AMA does not stack up well against the others.
Disability Insurance plays a key role in financial planning for anyone looking to safeguard against the possibility of illness or injury that could stop them from working. The American Medical Association (AMA) has disability insurance available for physicians, but you should compare it with other options because theirs is not the top choice out there.
What Is American Medical Association?
Founded in 1847, the American Medical Association (AMA) brings together more than 190 specialized medical groups across the country. Their main mission is to push forward the practice of medicine and improve public health. The AMA achieves this objective by advocating for physicians in the legal system and government, as well as shaping the future of healthcare to address the most pressing issues.
Physicians and dentists can access disability insurance through the AMA’s product, DisabilityPro. This insurance comes from The United States Life Insurance Company in New York City. Different from other doctor disability insurance plans reviewed by LeverageRx, the AMA’s policy is tied to an association and comes with significant downsides.
American Medical Association Disability Highlights
The American Medical Association’s (AMA) policy for physicians, is known as DisabilityPro. Now, let’s explore the significant aspects and attachments that require your attention.
Own-Occupation
All of the disability insurance companies listed on LeverageRx (Ameritas, Standard, Principal, MassMutual, Guardian, Ohio National) offer a own-occupation policy, meaning that they will provide full benefits to physicians or dentists even if they are able to work in a different field after sustaining an illness or injury. However, the AMA disability insurance policy has a different definition of “total disability,” stating that it only applies if the individual is unable to perform the significant and essential duties of their current occupation and is not working in any other occupation. If a physician or dentist becomes disabled and is unable to perform their specialty but is able to work in another occupation, they will not receive full benefits from AMA, unlike the other companies listed above.
Non-Cancellable & Guaranteed Renewable
Insurance policies designated as non-cancellable and guaranteed renewable, as defined by the glossary of healthcare.gov, are not subject to alterations, modifications, or cancellations by the insurance company. However, if a policy does not fall under this category, the insurance company holds the power to make changes to its features and raise premiums. The AMA disability insurance plan does not fall under the category of being non-cancellable, which means that the policy may be altered, premiums may be increased at any given time, and the company has the option to cancel the policy on any policy anniversary as they see fit. This stands in stark contrast to all other physician disability insurance companies at LeverageRx. The “big five” disability insurance plans, on the other hand, are designated as non-cancellable and cannot be altered or terminated as long as the premium payments are made.
Benefit Period
The option to choose the age at which you wish to receive benefits is known as the benefit period. For instance, if you sustain an injury at the age of 57, do you prefer to receive benefits until you reach 65 or 70? Keep in mind that the longer you want to receive benefits, the higher your premium will be. With AMA, you have the option to receive benefits until the age of 67.
Elimination Period
In disability insurance, the elimination period is the time from when you first get sick or injured to when the insurance starts paying benefits. With the AMA DisabilityPro policy, you can choose an elimination period between 60 and 365 days. Some insurance companies let you pick shorter periods of 30 days, and others have longer options up to 720 days.
Mental Disorders
A considerable number of disabilities stem from mental, nervous, and substance abuse problems. In some cases, insurance policies may restrict the duration of benefits for these types of disabilities and may not provide coverage for the entire policy period. According to the AMA disability insurance plan, benefits for disabilities caused by mental, nervous, or substance abuse issues are limited to 24 months. This means that even if your disability persists for a longer period, you will only receive monthly benefits for 24 months.
AMA Physician Disability Insurance Riders
When purchasing disability insurance for physicians, whether from AMA or another provider, you are given the choice to include riders. Riders are extra features in your insurance contract that provide more benefits or options, depending on your unique situation.
Cost-of-living Adjustment (COLA) Rider
A disability insurance coverage with COLA rider is a pre-installed feature that ensures your benefits are adjusted according to the inflation rate. These yearly adjustments are usually a fixed percentage or linked to an inflation index. However, AMA does not offer a cost of living adjustment rider, which means that your benefits will not keep up with inflation and their value will decrease over time. On the other hand, all other individual plans allow you to add a COLA rider to your disability insurance policy. These riders typically provide a 3% or 6% increase in benefits each year, with a maximum limit and sometimes tied to an inflation index.
Residual Disability Rider
Partial or residual benefits allow the insured to receive benefits in the event of a disability that results in a loss of income, but does not render them totally disabled. These benefits typically require a minimum of 15-20% loss of income for the insured to be eligible. This is an important aspect of any disability insurance plan, as most disabilities initially start as partial disabilities. The policy from the American Medical Association (AMA) only starts paying out if the policyholder is fully disabled and has lost at least 20% of their income. However, it’s interesting to note that all the major insurance policies for doctors, known as the “big six,” include a feature that allows for payment even with partial disability.
Future Increase Rider
The ability to increase coverage in the future is a valuable feature for residents and fellows who expect their income to rise over time. The American Medical Association (AMA) provides a “future purchase option” in its disability insurance, giving you a chance to bump up your coverage once, either within the first three years of the policy or before turning 40.
However, this limitation can be problematic for physicians in residency or early in their career who anticipate significant income growth later on. In contrast, all other individual plans (such as Ameritas, Standard, Principle, Guardian, Ohio National, and MassMutual) allow for annual increases in coverage up to the age of 55.
Alternatives to the American Medical Association
In case you haven’t noticed, there is a lot left to be desired in the AMA’s disability insurance product designed for doctors. We recommend you check out the alternatives, a couple examples are below.
Guardian
Guardian has the best definition of total disability. To be considered totally disabled and receive full benefits, you must not be able to work the medical specialty you went to school for. However, even if you can work somewhere else, Guardian will pay you full benefits since the new job is not your specialty.
Learn More: Guardian Disability Insurance Review
MassMutual
The COLA rider offered by MassMutual is highly beneficial as it ensures an annual increase in benefits. In fact, by the 6th year, the rider can result in a 16% increase in payout. However, the coverage for own-occupation is not as strong. In case an individual is able to work in any capacity, MassMutual may not provide full benefits.
Learn More: MassMutual Disability Insurance Review
The Standard
The disability insurance plan for doctors and dentists at The Standard is named Platinum Advantage. It includes coverage up to the age of 67 and a broad interpretation of total disability. In general, this is a moderate choice.
Learn More: The Standard Disability Insurance Review
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