way, you have access to coverage if you decide to work longer or need other income replacement.
• Residual disability. You can receive partial benefits based on reduced hours. So, if your condition requires that you work less, you can still receive some payout.
• Catastrophic disability. If your injury or illness stops you from completing daily activities such as bathing or dressing, you can receive additional benefits.
• Future purchase option. Residents and new physicians should consider this rider, which allows you to get a higher benefit rate later without going through underwriting again. This can help you get more coverage as your earning potential increases. You can also find out if the insurance is renewable later.
• Mental health. Some mental health riders provide you with benefits if you end up unable to perform your duties as a result of a mental health issue.

6. Financial strength rating

Check the financial strength rating of the disability insurance company. One company that provides ratings is A.M. Best. You’re likely to see ratings of A-, A, A+ and A++. 

We recommend looking for the best disability insurance companies with a rating of A+ or higher. Some common companies and their ratings include:

Company	A.M. Best rating
Assurity	A-
Guardian	A++
Mass Mutual	A++
Mutual of Omaha	A+
New York Life	A++
Northwestern Mutual	A++
The Standard	A

7. Benefit period: How long are you covered?

You might not receive your benefits the entire time you need them. A long-term disability insurance policy generally has a longer benefit period than what you’d see with short-term disability policies. 

Some policies pay benefits for a period of weeks or months, while others cover you for years. Double-check to see whether you can get ongoing benefits in the case of permanent disability.

8. Elimination period before benefits kick in

An elimination period is a required waiting period between the date of your injury or illness and when you actually start receiving benefits. Elimination periods can range from 30 to 365 days, depending on the policy and whether it’s a short- or long-term policy. 

This period often functions as your “deductible,” in which you cover the cost of your own care until the benefits start paying out.

9. Mental and substance abuse coverage

In some cases, your policy might not cover illness or injury due to mental health issues or due to substance abuse. If you’re concerned about this, consider checking the policy to determine whether you can get coverage for these issues.

10. Loan payoff as an included benefit

Finally, determine whether there’s a loan payoff option in your benefits. Will your student loans be paid off in full if you’re disabled? Does the insurance policy pay off your mortgage? 

Not all policies pay off your loans, so check to see whether that’s an included benefit.

Get basic coverage from your employer, then add an individual policy

You can access disability insurance in several different ways. You might be able to buy it through your employer or through a professional organization. It’s also possible to get an individual policy. 

Consider getting basic insurance through your employer, and then add an individual policy if you need more coverage. Fill out the form below to get a disability insurance quote.