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The Ultimate Guide to Disability Insurance for Physicians in 2021

Disability insurance is a key component of financial wellness for anyone who earns an income. For physicians, dentists, and other doctors, it's simply a must-have.

But finding a great physician disability insurance policy can get confusing, time-consuming, and frustrating fast. After all, physicians possess unique coverage needs. Fortunately, the right guidance and research can help you pinpoint your best available options.

In this guide, we will help you understand exactly what doctors should (and shouldn't) look for when shopping for physician disability insurance. That way, you can purchase with confidence and get back to doing what you love.

Let's dive in.

Do physicians need disability insurance?

The case for physician disability insurance begins with a sobering reality.

According to the Social Security Administration, between 25 percent to 30 percent of American workers will suffer a disabling event at some point in their careers that prevents them from working and earning an income.

The truth is, the unexpected really can happen to you. As a highly-trained, highly-compensated medical professional, ask yourself the following questions:

  • What would you do if you were unable to work?
  • What would happen if you lost your income for a year, two years, or permanently?
  • What would happen if you were limited to half your previous workload? What about if you had to work in a lower-paying specialty to compensate for an injury.
  • What would become of your medical practice if you were unable to treat patients?
  • How would the resulting loss of income affect your finances? How would that affect your lifestyle and your ability to provide?

Physicians often have thousands of dollars in student loans to repay. Sure, refinancing your medical school loans to a lower rate can make a world of difference. But this debt doesn’t go away because one cannot work.

Doctors are also able to enjoy comfortable lifestyles due to the high salaries they earn. You could not maintain yours without your career income. Plus, medical professionals have few to no options for replacement careers that pay what they make.

With all that you have to lose, you should consider disability insurance. An injury or illness could limit your ability to work. The right physician disability insurance policy would replace some of that lost income.

So, what type of disability insurance should doctors get?

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What is physician disability insurance?

Physician disability insurance is long-term disability insurance coverage with an own-occupation provision that is designed specifically for medical professionals. It protects your source of income in the event that you are no longer able to perform your medical specialty due to injury or illness. Disability insurance policies for physicians, dentists, and other doctors typically feature a true own-occupation definition of disability.

People need disability insurance because many injuries and illnesses occur away from the job. Workers' compensation does not cover these conditions. Some people rely on Social Security Disability Insurance (SSDI). But physicians would find the limitations of these benefits to be substantially less than what they would need to pay their bills and maintain their lifestyles.

Without it, a bad accident, loss of vision, or illness could cause financial hardship. Even a temporary disability can cause you to fall behind on payments and rack up debt. You may be forced to sell valuable items or tap into retirement accounts for needed cash.

Read on to learn more about how physician disability insurance works.

How does physician disability insurance work?

What's the best disability insurance for physicians? More often than not, the most comprehensive physician disability insurance policies look like this:

  • They are individual policies.
  • They provide long-term coverage.
  • They have a true own-occupation definition of disability.

Long-term disability insurance is a contract with an insurance company. You make regular premium payments to the insurer. You can pay by the month, quarter, or year. In exchange, the company agrees to pay you contracted benefits if you suffer a disability that affects your income. The benefits replace some or all of the income you lose by being unable to work.

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The differences between group and individual policies

You now have a better understanding of physician disability insurance - specifically long-term coverage. So, where can you get it? You can purchase disability insurance individually or as part of a group plan.

Group disability insurance

Group insurance covers a company’s employees or members of an organization. Employers often provide group insurance, including disability, as an added benefit. Trade associations offer them as a benefit of membership. The American Medical Association and the American Dental Association offer group coverage.

Group disability plans are guaranteed issue. This means if you apply for coverage, you’ll be automatically enrolled. There is no underwriting.

PRO TIP: Group insurance costs less than buying an individual policy. This is because insurance companies can spread their risk over multiple people. Though you may pay some of the premium, the group sponsor pays most or all of the cost.

With these advantages, many people opt for group disability insurance. However, group coverage is not sufficient for most physicians. Group policies offer basic benefits with few optional features. They may not provide adequate coverage to physicians with large incomes.

Furthermore, group coverage is contingent on being part of the group sponsoring the plan. If that changes, you lose your coverage. There is also an annual renewal process for group plans. Upon these reviews, there is no guarantee the plan will be renewed.

Individual disability insurance

When you buy an individual disability policy, you own it for as long as you pay the premium. The amount you pay is generally locked in. It will not change unless you opt for more coverage. Many professionals supplement group coverage with an individual policy.

Individual plans are also portable. You don’t lose coverage by changing jobs or dropping your group membership. Individual insurance gives you more carrier options. And by adding riders, you can tailor your policy to specific needs.

Nowadays, insurtech companies like Breeze allow certain occupations to get an instant disability insurance quote and apply online in as little as 15 minutes. (Don't believe us? Check out Simply Insurance for a comprehensive review and recommendation.)

Unfortunately for doctors and other high-earning professionals, buying individual long-term disability insurance is still typically a 4-6 week process.

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The differences between short-term and long-term disability insurance

Disability insurance is classified as either short-term or long-term. Both types are designed to replace your income if you can’t work due to an injury or illness.

The main differences between short-term and long-term disability insurance are:

  • The injuries and illnesses they cover.
  • How long you can receive benefits.
  • How long you have to wait from when your disability occurs to receive compensation.

