When purchasing disability insurance, a major factor of determining your premium rate is your medical specialty.
Premium rates are based largely on how much risk an insured person poses to the insurer, which is obligated to pay on contractual disability claims.
Why disability insurers group people by occupation
These 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.
One reason that rate classes can vary by speciality is simply because some medical professionals earn far more than others. That means an insurance company will have more income to replace if disability affects a physician’s ability to practice. The higher the potential benefit payments, the more an insured will pay in premium.
Another reason is that some specialists may be more impacted by injuries and illnesses. For example, arthritis, while painful, may not prevent a psychiatrist from practicing, but it could affect a surgeon’s ability to work.
What the classifications mean
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 on disability insurance. Instead, carriers separate specialties into different classes. Medical professionals buying coverage for the first time may be surprised to discover how differently insurance companies classify medical specialties.
How specialities are typically grouped
In general, specialties in the highest-risk occupational classes are those that regularly engage in high-risk practices or that have strenuous manual duties. Examples include anesthesiologists, registered nurses, and podiatrists.
All types of surgeons are grouped in high-risk occupational classes as well, along with emergency room physicians and physicians who perform interventional procedures, such as obstetricians.
The lowest-risk medical specialties are those that do not typically perform surgery or interventional procedures. Examples include general practitioners, internists and family practice physicians, as well as most dental specialties.
Carriers don’t have the same classes for specialties
One of the challenges of comparing policies is that different insurance companies may assign different classes to the same profession or specialty.
For example, one company may classify oncologists in their 4M class, while a competing company may designate them as a 5M. In some cases, the discrepancy between insurers for certain specialties may vary by two class numbers.
In fact, you would be hard pressed to find a speciality that all the major carriers classify the same.
One speciality with a wide discrepancy between insurers is ophthalmology. According to the latest data, of the six major physician disability carriers, one has ophthalmology in its third occupational class. Another three carriers have it rated in the fourth class, while one has the speciality rated 5M and another all the up to 6M.
Another example is urgent care specialists. Several carriers rate this speciality a 3, but one has it at 6.
Some examples of specialities that are ranked anywhere from 4M to 6M depending on the insurer include:
Orthopedic surgeons and OB/GYNs have classifications ranging from 3 to 5.
At times, insurers may adjust occupational risk classes based on data that shows more or less risk in certain specialities, or the desire to boost sales among certain prospective customers. For example, an insurance company may inform its contracted agents that a certain group of specialists has been moved from a 4M risk class to a 5M class. Companies sometimes offer temporary discounts to certain classes as well.
What else your occupational class determines
In addition to your premium rate, the occupational class on our physicians disability insurance policy may also impact:
- How much in monthly benefits you can receive, as insurers may cap benefits based on occupational class.
- The maximum benefit you can receive and whether you can receive payments to age 65 or be limited by a period of time.
- Whether you can obtain own-occupation coverage.
Because of the complexity and the varying degree of features and benefits available, it’s best to work with an independent agent who can provide quotes on several different disability insurance policies instead of a captive agent who may only offer you one choice.
For more on income protection, check out:
The 2019 Ultimate Guide to Physician Disability Insurance!