If you’re a physician, you already know that there’s one thing that can make or break your career success:
Your hands.
Should you suffer a hand fracture or develop arthritis, it can leave you temporarily or permanently disabled — and unable to do your job. That’s why some physicians invest in hand insurance policies.
But the costs of such policies can be off-putting, especially for physicians still paying down student loan debt.
So do you need hand insurance? What exactly does it cover? Is there a better alternative out there?
There are many types of “body-part insurance,” of which hand insurance is just one offering. Many physicians buy hand insurance policies because their practice depends on their hands.
Consider the many healthcare specialties that rely on hands to save a life. For example, in 2011 almost 1 in 4 surgeons had insured their hands, and another 39% were considering it.
Although 25% of surgeons carry hand insurance, 75% still don’t. Meanwhile, the number of surgeons who carry disability insurance comes to 70-80%.
One reason why is that few insurers offer body-part policies. The other reason is that despite its high premium cost, it’s a very narrow type of insurance coverage.
When physicians do insure their hands, they often pay for several million dollars worth of coverage and the cost of these insurance premiums is staggering.
What it covers:
Hand insurance is health insurance that covers only your hands, including all four fingers and your thumb.
If you injure your hands to the point that you cannot perform your job, you’ll be eligible for a monthly benefit. Benefits may include compensation for loss of earnings and healthcare expenses.
What it doesn’t cover:
Hand insurance does not cover injuries to your wrists, arms, or shoulders, even if those injuries limit the functioning of your hand.
This bears the question: is hand insurance really worth the cost?
Do Physicians Need Hand Insurance?
Generally speaking, the simple answer is no.
There are many reasons why physicians may decide against hand insurance, such as:
The high cost of hand insurance plans
Coverage is too niche to be helpful
Qualifications are too difficult
The waiting period is too long
Physicians have a valid concern about the issues they may face if they lose the function of their hands.
Luckily, there is already an affordable alternative that provides better protection — and peace of mind.
The Best Hand Insurance Alternative: Disability Insurance
Disability income insurance covers your entire body, rather than only one body part. It also covers any disability that leaves you unable to work (not just those impacting your hands).
Think about this analogy. Would you pay extra for one slice of pizza when you can buy the whole pie for less?
When you pay for hand insurance, you’re essentially spending more money for less pizza.
Disability insurance is more economical and provides a wider range of protection. It’s a no-brainer.
To understand the benefits versus the costs of hand insurance, it’s best to compare the pros and cons. While we’re at it, we’ll also look at the pros and cons of disability insurance.
Pros of Hand Insurance
Covers the loss of a finger
Covers debilitating arthritis and nerve damage
Financially protects a physician in the event of a hand injury, for a period of time
Cons of Hand Insurance
The 12-month waiting period is too long
If you recover within the 12-month waiting period, you get nothing
The coverage is limited to your hands only
The policy payout is a flat-rate benefit, no matter how long your hands are disabled
Premiums are high
To be eligible for hand insurance, you often need to have a disability insurance policy anyway
Limited choice of insurers
Pros of Disability Insurance
Covers your entire body (“full body policy”)
Covers any disabling illness or injury, including to your hands
You can choose your own waiting period, from 60 to 360 days — shorter will cost more
Premiums are more affordable
As long as you are considered disabled or reach the total benefit period, you will continue to receive benefits
Cons of Disability Insurance
Must choose the right policy that will protect you if tragedy strikes
Shopping for disability insurance on your own can be confusing
To sum this up, here are your choices:
Stick with hand insurance and pay a hefty premium. That premium only covers one body part and has a capped payout. You are still required to buy a minimum amount of disability insurance
Opt to buy a comprehensive, long-term disability insurance policy. That policy will cover your hands and the rest of your body. It will also provide you 50-60% of your typical gross income through your benefit period.
If you select option two, you are joining the majority of physicians who want broader protections. Still, not all disability insurance policies are equal.
The only real con of choosing a disability insurance policy are the terms and conditions. These limitations can make your head swim.
You may encounter terminology you don’t recognize. Or you may struggle to understand how much coverage you need.
This section will provide a brief overview of the main things you may want to include in your policy.
Own-Occupation
There is no doubt about it: own-occupation disability insurance is the best option. Specifically, true own-occupation disability is the golden standard in disability insurance.
This means that if you become disabled and are unable to practice your occupation, you will be covered.