Below is an overview of the key differences between short-term and long-term disability insurance:

Short-term disability insuranceLong-term disability insurance
What it typically coversTemporary, non-threatening injuries and illnesses that you generally recover fromSerious injuries and illnesses that limit or prevent your ability to work for several months or years, or even permanently
How long after disability do benefits typically start14 daysAs little as 30 days or as much as two years, depending on the elimination period selected by the policyholder
How long do benefits lastTypically six months, though it may be up to two years5 to 10 years; in some cases to age 65
How is insurance providedTypically six months, though it may be up to two yearsOften through a group plan but an individual policy is recommended in most cases

Short-term disability is for temporary, less serious injuries. These conditions may prevent you from working for a few weeks or months. But people generally recover from them.

Examples might include:

  • A surgeon breaking an arm or hand.
  • A physician needing to recover from back surgery.
  • A medical professional needing to recover from cancer treatments.

Some insurers also sell "accident policies.” They pay benefits if you are injured in an accident.

Short-term disability insurance is almost always sold as a group plan. It is available through an employer or organization.

Long-term disability insurance, on the other hand, is designed to last a year or more if you become disabled.

SUMMARY

Long-term disability insurance is available as a group plan and as an individual policy. It is more expensive than short-term disability. But it offers greater protection.

Therefore, you are advised to not skip long-term coverage in lieu of having just a short-term policy. Short-term coverage will not be adequate if you suffer a serious injury or illness. With a short-term policy, you could be without income after a few months.

How much does physician disability insurance cost?

Here are general two rules of thumb on how much you spend on protecting your income with disability insurance:

1% - 4%

Between 1 percent and 4 percent of your current income.

2% - 6%

Between 2 percent and 6 percent of your monthly benefit amount.

This includes medical professionals — from physicians and dentists to veterinarians and nurse practitioners.

But how much disability insurance should a physician have?

Hypothetical policy examples

Before you apply, the insurance company should provide an illustration. This is a projection of what you would pay based on assumptions. It will include the total benefits you would receive if you filed a claim.

Here are examples of what a physician might pay for coverage. All three example policies would pay benefits up to age 65. The waiting period for each is 90 days.

Example 1: A 35-year-old male non-smoker receives a maximum monthly benefit of $5,000. The annual premium is just over $2,500. It includes an own-occupation definition of disability. The policy also has a residual benefit rider and a 3 percent annual cost of living adjustment using simple interest.

Example 2: A 27-year-old male non-smoker receives a maximum monthly benefit of $10,000. The annual premium is $3,350. The own-occupation provision is available as a rider. This policy also included a residual disability rider and a 3-percent simple interest cost-of-living adjustment.

Example 3: A 40-year-old male non-smoker receives a maximum $17,000 monthly benefit. The annual premium is about $5,800. It includes an own-occupation provision and a residual disability benefit. The policy also has a recovery benefit, automatic increases, and unlimited coverage for mental disorders or substance abuse.

“You are not able to perform the material and substantial duties of your occupation, even if you are gainfully employed in another occupation. If you meet the definition of totally disabled and you become employed in a new occupation, your total disability benefit will not be affected by any income from the new occupation, regardless of the amount.”

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What impacts the cost of physician disability insurance?

Insurers underwrite disability coverage based on the risk of an applicant filing a claim. They also consider how long and how much a person might collect in benefits. When determining the cost of physician disability insurance, carriers will assess the following factors:

Age

The older you get, the greater the risk of incurring a disability. Therefore, disability insurance is more costly for older people. Physicians should buy when they’re younger to obtain the lowest rates.

Gender

All other factors being equal, women can pay up to 40 percent higher premiums for disability insurance. Women suffer disabilities that impact their careers and file more claims than men. Claims for women also typically last longer.

A way women can negate the premium discrepancy is to find a policy with unisex rates. A unisex rate can reduce a woman’s insurance premium by 30 percent to 50 percent.

Health

Insurers will pay extra attention when assessing your health. You will be asked about your medical history and current health conditions. This includes your past and current tobacco use. You will also likely have to submit to a paramedical exam.

The exam is similar to a physical checkup. An independent third party will conduct the exam. It is paid for by the insurance company. A technician will record your height, weight, body mass index, pulse, and blood pressure. The examiner will collect blood and urine

The tech will ask several questions about your health. Some questions will be repeats of what you provided on the application. These include:

  • Family medical history
  • Pre-existing conditions
  • Medications you’re taking
  • Whether you drink or use tobacco

The answers you provide will serve to confirm the health information you provided in your application. They also inform underwriters of any medical concerns that could affect your risk.

Medical specialty

An insured’s occupation is considered a major disability risk factor. Different jobs are grouped into specific risk classes. These are numbered on a scale of 1 to 5 or 6. These classes take into account:

  • The hazards of the job.
  • The difficulty in returning to work following a disability.
  • The disability claim experience associated with the profession.

Typically, the higher the number, the less risk an insurer considers that profession. The lower the risk, the lower the premium rate.

Many disability insurers use the letter M to designate medical professionals. However, “physician” or “medical professional” is not itself an occupational class. Instead, carriers separate specialties into different classes.

In general, the highest-risk specialties perform interventional procedures. Insurers also consider strenuous manual duties as being high-risk. Examples include anesthesiologists, registered nurses, and podiatrists. Surgeons are also grouped in high-risk occupational classes. Emergency room physicians and specialists, such as obstetricians, will be classified as high-risk as well.

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.

Insurers assign different risk classes to the same profession. You would be hard-pressed to find a specialty that all major carriers classify the same.

This makes it important to obtain quotes from multiple carriers. For example, one company may classify oncologists in their 4M class, while a competing company may designate them as a 5M. For certain specialties, the discrepancy between insurers may vary by two class numbers.

