If you’ve stumbled upon this article, then you likely have set off to learn more about Physician Disability insurance for medical residents. Undoubtedly, you have either been approached by an agent, advised by a superior or spoken with peers about this type of coverage. Likely you already know that the best time to purchase a policy is when you are young and healthy – but what is the true benefit for residents and fellows in purchasing Disability insurance during fellowship or residency?
The primary reason to consider purchasing Disability insurance during medical residency is pertaining to the idea that during this time, you are young and likely very healthy. This is an interesting concept however, because all 25-30 year olds are certainly still young, and more importantly feel that their health will remain the same for years. So although you know you should consider protecting your income now, it becomes very easy to procrastinate and hold off on purchasing coverage for weeks, months and years.
The factor of age is simple – every year you delay purchasing Disability insurance will cost you about a 4% increase in premiums. In other words, the cost of coverage will increase by about 3-4% each year you wait. If a Disability policy will cost $1,000 per year today, in three years your premium will likely be about $1,125. Since Disability insurance can be designed to maintain a level premium for the duration of the policy life, it is beneficial to purchase coverage at a young age in order to secure a lower premium, for your entire professional career.
The factor of health is a bit more complex than the average person would believe. The biggest risk a medical resident will run in not purchasing coverage today, is the discovery of an illness that may prevent him/her from qualifying for it in the future. However, there is also the risk of simply discovering a smaller medical condition that still allows one to purchase a Disability policy, but requires an exclusion. Exclusions are used by insurance companies to remove a specific pre-existing medical condition from the disability contract. This means that you will not be covered in the case of a disability caused by the pre-existing condition or any complications that are a result of the pre-existing condition either. Although having a Disability income policy with exclusions is still better than not having a disability policy at all, most people prefer a policy without exclusions if at all possible.
A third reason why residents should consider purchasing Disability insurance during medical residency is in relation to the quality of coverage available on an individual basis versus that available with group coverage. Although it may be your good intention to purchase individual Disability insurance once you leave residency and become an attending, you may no longer qualify for as much individual Disability insurance as during residency. If the hospital or clinic you work for provides you with a group Long-Term Disability program, you will only be able to purchase enough individual Disability insurance to supplement what the Group coverage does not provide – perhaps half as much, if not less, than that which is available during the last year of residency.
Although this may not seem important since you will still have Disability insurance in either circumstance, the quality of each contract is significantly different. By this point you have spent nearly a decade, if not longer, training to become an attending in your specialty. Most physicians prefer to protect their hard work and unique specialty with a Disability insurance contract that will pay them when prevented from performing the duties of their specialty. Unfortunately group coverage does not typically provide this level of protection and once you are already employed and provided group Long-Term Disability, the amount of Physicians Own-Occupation Disability insurance you can purchase will drastically be reduced.
If you are interested in obtaining quality Disability insurance that truly provides income protection for your medical specialty, start by researching information about what to look for in a policy. Read articles that can be found online, but do not solely base your judgment on these. The value of reading articles and websites is to learn about the differences that exist in the various contracts available today. There are many websites providing additional resources and information about Disability insurance for medical residents and young physicians. Take advantage of the resources available over the web, find an experienced agent and work with them to find the best option for you.