The average family physician earns $219,000, according to Medscape's 2018 Compensation Report. Over a 30 year career in medicine, this equates to over $6.5 million in potential earnings.
If an accident or illness shortens that career, how will you replace those potential earnings? Will you be able to pay your bills, cover your student loan debt, and maintain your lifestyle?
If you’re like most family practitioners, the answer is no.
With all that you, as a resident or family physician, have to lose, it’s highly encouraged that you own disability insurance.
Disability insurance is designed to replace a major portion of your income if you are unable to work due to injury or illness.
Without disability insurance, you could lose a significant amount of income and all that your income supports if you’re in a bad accident, lose your vision, or suffer an illness that affects your ability to practice medicine.
Even if the disability is temporary, you could fall behind on your mortgage or car payments, rack up more debt, and be forced to sell valuable items or tap into retirement accounts for needed cash.
Buying disability insurance can be complicated. Rates vary widely by several factors, including your medical specialty.
Insurance companies generally classify occupations on a scale of 1 to 5 or 6. Many use the letter M to designate medical professionals. Typically, the higher the numerical value of the classification the lower the rate available from the insurance company.
“Physician” or “medical professional” is not itself an occupational class with disability insurance. Instead, carriers separate specialties into different classes. Medical professionals buying coverage for the first time may be surprised to discover how different insurance companies classify medical specialties.
Family medicine physicians are considered a low-risk profession. Most of the major insurers specializing in physician disability insurance rate this specialty as either a 5 or 6. These are the highest classes available and therefore offer the lowest rates. Insurers classify family practitioners the same regardless of whether they engage in OB care, sports medicine, or ambulatory only care.
Here's how the best disability insurance companies classify family medicine doctors and the expected cost for a healthy 30-year-old located in Texas.
|Company||Occupation Class||30-year-old male||30-year-old female|
|Ameritas||4M||$303.19/mo, $2,997.15/yr||$498.59/mo, $4,928.35/yr|
|Guardian||3M||$344.26/mo, $4,010.93/yr||$572.35/mo, $6,668.29/yr|
|MassMutual||3P||$333.10/mo, $3,872.00/yr||$529.37/mo, $6,141.00/yr|
|Ohio National||3M||$299.81/mo, $3,466.00/yr||$451.53/mo, $5,220.00/yr|
|Principal||3A-M||$350.53/mo, $3,204.80/yr||$620.10/mo, $7,086.88/yr|
|The Standard||3P||$384.60/mo, $4,395.38/yr||$620.10/mo, $7,086.88/yr|
The rates provided above are based on the following assumptions:
- The applicant has a normal health history and does not smoke
- Generates an income of $364,000 per year
- The disability insurance plan covers $10,000 per month in benefit to age 65
- Contains an own-occupation definition of disability that allows the insured to collect full benefits if you can't practice anesthesiology, even if you can work in another field
- Has a partial or residual disability insurance rider triggered by a specific percentage loss of income
There is more to comparing disability insurance than rates and risk classes. There are other features and inclusions that are important for family physicians to include.
The most important provision you need to have included in your policy is that a disability is defined as one that prevents the insured from working in his or her “own-occupation.”
Many disability policies only pay benefits if the individual is unable to work in any capacity. While these policies are more affordable, they do not provide adequate coverage for high-earning physicians.
An own-occupation disability insurance policy will pay a family physician disability benefits if an injury or illness prevents the insured from working in their practice, even if they’re capable of performing other types of work.
In some cases, even having an “own-occupation” policy does not guarantee you will receive full benefits. Some companies require a minimum loss of income compared with your pre-disability income before you qualify for benefits. This is often referred to as residual disability. The percentage of lost income for residual disability is typically 15 percent or 20 percent.
For example, if you earned $200,000 before becoming disabled, but were able to work in another field for $175,000, you would not qualify for benefits under these policies because your income only fell 12.5 percent.
Others will pay 100 percent of the base monthly benefit, regardless of your post-disability earnings, but may only pay for a limited timeframe — say, for the first six months of your disability period.
If you’re the partial or full owner of your own veterinarian practice, you should consider business overhead expense (BOE) policy or rider.
Whereas regular disability insurance covers individual income, a BOE policy will help cover your monthly business expenses if an injury or illness impacts your ability to work.
BOE policies vary but you can typically get one that pays a maximum monthly benefit between $15,000 and $25,000. If you obtain BOE that is bundled with your personal disability policy, the maximum benefit may be a factor of that benefit amount; for example, the BOE benefit maximum might be equal to 12 times the benefit on your personal policy.
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Colin is the Founder & CEO of LeverageRx, an online lending and insurance marketplace for doctors. Colin has over 10 years of experience in financial services and is a licensed life and health insurance agent.