Financial underwriting

Disability insurance benefits are based on a percentage of your income. Therefore, a key part of the underwriting process and a determining factor of your premium is how much you earn. This is done through financial underwriting.

The insurance company’s underwriter will assess your

  • Earned income
  • Unearned income
  • Net worth
  • Your bankruptcy history, if applicable

You will have to provide tax returns and business tax forms, if applicable.

For underwriting purposes, income is earned if a disability would stop or reduce it. Investment or business income that doesn’t require work on your part will not be factored into your financial underwriting.

Underwriters will assess an employee’s salary, wages, regular overtime, bonus, and commissions (less expenses). They may consider the employer’s contributions to your retirement plan. Any perks, such as vehicle allowances, will not be factored into your income.

If you own a medical practice, the underwriter will consider your share of the business’s earnings.

In addition, some policies will consider contributions made to a pension or profit-sharing plan as earned income. This includes a certain percentage of their salary or other designated maximum unless the contributions continue after you become disabled.

If your income fluctuates, the insurer will determine a maximum benefit amount using a weighted average over two to three years.

Location

Where you live will greatly impact how much you pay for physician disability insurance. The difference can be as much as 30 percent.

The variation in rates boils down to three factors:

  1. State regulations. Some states are more stringent on insurance products. This makes it more expensive for carriers to get products approved by a state’s insurance department. Heavy regulation also increases selling, promotional and processing costs.

    Carriers often avoid selling products in states with strict regulations. Fewer carriers mean less competition. This typically increases the cost as well.
  2. Claims history in states. Insurers base their rates in a region on the claims history of that area. The more disability claims an insurer experiences in a region or state, the more it will charge all insureds in that area.
  3. Living costs and income levels. Living costs and income levels. Disability insurance is priced based on the insured’s income. Therefore, states and regions where doctors earn more and that have higher costs of living make income replacement more expensive.

Other factors that will affect premium costs are based on your policy preferences. These include:

Benefit length

You can choose how long the policy will pay benefits. The longer you receive payments, the more you pay in premium. Some policies will pay a monthly benefit for a pre-established period, such as 10 years. Others will pay until you reach a certain age, typically 65. A few insurance companies have an option that pays lifetime benefits if the insured remains disabled for life.

Elimination period

Disability insurance policies include a waiting period, commonly known as an elimination period. It’s the period of time between when a disability occurs and when benefits are paid.

The elimination period for disability insurance is similar to the deductible on property insurance. It’s the part you pay out-of-pocket before benefits kick in. The longer the waiting period on disability insurance, the less you will pay in premium.

Understanding definitions of disability for doctors

The most important factor when considering a disability insurance policy is how it defines “disabled.” This will determine how much, and even if, you collect benefits following an injury or illness.

Disability is not a black-or-white definition. Just being hurt or sick doesn’t qualify you for disability benefits.

A policy’s definition of disability is based on your capacity to work. Some policies consider you disabled if you’re limited in your ability to practice your specific medical specialty. Others will not pay benefits if you can work anywhere in the field of medicine. Lesser policies will not pay benefits if you can work at all.

To collect on a claim, you must meet the policy’s definition of disability. This can vary greatly by company and policy. Here is a breakdown of the most common definitions of disability in policies:

Any occupation

Under this type of policy, you may be ineligible for benefits if you can work another job. This is true regardless of whether you do so. This is the strictest definition contained in a disability policy. An any-occupation policy will typically require the lowest premiums. But it will also result in the least amount of coverage.

Any-occupation policies are designed for serious disabilities that prevent you from working at all.

A typical policy definition of any occupation is: “You are unable due to illness or injury to perform all the substantial and material duties of any occupation for which you are fitted by education, training, and experience.”

This policy type only pays benefits if you can’t perform work “reasonably suited” to you. A number of factors define “reasonably suited.” The insurance company will assess whether you can find a job that:

  • You are qualified to perform, based on skills and education.
  • Pays a minimum percentage of what you earned prior to the disability. A typical level is 60 percent of your pre-disability wages.
  • Is located within a reasonable distance from your home.
  • Will allow you to attend scheduled appointments and treatments.
  • Your physician will sign off on you to perform.

Some disabilities may enable you to work as an instructor, a consultant, or in another specialty. If so, you will likely not receive disability benefits under an any-occupation policy.

The insurance company will assess whether you can work in another occupation. It will consult with a third-party vocational expert (VE). VEs will assess your abilities and the labor market.

VEs work for the insurance company, which will want to avoid paying claims. Therefore, VEs will do all they can to match you with employment despite your disability. In many cases, insureds seeking benefits will have to hire an attorney to fight for benefits.

Under no circumstances should a medical professional settle for an any-occupation policy. Doing so can result in a substantial loss of income. Fortunately, insurance companies have designed policies that meet the coverage needs of physicians.

Own-occupation

The opposite of an any-occupation definition is own-occupation coverage.

An own-occupation policy protects your ability to work in your given profession. You will be covered if a disability prevents or limits you from working the job you had before your event. If you’re able to work in another capacity, you are still eligible for benefits.

A typical own-occupation provision will state:

“You are not able to perform the material and substantial duties of your occupation, even if you are gainfully employed in another occupation. If you meet the definition of totally disabled and you become employed in a new occupation, your total disability benefit will not be affected by any income from the new occupation, regardless of the amount.”

Some insurers define own-occupation for medical professionals. These provisions consider you disabled if you can’t perform the “material and substantial” duties of your specific specialty. Even if you work in another field of medicine, you qualify for benefits under certain own-occupation policies.

