Disability insurance for physicians can be expensive. For certain specialties that insurers consider high claims risk and/or that earn high incomes, premiums can eat up a considerable portion of your budget. Residents and those starting in practice, who haven’t yet maximized their income, can also pay a large percentage of their budget on disability coverage.
Fortunately, with research and by working with a licensed and knowledgeable insurance professional, you may be able to find discounts on disability insurance coverage. Here are the seven most common discounts you may either qualify for or find through certain carriers.
If you’re still in residency and work with an insurance agent, that professional may be able to find an insurer offering a discount for medical residents. This discount can be 10 percent to as much as 20 percent off the premium for a standard rate.
One advantage of a resident discount is that the discount applies after you've completed residency if you decide to increase your coverage. You could receive the same percentage off on your rates as you increase your coverage amount to account for your higher post-residency income. To receive this discount in most cases, you must purchase the policy while still in medical school or training, prior to graduation.
See Also: Disability Insurance for Doctors
A number of professional associations, including the American Medical Association, can get their members a discount on individual disability insurance offered through an insurance carrier. The discount may be around 10 percent off standard pricing. To qualify, you will likely have to be a dues paying member of the association at the time of application.
Also keep in mind that an association discount on an individual policy is not the same as buying a group policy through a professional membership. The AMA and other organizations offer their own group plans, but this is not the same as offering a discounted individual policy.
Disability insurers may at times adjust occupational risk classes to boost sales among certain prospective customers. For example, an insurance company may inform its contracted agents that a certain group of specialists have been moved from a 4M risk class to a 5M class. Companies sometimes offer temporary discounts to certain classes as well. To take advantage of these discounts, it’s important to work with an independent insurance agent who has access to multiple carrier policies.
This type of program provides the cost savings of a group policy with the flexibility and ownership of an individual policy. Basically it requires three or more employees of a common employer to purchase individual disability policies at the same time. Each member of the multi-life program can save anywhere from 10 percent to 25 percent on their premiums.
Because women file more disability claims than men, they generally pay more in premiums for coverage. However, some insurers offer a unisex rate that 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, and even men can sometimes save using a unisex rate.
Insurance companies will often cut you a break on your premium if you pay annually instead of monthly. In fact, the average cost of paying monthly is 3.9 percent more among the top 6 disability insurance companies than paying annually.
Another way to pay less for coverage, at least in the first years of your policy, is to opt for a graded premium structure. A graded structure policy starts with a lower premium payment that gradually increases over time, as opposed to a level premium where you pay the same amount for the life of the policy.
A graded structure is especially advantageous if you’re a student just beginning your practice, as you will pay up to 40 percent less for insurance during the first years of your policy than if you opt for the level structure. Then, as you earn more income, you can afford to make the increasing premium payments.
It’s not common, but you may also be able to save on disability insurance if you buy a term life insurance policy from the same carrier. A minimum amount of life insurance coverage may be required to earn this discount.
Joel Palmer is a writer and personal finance expert who focuses on the mortgage, insurance, financial services, and technology industries. He spent the first 10 years of his career as a business and financial reporter.