Nursing Disability Insurance
Nurse practitioners (NPs) are among the fastest-growing specialty in medicine. At the same time, their educational requirements have increased considerably over the last few years, with many employers now requiring advanced degrees.
That’s a lot of student loan debt to accumulate for a job that pays $100,000 to $125,000 annually.
Given the investment required to become a nurse practitioner and the income you earn from your chosen specialty, it’s important to protect your livelihood against an unforeseen injury or illness.
Why every nurse practitioner needs disability insurance
The best way to do that is to invest in a disability insurance policy, which can 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.
Even if you have coverage through a group plan, you may want to strongly consider an individual physician disability policy. Group plans typically offer fewer benefits than individual policies. Also, your ability to have coverage is contingent on being employed by the company or a member of the organization sponsoring the group plan, and group plans can be canceled at any time; individual insurance remains in force as long as you pay the premiums.
Understanding how your medical specialty impacts your disability insurance rates
Speaking of premiums, your medical specialty greatly determines how much you will pay for disability coverage.
Insurance companies group jobs into specific occupational classes based on risk. These occupational classes take into account the hazards of the job and the difficulty in returning to work following a disability. Another factor is the claim experience associated with certain professions.
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 will be from the insurance company (and perceived risk).
How do disability insurance companies classify nurse practitioners?
Nurse practitioners are often certified in multiple areas of medicine. This makes it challenging for disability insurance companies to classify the profession in its various risk classes. As such, the premium rates charged to nurse practitioners on a physician disability insurance policy can vary greatly by company.
In fact, the major providers of physician disability insurance classify NPs from 3M to 5M.
When you review potential policies, it’s also important to understand what specialty you are being assessed as. For example, if you are a nurse practitioner whose main clinical focus is OB/GYN care, is the insurance company classifying you as an NP or an OB/GYN? The difference in premium rates can be substantial.
NPs should have own occupation and residual disability coverage
The most important provision a nurse practitioner should have included in a policy is that a disability is defined as one that prevents the insured from working in his or her “own occupation.”
This means the policy will pay benefits if an injury prevents you from working in your chosen medical specialty, but allows you to do other types of work that would nonetheless reduce your income.
A policy without an own-occupation feature would not pay benefits so long as you’re able to work in some capacity. With it, benefits would be paid so long as you couldn’t perform the specific tasks of your practice.
Residual disability is generally defined as being able to perform one or more, but not all, of the material and substantial duties of your occupation, or being unable to work in your occupation for a set percentage of the time. This would mean that you can still practice medicine but have to limit how much you can work.
Residual disability benefits are triggered when the insured suffers an established percentage of income because of their disability. The benefit you receive under the provision is typically proportionate to your lost earning power.
Buy while young and look for unisex rates
All insurance is priced based on the risk of you, the insured, filing a claim. The higher your risk, the more you will pay in premiums.
One of the factors that contribute to a higher risk for disability claims — and thus higher premiums for disability insurance — is age. Statistics show the older you are, the more likely you are of becoming disabled. Therefore, you can save money in the long term by purchasing coverage today. Each year you age is more money you’ll be paying out each month or year in premiums.
If you do buy coverage when you’re starting out in practice, it’s also advisable to get a policy with a future purchase option, also sometimes referred to as a future increase option, a future insurability option, or a benefit update rider.
This feature, whether provided as an optional rider for an additional cost or as part of the base policy, enables a policyholder to increase the amount of coverage at a future date without having to undergo additional underwriting. It’s designed to ensure you have adequate protection as your income increases the longer you practice medicine.
Women NPs should find a policy that offers a unisex rate. Because women file more disability insurance claims than men, their premiums are typically higher. A unisex rate policy, however, essentially negates gender-specific rates and uses an identical rate for men and women. On average, a unisex rate policy can save women 45 percent to 55 percent on their premiums.