For example, an orthopedic surgeon with severe arthritis could no longer work in that field. But he or she could teach.

An any-occupation policy would not pay disability benefits. By teaching and earning income, the former surgeon is not disabled.

An own-occupation policy, on the other hand, would pay the former surgeon full disability benefits. That’s because they would no longer be able to perform the duties of their chosen profession, i.e. surgical procedures. This would lead to a significant loss of income.

Another example of the importance of own-occupation coverage is dermatology. This is especially true for Mohs surgeons.

Dermatologists average annual earnings of $386,000, according to Medscape. Mohs surgeons can earn at least $100,000 more a year.

Many ailments may limit you from performing the precise nature of Mohs surgery. Those conditions could still allow a doctor to provide dermatological consultation and other treatments. But losing the ability to practice the surgical procedure may result in a significant loss of income.

Without an own-occupation provision that identifies you as a Mohs surgeon and not just a dermatologist, you may not qualify for disability benefits if you lose the ability to perform surgical procedures.

Some own-occupation policies enable you to collect full benefits if you can still practice your specialty in a limited capacity. For example, a few companies will consider you totally disabled if:

  • More than 50 percent of your income is from either hands-on patient care or surgical procedures; and
  • You can no longer perform those duties or procedures due to injury or illness.

Keep in mind that own-occupation provisions may be included in your base coverage with some policies. In others, it may only be available as a rider.

Some policies explicitly prevent certain specialists from obtaining “own-occupation” coverage. Examples include neurosurgeons and anesthesiologists. Make sure your specialty will be covered before signing up.

Transitional own-occupation

A transitional own-occupation policy is similar to own-occupation coverage. The difference is how benefits are impacted if you work in another occupation following an injury or illness.

A transitional own-occupation limits your benefits based on the difference between your total disability benefit amount and post-disability income.

For example, imagine your benefit for a complete disability is $10,000 per month. You suffer an injury that prevents you from practicing your given specialty. But you find a new job that pays $5,000 a month. Under a transitional own-occupation, your benefits will be reduced to $5,000 per month.

A transitional own-occupation benefit will only apply if you earn less than you did before your disability.

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Understanding physician disability insurance riders

Insurance policy riders are optional features. You can add them to enhance your coverage. Riders help customize a policy to fit your needs and preferences.

As you consider riders, keep in mind that:

  • A rider on one policy may be part of another policy’s base coverage. Own-occupation coverage is one example.
  • You typically have to purchase a rider when your policy is issued. You cannot add them later. Carefully consider what options you need before signing on for coverage.
  • You can drop certain riders after purchase. But you will not be able to reinstate them.
  • Riders that require extra premium add to the selling agent’s commission. That means the agent has a financial incentive to tack on as many riders as possible. Make sure the ones you select are right for you.

Here are the key riders you may want to consider:

Residual Disability Rider

Some disabilities prevent you from working at all. Others only partially limit your ability to practice medicine. But working part-time or seeing fewer patients will result in lost income.

Residual disability benefits protect you against partial income loss. Residual disability is generally defined in one of two ways:

  • Being able to perform one or more, but not all, of the material and substantial duties of your occupation
  • Being unable to work in your occupation for a set percentage of the time.

A residual disability rider can supplement your income. It provides benefits if you are still working and not considered totally disabled.

Residual benefits are typically calculated as a percentage of:

  • The policyholder’s loss of earnings; AND
  • The benefit they would receive if they were unable to work.

It essentially makes up the difference between what you earned before disability and what you can earn with your disability.

When comparing residual riders, take note of:

The benefit amount. A common minimum residual benefit is 50 percent. This is the percentage of the benefit amount guaranteed for total disability. Others pay out full benefits if you lose at least 75 percent of your income due to disability.

How residual disability is defined. Benefits typically don’t get triggered until you’ve lost a minimum amount of income. Typical amounts are 15 percent or 20 percent.

How long a minimum benefit is guaranteed during a residual disability period. Some riders guarantee the minimum amount for six months. Others will pay it for 12 months.

Whether you have to return to your own occupation to receive residual benefits. Some basic residual riders only permit you to work in your designated specialty. Others allow you to work in any occupation.

Whether you should purchase a basic or enhanced version of a carrier’s residual rider. Many carriers offer two or more residual riders. You can often choose between a basic version and an enhanced version. The enhanced version will offer better features. It will also cost more. Examples of enhanced rider features include:

  • Longer guarantee periods
  • More favorable residual definitions
  • Higher residual benefit payments

Future Increase Rider

Your income will increase over time. This is especially true if you’re a resident or starting your practice.

Consider the following questions:

  • Will your disability insurance benefits increase the longer you own the policy?
  • Will you have to buy a new policy — and go through underwriting — every time you receive a substantial bump in pay?

A future purchase option enables you to increase your coverage amount. You can do this at designated future dates. Plus, you can do so without going through underwriting again.

How much and how often you can increase your disability benefits depends on your policy. Your future increase option may be exercised:

  • Annually up to a certain age.
  • After a major life event, such as marriage or the birth of a child.
  • If your income increases by a designated percentage during a given period. For example, a 30 percent income hike during a three-year period may trigger the option.
  • If you lose or have a reduction in your group coverage. The future increase option can replace it with higher individual coverage.

There is typically a maximum amount you can increase your coverage by. The added benefit will increase your premium.

A future purchase option is critical for residents or fellows. That's because your benefits will be capped based on the income at the time of purchase. Once you're out of residency, you will need to increase your coverage.

