Should Doctors Get Disability Insurance? A Complete Guide for 2024

Disability insurance is often recommended to the healthcare community. However, it can be expensive, especially for residents and young attendings who start with lower salaries compared to their future earnings — causing many to question if they should get doctor disability insurance.

For most physicians, it makes overall financial sense to purchase disability insurance. But sometimes it isn’t worth the cost.

Generally, you can expect disability insurance to cost 2% to 4% of your income for adequate coverage. So, if you’re earning $150,000 per year, your monthly premium could be in the $250 to $500 range. However, disability premiums vary based on a number of individual factors (e.g., age, gender, occupation, medical history, etc.), making it a complex and tailored financial product.

Keep reading to determine if you need disability insurance, including what’s considered adequate coverage and when to cancel your existing policy.

Should doctors get disability insurance?

Most physicians, including residents, should buy disability insurance to serve as income protection from the unknown. After all, any number of injuries or illnesses — or just normal wear and tear on your body over many years — could affect your ability to perform your duties. 

Considering the money that was put toward your medical degree, including the cost of medical school, and the time and effort spent honing your skills, it would be devastating to have it all taken away in the blink of an eye. And that’s just the emotional turmoil.is

A disability could sideline you for a couple of years or the remainder of your anticipated medical career. Without those future earnings, will you be able to afford your existing lifestyle or continue with your long-term financial goals?

This is why physician disability insurance makes sense for most doctors. Without it, you could be facing a medical condition that causes abrupt changes to life as you know it without your consistent high income to back you up.

If you’re single, you might be willing to gamble that you’ll stay healthy and uninjured throughout your career, depending on your risk tolerance level. You might even stick with a group policy if your employer offers one.

But if you have a family depending on your income or you work in a medical specialty at high risk for disability, having your own disability insurance policy should become a non-negotiable in your financial plan. You should also consider buying life insurance and building an emergency fund to protect yourself and your family better.

SLP Insurance can help you get adequate coverage. Just fill out the form below, and we'll connect with you about your own-occupation disability options. Keep reading to learn more about doctor disability insurance.

When doctor disability insurance might not make sense

Generally speaking, disability plans are worth it for most physicians. However, there are some situations where it doesn’t make sense to buy or continue to carry a disability insurance policy.

Scenario 1: You’re financially independent

This scenario is pretty straightforward. If you’ve reached financial independence, you don’t technically need your doctor income to go about your normal life. Therefore, you no longer need a policy from a disability insurance company and can use those premiums elsewhere (such as to pay for health insurance coverage).

Scenario 2: You’re married to a high-earning spouse

If your spouse has a high salary that can sustain your household without your income, then it might make sense to avoid the cost of disability insurance. This scenario should be discussed in detail, so there aren’t any surprises or misunderstandings that could further strain your relationship during an already stressful situation.

Scenario 3: You can’t afford disability insurance premiums

If you flat out can’t afford disability insurance due to other necessary financial priorities, you might choose to delay purchasing disability insurance. However, you’ll be taking on a huge risk. So, you’ll want to plan to purchase a policy as soon as you’re in a better financial position. 

That being said, disability insurance is a highly customized product. So, you might be able to afford more than you think you can. It’s best to reach out to a knowledgeable independent insurance agent who can discuss your situation and explore discounts to make disability insurance more affordable.

Related: Guide to Buying Disability Insurance for Nephrologists + Costs

Other reasons to consider skipping doctor disability insurance

There are a number of other unique situations that might make you reconsider your need for disability insurance, including:

• You’re a physician in the late stages of your career. Most disability insurance policies stop making payments once you hit traditional retirement age, or for a short benefit period. If you’re in your late 50s to 60s, the cost might outweigh the potential benefit considering you’ll have a limited payout. Plus, you should have more of a nest egg to fall back on at that point in your career.
• You’re expecting an inheritance or other family support. Maybe you’ve got a rich aunt that doesn’t have any kids of her own, setting you up for an eventual financial windfall. Or maybe your family is known for bending over backward to support each other. Whatever the case, the cost of disability insurance might not make sense if you have others that could provide financial assistance if you become disabled.
• You’re comfortable with your Social Security Disability benefit. Unless you live well below your means or have significant assets, your Social Security disability benefit won’t be enough on its own. But for some, the small supplement might fill the financial gap in a worst-case scenario, allowing them to skip out on disability premiums.

If you fall into one of these scenarios, you might delay buying doctor disability insurance or forgo it altogether. Just keep in mind that disability insurance gets more expensive the longer you wait to purchase it.

Related: International Disability Insurance: What to Expect From Your Coverage While Abroad

What is considered adequate coverage for doctor disability insurance?

Disability insurance won’t replace your full salary. But insurance companies typically offer long-term disability insurance coverage for about 60% of your income. That being said, if you’re responsible for the cost of your premiums (and not your employer), then your monthly disability income isn’t taxable — giving you a maximum payout that should be close to replacing your existing after-tax pay.

In addition to choosing a monthly benefit amount you’re comfortable with, you’ll also need to look at other coverage options. These include decisions like choosing your benefit period (e.g., two years of disability insurance benefits versus all the way up to retirement age) and whether you need own-occupation coverage.

An own-occupation disability policy provides the strongest definition of disability, allowing you to continue working in another field if you desire. For most physicians, a true own-occupation definition offers the best disability insurance compared to going with a less expensive “any occupation” definition that can make your disability claim harder to qualify for.

Additionally, you’ll need to consider disability riders, such as future income increases, partial or residual disability, catastrophic disability and cost of living adjustment (COLA rider) for inflation protection (among many others).

All of these optional riders can impact your disability premiums. But more importantly, they can provide better (or worse) coverage for your medical specialty and unique situation.

For more information about buying doctor disability insurance, check out our long-term disability insurance guide that answers some of the most common questions physicians have.

You can also connect with SLP Insurance and its partner agents to discuss individual disability insurance coverage options and available discounts by filling out the form below.