All other disability insurance may not cover you if you can still work, just not in your current occupation. There are plenty of other occupations, but few earn as much as physicians.
Meanwhile, you may still have a mortgage, car payments, and student loans that you can no longer afford.
Purchasing an own-occupation policy will cost more, but it is well worth the extra investment.
Riders
Most disability insurance policies offer optional riders, which provide added coverage. Riders allow you to tailor your policy to fit your specific needs. Based on your current circumstances, here are some riders you may want to include in your policy:
Future Increase Option
Experts recommend that physicians buy disability insurance early in their career to lock in a cheaper rate. However, this will limit their potential coverage amount since most new physicians aren’t earning their full salary potential.
A Future Increase Option can allow physicians to purchase more coverage as their income increases later in their careers.
Partial Disability Coverage
This rider will allow for partial coverage due to a partial disability. This partial disability must make it impossible for a physician to continue working the same amount of hours or the same scope of work.
COLA (Cost of Living Adjustment)
This rider increases coverage so that it’s commensurate with increased cost of living.
Student Loan Repayment Option
This rider is a smart addition for physicians who carry a heavy medical school loan debt.
When you add this to your policy, your insurance will provide you with your purchased coverage amount. It will also reimburse your student loan lender while you are considered disabled.
Mental Health Coverage
Some policies include coverage for mental health, and others do not. If you choose a policy that doesn’t include mental health coverage, you can still use a rider to add this optional coverage.
Mental health coverage protects you if you suffer a substance abuse disorder. It will also cover you if you’re disabled due to depression or any other mental illness, but only for a limited time.
Still, this can help you recover without the added stress of financial issues.
Keep in mind that each optional rider will increase the cost of your premiums. Still, some will be worth the extra cost if your benefits outweigh the cost.
Exclusions
Always read the fine print. Every insurance policy carries exclusions, or circumstances that the provider will not cover.
In disability insurance, the most common exclusions are pre-existing conditions.
Make sure you understand the limitations and exclusions included in your disability insurance.
Other common exclusions include healthy pregnancies, substance abuse, or suicide attempts and other intentional self-harm. Some policies may exclude workplace injuries, but workers’ compensation benefits should cover them.
Coverage
The amount of coverage you are eligible for depends on your current salary. Most insurance providers will only offer up to 60% of your current income.
You don’t need to take the full 60% if you feel like living expenses will not need that much coverage. This can save you a lot of money over time, but you may regret not taking the full amount if you do become disabled.
Premium
The policy with the lowest premium is not always the policy with the best insurance coverage. Of course, cost does come into play.
When comparing two policies that offer the same coverage, benefit period, and riders, and one has a lower monthly premium, it only makes sense to go with the cheaper policy, as long as it is from a reputable company.
How To Get Hand Insurance As a Physician
Body part insurance is rarely useful to people outside the celebrity or sports industries. You can understand why a singer would insure their vocal chords or a world champion athlete would insure their legs.
However, physicians need more than their hands to perform their jobs. Although they do rely on their hands, there are so many other things that could stop them from being able to complete their daily tasks.
If a physician is really insistent on getting hands-only insurance over full-body disability insurance, they should remember one thing.
This specific policy will not cover their shoulders, wrists, and arms. If a physician injures their shoulder, they won’t be able to move their arms or hands. If their wrists become injured, how can they use their hands?
They may want to speak with their insurance agent to learn if they can get a quote that includes these other vital body parts.
Of course, knowing how expensive a hand insurance policy would be, each additional body part would only incur a much higher premium.
A full-body policy may still make more sense in the long run. Imagine if a physician had a car accident that left him permanently disabled. A hand insurance policy would be useless at this point.
However, if you really want to get hand insurance, there’s a process you’ll have to follow, which generally involves:
Filling out an application
Provide proof of your current gross income
Provide proof of no pre-existing conditions
Undergo a medical exam as part of the underwriting process
Receive a quote for the premium and coverage offered
Like all other health insurance policies, the cost of hand insurance will depend on many factors. Those factors may include your age, health, occupation, and the amount of coverage you seek.
It makes sense for physicians to purchase useful insurance products. Life insurance, auto insurance, and liability insurance each come to mind. But does hand insurance really merit consideration?
The choice is up to the individual physician.
However, physicians should protect their income in the event of a disability.
A comprehensive disability insurance policy can provide that protection — and the peace of mind that their carrier will honor their insurance claims.