Cost-of-Living Adjustment (COLA)

A cost-of-living adjustment rider will increase your benefit amount each year you are disabled.

Your expenses — i.e., your cost of living — increase each year with inflation. That’s why you receive pay raises. And it’s why the disability benefits replacing your lost income should increase as well.

The younger you are, the more you should consider a COLA rider. Without the rider, your benefit amount will remain the same during your benefit period.

Why does this matter? Say inflation averages 3 percent a year. A level benefit amount will have a third less purchasing power in 15 years. With a COLA rider, your benefits will keep pace with inflation. You, therefore, won’t lose purchasing power.

When comparing COLA riders, consider:

What are annual increases based on? Some policy riders increase the benefit based on a fixed percentage. Others use the Consumer Price Index. Some disability insurance carriers offer a choice between the two.

How much will benefits increase each year? Fixed-rate increases are typically 3 percent. COLAs based on a third-party index will set a minimum of 1 percent or 2 percent. The cap might be 6 percent.

If a fixed percentage is used, note whether the increase is based on simple interest or compound interest. Compound interest increases the benefit amount more than simple interest. That’s because it is calculated based on principal and accumulated interest.

What happens to your benefit amount if you’re able to work again? Say your original benefit was $10,000 a month. After three years with a 3-percent fixed annual increase, you would be receiving $10,600.

Then you return to work. Your benefits stop. If you become disabled again, some carriers would reset the monthly benefit to $10,000. Others would pay out the $10,600 you were collecting at the end of your disability period.

Catastrophic Disability Rider

Most major carriers offer a catastrophic disability rider. The rider can help pay for the care needed due to a catastrophic injury or illness.

  1. You suffer a complete loss of at least one of these senses: speech; hearing in both ears; sight in both eyes; or use of both hands, both feet, or one hand and one foot.
  2. Your condition prevents you from performing at least two of the six activities of daily living (ADL) without assistance: bathing, dressing, eating, using the restroom, continence, and transferring.
  3. You have severe cognitive impairment as measured by accepted medical tests.

The risk of a catastrophic disability is relatively low. Therefore, the rider is inexpensive to add. However, there are rider limitations:

  • The rider may be restricted to applicants of a certain age. Age 50 is a typical cut-off.
  • Insurers usually cap catastrophic benefits.
  • Often, the base policy will not allow a catastrophic benefit to exceed three times the base monthly benefit.
  • Others may prevent you from collecting more in benefits than what you made before a disability. Say you earned $20,000 a month before you were disabled. Your base policy pays out $15,000 in benefits. In this scenario, your catastrophic benefit rider would be limited to $5,000 a month.

Student Loan Rider

Disability does not often result in student loan debt forgiveness. Disability insurance can help you cover your remaining student loan debt if you can’t work.

A few carriers offer an optional rider that addresses student loan debt. A student loan rider will cover some or all of your student loan payments during a period of disability.

It’s a relatively inexpensive option to add. It can help increase your coverage if:

  • Your maximum disability benefit falls short of covering monthly expenses.
  • You have a monthly student loan payment of at least $250.
  • Your payments will last 10 to 15 years.

Limitations on student loan riders typical include:

  • Proceeds are only available for a maximum period. Most stipulate 10 years or 15 years.
  • The maximum period begins when the policy is issued. It does not begin when disability benefits begin. For example, say you get a 15-year student loan rider. You incur a disability five years after you purchase the policy. In this scenario, you will receive student loan rider benefits for 10 years.
  • There are minimum and maximum benefit amounts. Minimum monthly amounts range from $100 to $500. Maximum benefits range from $2,000 to $2,500 a month.
  • Rider benefits are only paid for total disability. If you can still work in some capacity, you would not be eligible for rider benefits.

Best Own-Occupation Disability
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About

Ameritas Life is as reputable as any name in the insurance industry. However, it's actually a newcomer to the disability insurance space in comparison to its competitors. DInamic Foundation is its best disability insurance product for doctors. Policies are underwritten and issued by Union Central Life, its wholly-owned subsidiary.

Ameritas features a true own-occupation definition of disability. This provision benefits you if an accident or illness prevents you from practicing your specialty.

DInamic Foundation requires you to choose between non-cancelable coverage and guaranteed renewal. The maximum benefit period available is to age 70. Ameritas offers basic and enhanced residual disability riders. It also offers two different COLA riders.

Pros

  • True own-occupation provision.
  • Lowest premium amount.
  • Two COLA rider and residual disability options.
  • Various add-ons such a good health benefit, presumptive total disability benefit, COBRA premium benefit, partial disability benefit, and non-disabling injury benefit.

Cons

  • Slower customer service.
  • Lowest maximum policy benefit: $20,000 per month.
  • Must choose between non-cancelable coverage and guaranteed renewal.
  • For certain occupation classes, the own-occupation provision is only available for five years.

Read our full review of Ameritas's disability insurance policy.

States AvailableAK, AL, AR, AZ, CA, CO, CT, DC, DE, FL, GA, HI, IA, ID, IL, IN, KS, KT, LA, MA, MD, ME, MI, MN, MO, MS, NC, ND, NE, NH, NJ, NM, NY, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VA, VT, WA, WI, WV, WY
About

As one of the largest, most trusted mutual insurance companies in America, Guardian Life is the Cadillac of its industry. Its disability insurance product, ProVider Choice, is a great fit for doctors. Policies are underwritten and issued by Berkshire Life, a wholly-owned stock subsidiary.

