Is it Too Late to Purchase Physician Disability Insurance?

Anyone can experience a serious injury or illness. But the nature of your work as a physician means that a simple car accident or mobility issue could alter or end your medical career without notice. If you’re not financially independent, having adequate physician disability insurance is a must.

Even if you have disability coverage through your hospital or clinic, an individual policy can provide you with better income protection. They’re portable and have stronger definitions of disability that are specific to your medical specialty.

Here’s what to expect for physician disability insurance, including cost estimates and what your policy should include.

How much does physician disability insurance cost?

Your disability insurance premiums will depend on a number of factors, including your age, gender, medical history and occupation. As a general rule of thumb, you can expect to pay more for coverage if you’re older, a female or in a medical specialty that has a high-risk of disability. That said, you might pay anywhere from 2% to 4% of your income for own-occupation disability insurance.

Let’s look at what a resident surgeon might pay compared to a resident pediatrician.

Trauma surgeon vs pediatrician disability insurance monthly cost
(age 34, resident/fellow)

Company	Male surgeon	Female surgeon	Male pediatrician	Female pediatrician
Guardian	$221	$322	$162	$236
MassMutual	$200	$311	$140	$218
Principal	$192	$345	$110	$194
Ameritas	$206	$299	$145	$207
Standard	$174	$275	$145	$228

Surgeons will pay higher premiums than pediatricians due to historical claims data that shows they’re at a higher risk of filing a disability claim.

Women are also more likely to file a disability claim, which unfortunately drives up premiums for female physicians. This is partly attributable to the fact that women experience a myriad of health risks during pregnancy, delivery and postpartum.

Fortunately, some insurance companies offer unisex discounts, which can reduce the premium down to a gender-neutral rate. Additionally, if you purchase a policy within six months of finishing training, you can often obtain significant discounts on your premium.

Why physicians need disability insurance

If you become disabled during your medical career, disability insurance will pay out a set amount each month until you recover from your disability or until you reach retirement age.

This is a huge benefit, especially if you have a family depending on you as their main source of income. In this case, disability insurance is essential to their financial security as well as yours.

Most physicians purchase optional riders on their policy so they can buy more as their income increases. You can also purchase a rider for inflation protection so that your policy benefits maintain the same purchasing power.

You might scoff at having a policy in force until you’re 65 years old. However, the biggest risk and the cheapest cost is at the beginning of your career. Disability insurance is a great product to buy for the first few years of your career while you’re building wealth. Once you have substantial assets, you can reduce the benefit or eliminate some of the optional riders to save money. Once you’re financially free, you can cancel it entirely.

SLP Insurance can hunt down the best disability insurance discounts for your situation, making own-occupation physician disability insurance more affordable. Fill out the quote form below to get started.

Special considerations for physicians when buying disability insurance

Any high-earning, high-debt professional should consider getting disability insurance to protect their educational investment. However, physicians who forgo disability insurance gamble with their livelihood, considering the range of events that could impact their ability to perform procedures and treat patients.

Thinking about the worst is never pleasant, but assume for a moment that you get into a car accident commuting to work or on the way to a family vacation. You might be fine overall, but what happens if you fracture some of the bones in your hand and can no longer perform certain procedures? What if you receive a devastating diagnosis that is survivable but greatly limits your ability to work?

There’s more risk as a physician than a typical worker. A blogger who has a skiing accident, however, might be able to maintain their lifestyle as long as they can sit up straight in a chair.

Perhaps that might be true for some specialties today, but the vast majority of physicians need an own-occupation policy.

To state the obvious, most physicians need to use their hands and have a normal range of motion at work. If you work via Zoom all day, then perhaps you don’t need an own-occupation policy. Overall, medical professionals need own-occupation coverage in the absence of a seven-figure net worth.

What should physician disability insurance include?

You might ask, what is an own-occupation policy? This type of disability insurance will pay you a benefit if you’re unable to perform your specific occupation due to a long-term injury or illness. With a true own-occupation policy, you can receive full benefits even if you’re able to continue working in a different profession or medical role. We recommend keeping this specialty-specific level of coverage as a physician because of your extensive, specialized training.

Aside from own-occupation coverage, you’ll need to consider other beneficial disability insurance riders, such as:

• Future purchase option. This rider is important for residents and new physicians who haven’t reached their full earning potential. It allows you to increase your benefit at a later date without having to go through the underwriting process all over again.
• Residual disability or partial disability coverage. This option provides partial benefits based on loss of earnings (e.g. reduced hours) because of your disability.
• Catastrophic disability benefits. You’ll receive additional disability insurance benefits for a severe injury or medical condition that prevents you from performing daily living activities, including bathing, dressing and eating. 

You can add or remove optional riders depending on your insurance needs and budget. You can also adjust the cost of disability insurance by modifying the terms of the policy.

For example, you might extend the waiting period from 90 days to one year before you start getting paid after an injury. You could forgo inflation protection (cost-of-living adjustment), insure less income, forgo the option to buy more later, or choose not to buy an optional rider that covers your student loan payments in the event of disability.

