The Fundamentals of Disability Insurance for Residents and Fellows

Practicing medicine requires extremely rigorous training, including time, experience, and cost. Physicians are at higher risk than many to lose their earned wealth if any ailment bars them from performing the duties of their job.

Disability Insurance offers a form of monthly income in the event of a disability and should be an essential consideration for those still training, including residents and physicians in fellowship positions. Securing the right policy early can protect trainees as they begin their ascent to the title of Physician. This article hopes help begin the conversation by covering premium prices and extraneous factors that influence a policy such as timing, location, occupation, and occupation policy riders.

Premium Prices

Two significant considerations in the basic calculation of disability policy premiums are age and gender. Policy premiums increase annually anywhere between 0.86% and 4.97% to reflect the insured’s age. Additionally, female policies generally cost more than male policies because women statistically file disability claims more often than men.

Timing

Policy premiums can also differ based on when you acquire the policy. For example, certain companies offer group discounts to residency and fellowship groups, such as the Multi-Life discount, that offer up to a 35% discount on personal Disability Insurance policies depending on the number of participating employees.

Similarly, Disability Insurance requires records of the last two years of income in your current occupation to calculate policy benefits, preventing those who have recently started their own private practice from being approved. It may be beneficial, then, to take out a policy during training in preparation for years in which you will not be able to obtain Disability Insurance.

Location

Pricing, policy definitions, and contract benefits for Disability Insurance vary in different locations in America. Some places like California, Washington D.C., Florida, and Puerto Rico, include up to an additional 30% surcharge on the insurance price for the same exact policy in another state. Additionally, locations such as these lack specialty language in their contract definitions, limiting the length of coverage for claims such as mental or nervous disability.

Income coverage caps vary by state as well. For example, MassMutual will cover up to $20,000 of income per month for physicians in most states with a personally owned policy but will only cover up to $15,000 in states like Florida and California. This could leave new attending physicians in these states underinsured as their career grows in the future.

Occupation

Another consideration in Disability Insurance is a physician’s specialty. Some specialties are rated by the insurance companies as a higher risk to go out on disability insurance than others, which may raise their premiums. Securing a policy as a trainee may exempt you from paying more in a specialty occupation.

Additionally, perhaps the most important rider to add to your disability policy is the Own Occupation Rider. This rider ensures that you will receive disability insurance benefits if you cannot work in your own occupation, even if you are able to work in another occupation. This protects you from an unexpected income decrease that does not reflect your occupation expertise.

Conclusion

Using this information as a benchmark, fellows and residents can explore the possibility of finding a policy that best fits their needs at a time when protecting their hard work is paramount.

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