According to Guardian, total disability occurs when injury or illness prevents you from performing your occupation. For doctors, more than half of your income must come from hands-on patient care or surgical procedures to qualify.

Guardian’s true own-occupation definition of disability guarantees full benefits. It still applies if you’re able to maintain gainful employment in another occupation. In fact, you may be able to benefit if you can still practice your specialty with major limitations.

Coverage is non-cancelable and guaranteed renewable to age 70. You may elect 10-year, five-year and two-year benefit periods. Guardian offers 30-day, 60-day, 90-day, 180-day, 360-day and 720-day elimination periods.

Unlike other providers, Guardian features three cost-of-living adjustment (COLA) rider options. As for residual disability, Guardian offers both basic and enhanced partial riders.

Pros

  • True own-occupation provision.
  • Highest COMDEX score: 99.
  • Highest maximum policy benefit: $20,000 per month.
  • Simplified underwriting for up to $7,500.
  • Various options for benefit and elimination periods.
  • Various options for COLA and residual disability riders.
  • Various add-ons such as an automatic benefit enhancement, benefit purchase option, catastrophic disability rider, hospice care benefit, serious illness supplemental benefit and student loan protection.

Cons

  • Highest premium amount.
  • No presumptive total disability benefit.

Read our full review on Guardian's disability insurance policy.

States AvailableAK, AL, AR, AZ, CA, CO, CT, DC, DE, FL, GA, HI, IA, ID, IL, IN, KS, KT, LA, MA, MD, ME, MI, MN, MO, MS, NC, ND, NE, NH, NJ, NM, NV, NY, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VA, VT, WA, WI, WV, WY
About

MassMutual has been a mainstay in the insurance game since 1851. MassMutual offers two disability insurance products, Radius and Radius Choice. Both feature provisions and add-ons that allow you to customize your coverage to meet specific needs. MassMutual helps you protect your income and retirement without relinquishing payment control.

MassMutual features a true own-occupation definition of disability. However, the provision is not part of your base policy. You must purchase it as an additional rider. With this provision in place, ‘total disability’ occurs when you cannot perform the main duties of your occupation. This requires you to be under a physician's care.

Both Radius and Radius Choice are non-cancelable and guaranteed renewable to age 65. Radius is conditionally renewable for life, while Radius Choice is only until age 74. Both policies have benefit periods available to ages 65 and 67, as well as two years, five years and 10 years. Radius Choice also offers a maximum benefit period to age 70. Both policies offer elimination periods of 60 days, 90 days, 180 days, one year and two years.

MassMutal offers one cost-of-living adjustment (COLA) rider. After your first year of disability, your monthly benefit increases by a set percentage each year. MassMutual offers one option with basic criteria that increases your chance of qualifying.

Pros

  • True own-occupation provision.
  • Various add-ons such as an automatic benefit enhancement, catastrophic disability rider, future increase option, presumptive total disability benefit and student loan protection.

Cons

  • Own-occupation provision sold separately.
  • Only one COLA rider and residual disability rider option.
  • No benefit purchase option, hospice care benefit or serious illness supplemental benefit.

Read our full review on MassMutual's disability insurance policy.

States AvailableAK, AL, AR, AZ, CT, DC, DE, FL, GA, IA, ID, IL, IN, KS, KT, LA, MA, MD, ME, MI, MN, MO, MS, NE, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, WA, WI, WV, WY
About

Ohio National’s disability insurance product is relatively new to the market. Still, it's among the best money can buy. ContinuON Income Solutions II allows you to customize your coverage without losing control of premium expenses.

Ohio National offers its true own-occupation provision as a rider. Regardless of occupation class, it does not come with your base policy. With Ohio National, total disability occurs when you're unable to perform the material and substantial duties of your specialty. To qualify, you must be under the care of a physician.

ContinuON Income Solutions II is guaranteed renewable on an annual basis. Coverage is non-cancelable as long as you consistently pay on time. Benefits periods include age 65, 67 and 70. Two-year, five-year and 10-year benefit periods are also available. Ohio National offers 60-day, 90-day, 180-day and one-year elimination periods.

Ohio National offers both a 3% and a 6% COLA rider. Policyholders may elect the basic or enhanced residual disability rider.

Pros

  • True own-occupation provision.
  • Excellent customer service.
  • Various add-ons such as a hospice benefit, survivor benefit and recurrent disability benefit.

Cons

  • Lowest physical and labs limit means simplified underwriting is only allowed for up to $3,000 per month.

Read our full review on Ohio National's disability insurance policy.

States AvailableAK, AL, AR, AZ, CA, CO, CT, DC, DE, FL, GA, HI, IA, ID, IL, IN, KS, KT, LA, MA, MD, ME, MI, MN, MO, MS, NC, ND, NE, NH, NJ, NM, NV, NY, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VA, VT, WA, WI, WV, WY
About

Principal Life is among the most competitive providers in the disability insurance market. HH750 is an excellent option for doctors seeking a top-shelf disability insurance product. It features a wide variety of options that afford you maximum flexibility.

Principal offers both a true own-occupation and a modified own-occupation provision. A true own-occupation provision is the best bet for highly-skilled individuals like doctors. You benefit if you become unable to perform the material and substantial duties of your specialty. It still applies if you can maintain gainful employment in a different occupation.

Modified own-occupation is a watered-down version of the former. Frankly, it's only feasible if you’re cost is a concern. The definition of disability is the same, but you will not benefit if you can fulfill another occupation. Either way, both provisions are available as part of your base policy. You do not have to purchase an additional rider.