There are many disability riders and policy decisions to explore as a physician. So, it’s best to speak with an expert independent insurance agent to fully understand the benefits and costs of each option.

What kind of disability insurance is available to physicians?

Physicians can potentially access long-term disability insurance through an employer, professional association, residency or fellowship partnership, or an individually-purchased policy.

Employer-provided group disability coverage

Our 2022 Student Loan Planner Insurance Survey found that more than half of physicians have disability coverage through their employer. While this is a great job benefit, it can also be misleading. Most employer-sponsored group disability plans have limited benefits and coverage, which might not become apparent until you actually need it.

For example, the Southern California Permanente Medical Group offers its associate physicians disability insurance coverage that provides 50% of their income with a $20,000 per month maximum. However, income calculations exclude bonuses, awards or year-end performance draw. Additionally, physicians are entirely responsible for their premium payments until reaching partnership level.

Disability insurance through your employer is certainly better than not having any at all. Those without coverage or with inadequate coverage risk having to rely on other people’s charity or on Social Security disability benefits as their source of income. Neither of which is ideal considering the average Social Security Disability Insurance (SSDI) payment was about $1,343 as of May 2023.

If your employer is picking up the tab for disability insurance, make sure you’re signed up for anything offered. However, if you’re responsible for the premiums, make sure to compare their group policy with individual disability insurance options.

Disability coverage through a professional association partnership

Some professional associations provide members with discounted disability coverage through an insurance partnership. For example, the American Medical Association (AMA) offers several disability insurance options underwritten by New York Life for practicing physicians, residents and medical students.

Here’s a quick summary of AMA’s disability coverage details:

• Physicians under 55 can apply for up to $15,000 in monthly benefits (age 55 to 60 can apply for up to $5,000). 
• Residents can apply for up to $5,000 in monthly benefits, regardless of current salary, debt or existing coverage amounts.
• Medical students are eligible for up to $1,000 per month for up to 12 months for $41 a year.

AMA members receive a 35% rate reduction. However, rate reductions are reviewed annually and aren’t guaranteed. Additionally, coverage isn’t available in New Hampshire, Vermont and Washington.

For some, buying insurance through an association partnership might make sense. But don’t immediately take this membership perk at face value. Always comparison shop and dig deep into disability coverage details to understand exactly what is and isn’t covered.

Individual disability insurance policy

In most cases, you’ll find a better deal on physician disability insurance by working with an independent agent who searches the “Big 5” disability insurance companies. They can walk you through important policy decisions and find a balance between coverage options and your budget.

An agent should be able to tell you in what scenario they wouldn’t be able to get you the best policy. Make sure they have adequate knowledge to merit the commission you’re indirectly paying them by purchasing a policy.

Guaranteed standard issue policies for select residency and fellowship programs

Some residency and fellowship programs have guaranteed standard issue disability insurance. This means that you might not be required to get a medical exam to purchase a policy. For some physicians with pre-existing conditions, this could be extremely important.

However, if you ask for quotes independent of that program, you might no longer qualify for the guaranteed issue discounts. In a worst-case scenario, this could make you uninsurable. 

That’s why when SLP Insurance gets your information, we ask for some medical information to determine if we need to check with your program first, or if it’s okay to continue submitting your information to get quotes.

How much disability insurance do physicians need?

At a minimum, you should have enough physician disability insurance to cover your living expenses. But if you can afford more, we recommend purchasing the maximum benefit amount available. This is generally around 60% of your gross income. However, your monthly benefit might be reduced if you already have existing disability coverage.

You also might want to look at your workplace policy and purchase a supplemental policy to go along with it. One surgeon client of ours realized that he only had $5,000 a month of income protection on a $400,000 income. With three kids and a partner who didn’t work outside of the home, his family was exposed to a dangerous financial risk.

If you’re in a similar situation where you’re the breadwinner or sole provider, a supplemental policy that protects $5,000 to $15,000 a month of income would be appropriate (depending on risk tolerance and family assets).

As the primary source of income for your family, you have others relying on you in so many ways. Money can’t buy happiness, but it can certainly keep your family in a comfortable lifestyle. It can also prevent your spouse or partner from having to scramble to find employment while also managing the changes that come with your disability.

Once you become financially independent, you can cancel your disability policy and live off passive income from your investments if it’s ever needed.

Comparison shopping: Get a disability insurance quote for physicians

Disability insurance isn’t something that you want to gamble with. If you’re a young physician or resident, take advantage of your age and health by locking in a low rate for the rest of your career. The prices exponentially increase the longer you wait.

If you already have existing disability coverage, it never hurts to do some comparison shopping to make sure you’re getting the best rates and coverage. SLP Insurance is available to provide unbiased information and answer specific questions about costs and coverage options.

To make sure all options are being explored with your best interest, you need a group that doesn’t need to sell you a policy. There should be no pressure, and the priority should be getting you the biggest discount possible for the coverage that you need.

Start the free quote process today by using the form below, and receive a free one-on-one assessment of your disability insurance needs.