HH750 is non-cancelable and guaranteed renewable to age 65. Benefit periods are available to ages 65, 67 and 70, and for two years and five years. Principal features 30-day, 60-day, 90-day, 180-day and one year elimination periods.

Principal offers one cost-of-living adjustment (COLA) rider. After selecting a maximum benefit between 3-6%, it increases on a compound basis. Principal also offers one partial residual disability rider.

Pros

  • True and modified own-occupation provisions.
  • Advisor’s Choice Award for advisor support.
  • Available to those who only work 20 hours a week.
  • Simplified underwriting for up to $6,000 per month.
  • Various add-ons such as a benefit update rider, catastrophic disability rider, future benefit increase rider, presumptive total disability benefit, and serious illness benefit.

Cons

  • The modified own-occupation provision can be misleading. It can save you money now, but you will not receive as strong of benefits as true own-occupation.

Read our full review of Principal's disability insurance policy.

States AvailableAK, AL, AR, AZ, CA, CO, CT, DC, DE, FL, GA, HI, IA, ID, IL, IN, KS, KT, LA, MA, MD, ME, MI, MN, MO, MS, NC, ND, NE, NH, NJ, NM, NV, NY, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VA, VT, WA, WI, WV, WY
About

The Standard is among the largest, most trusted providers in the disability insurance space. The company has several options, but Platinum Advantage is the most beneficial for doctors. It features built-in provisions and additional riders that maximize income protection.

The Standard's true own-occupation definition of disability is available as an additional rider. With this provision in place, ‘total disability’ occurs when you are unable to perform the substantial and material duties of your specialty. You must also be under the care of a physician to qualify.

Platinum Advantage is guaranteed renewable to age 67. To make your policy non-cancelable, you must purchase an additional rider. Benefit periods are available to ages 65 and 67, as well as two years, five years and 10 years. Elimination periods of 60 days, 90 days, 180 days and one year are available.

The Standard offers one cost-of-living adjustment (COLA) rider. After selecting a maximum benefit between 3-6%, it increases annually on a compound basis according to the Consumer Price Index. The Standard offers a basic residual disability rider.

Pros

  • True own-occupation provision.
  • Wide variety of options and strong coverage guarantee.
  • No-cost riders and benefits, such as the family care benefit.
  • Various add-ons such as an automatic increase benefit rider, benefit increase rider, catastrophic disability rider, family care benefit, premium waiver benefit, presumptive total disability benefit, student loan rider and survivor benefit.

Cons

  • Own-occupation and non-cancelable riders sold separately.
  • Only one COLA rider and residual disability rider option.
  • Lowest COMDEX score: 79.

Read our full review on The Standard's disability insurance policy.

As you research disability coverage, consider the carrier issuing the policy. History and financial strength are important attributes of an insurance company.

Why financial ratings are important

When you buy disability insurance today, you’re planning for tomorrow. You’re counting on an insurance company to protect you. You may depend on the company to provide a stream of monthly income for several years.

What if the insurer goes out of business or can’t meet its contractual obligations? The effect on you and your family could be catastrophic.

You can minimize this risk by choosing companies with superior financial ratings. These are grades given by third-party rating agencies.

Remember: Rating agencies assess an insurer’s ability to meet its current and future obligations to policyholders. They base ratings on independent investigation of an insurer’s financial health.

Agencies assign letter grades. Higher letter grades — typically anything with an ‘A’ — indicate better financial performance.

A few of the agencies that rate insurance carriers and their top ratings include:

  • A.M. Best: A++, A+, A, A-
  • Moody’s: Aaa, Aa1, Aa2, Aa3, A1, A2, A3
  • Standard & Poor’s: AAA, AA+, AA, AA-, A+, A, A-

Below are leading providers of disability insurance policies. These companies are considered appropriate for physicians and medical professionals. Each has a lengthy history of at least 100 years. They carry strong ‘A’ financial ratings. They also offer the key insurance components for medical professionals.

COMPANYBBB RATINGA.M. BEST RATING
AmeritasA+A
GuardianA+A++
MassMutualA+A++
Ohio NationalA+A+
PrincipalA+A+
The StandardA+A

You should verify which ones offer coverage in your state of residence. Some companies can sell policies in all 50 states and the District of Columbia. Others do not.

Compare rates & features side-by-side from the top 6 physician disability insurance companies.

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How to get physician disability insurance

Finding an agent

For many physicians, the first step is finding a licensed insurance agent. A knowledgeable agent can make the other steps easier and less time-consuming. An agent can do all the research and legwork. They can offer recommendations.

Two types of disability insurance agents to choose from are captive and independent.

Captive agents typically represent one company. They are limited to selling that company’s policies.

Independent agents are contracted with multiple insurance companies. They serve as independent contractors. They are compensated by a commission percentage of their sales. Most experts suggest working with an independent agent to have multiple policy options.

If you find an independent agent, research their credentials before enlisting their services:

  • Seek referrals from people you trust.
  • Read online reviews of agents.
  • Check the Better Business Bureau for ratings and complaints.
  • Ask prospective agents about how much experience they have. Ask them which companies they represent. Understand how they are compensated.

Step 1: The recommendation

Disability insurance policies have many moving parts and optional features. Therefore, it’s important to research several options. Obtain multiple quotes from different carriers. If you have enlisted an agent, discuss your situation in complete detail. Ask questions about the policy benefits that will help you the most.

Step 2: The application

Once you’ve settled on a policy, the next step is applying for coverage. This involves filling out a short form. The applications gather personal, professional, and basic medical information.

You or your agent will submit the form to the insurer. You will also provide supporting documentation. This includes proof of employment and income. You will also have to authorize the release of medical records. Some insurers will also check driving records and your credit report. If so, you will have to authorize the release of those documents.

It’s important to fill out every question on the form accurately and completely. Unnecessary delays can occur for missing information on the application. The person processing the application will have to contact you or your agent to track down the information.

Step 3: The medical exam

Next, the insurer will schedule a paramedical exam. This is a crucial part of how the insurance company assesses your health. This exam is similar to a physical checkup. It should take about 30 minutes. It will consist of an interview to gather a medical history. The examiner will collect blood and urine. They will record your height, weight, blood pressure, and pulse.

Step 4: The underwriting

The examiner will send the exam results to the insurance company’s underwriter. That individual will also review your medical, financial, and employment records. Your personal physician will be asked to fill out a form called an attending physician’s statement.

The goal of underwriting is to assess your overall risk of filing a claim. This will determine if you can qualify for coverage. If you can, underwriting also determines how much you will pay in premium.

Step 5: The offer and — hopefully — policy issuance

Based on your risk assessment, you will receive an offer with a premium amount. If you accept the offer, the insurance company will issue your policy. If it’s unsatisfactory, you can start the process over with another carrier

Once the policy is delivered, you have a minimum number of days to ensure it is right for you. This is known as a free-look period. By law, insurance companies must provide a free-look period once your policy is issued. (See a complete definition below in the section, Disability insurance terms).

From the time you submit an application, it may take four to six weeks before your policy is issued. In some cases, it could take longer.

Filing a claim for physician disability insurance benefits

You buy disability insurance hoping to never use it. But there may come a time you’ll need the benefits you’ve paid for.

If you sustain a disabling illness or injury, contact the insurance company or your agent as soon as possible. The insurance company will respond by sending forms for you to complete.

Here are key questions that arise during the claims process:

What is your diagnosis?

It can be difficult to pursue a claim if you can’t name the problem keeping you from work. Work with your doctor to provide a specific diagnosis of your injury or illness.

What is the date you became disabled?

Your policy has an elimination period. (See definition in the section, Disability insurance terms). Therefore, the insurance company will need an exact date you became disabled. If you suffered injuries in a fall or accident that instantly kept you out of work, that would be your trigger date.

Unfortunately, not all disabling conditions are black-and-white. Some happen gradually. Consult your doctor to determine a trigger date for your condition. Try to determine the moment your condition prevented or limited you from performing your work duties. Look for a time period you may have started performing fewer procedures or seeing fewer patients. Determine when your income started being affected by your condition.

What is the deadline for filing a claim?

Knowing the trigger date is also important because it starts the clock on when you need to file a claim. Insurers often stipulate a timeframe of 20 to 30 days from the time you incur the disability. This information should be included in your policy. If you can’t find it, contact the insurance company right away. Any missed deadlines can adversely impact your ability to collect benefits.

What does your policy provide?

You should review your policy at least annually to ensure adequate coverage. That way, if you need to file a claim, you won’t be surprised by what is and isn’t covered. Make sure you understand:

  • The policy’s definition of disability. (See above in the section: The definitions of disability).
  • Whether the policy covers residual disability. (See above in the section: Understanding disability insurance riders).
  • Exclusions and limitations contained in your policy. (See below in the section: Disability insurance terms).

How do you prove a disability?

To collect benefits, you will have to prove to the insurance company that:

  1. You have suffered a disabling accident or illness; and
  2. The disabling event will adversely impact your ability to practice medicine.

This will be accomplished through medical records and a written statement from your treating physician. Records will include your medical history, physician notes, MRIs, x-rays, and lab reports.

The written statement should:

  • Detail the nature of your injury or illness.
  • Describe the treatment plan.

The statement should also verify once of the following:

  • You cannot work at all.
  • You will be limited in what tasks you perform.
  • You will be limited by how much time you can work.

Some experts advise enlisting an attorney before making contact with the insurance company. Insurance companies may contest a disability claim. If so, having legal counsel can help move the process along.

Physician disability insurance FAQs

How should you compare disability insurance policies?

Comparing physician disability insurance policies is not easy. It’s like comparing one company’s apples to another’s oranges to another’s watermelons. Each carrier has its strengths and weaknesses. Costs can vary based on several factors.

The best place to start your comparison is to build your ideal policy. Start with:

  • Your overall budget now and in the future.
  • How much you need per month to replace lost income in the event of a disability.
  • How long your savings will last if you became disabled.
  • Medical conditions that could contribute to a potential disabling incident.
  • Lifestyle factors that might be considered high-risk. This includes foreign travel and certain hobbies.
  • Your current specialty or the one you’re training for.
  • Your major debts, including your mortgage and student loan payments.

Then consider a number of different disability scenarios, such as:

  1. A catastrophic disability that leaves you unable to care for yourself.
  2. A temporary disability that you recover from in roughly 18 months.
  3. A permanent disability that still enables you to work part-time or in another medical specialty.
  4. A mental illness or breakdown.

Determine how much and for how long a given policy would payout under these scenarios. Base these projections on your needs and attributes. This exercise will entail a lot of research. Working with a licensed insurance professional can make it easier.

What length of benefit period should I get?

You can often choose how long the policy will pay in benefits. The longer you receive payments, the more you pay in premium. Some policies will pay a monthly benefit for a pre-established period of time, such as 10 years. In those cases, once the benefit period has elapsed, benefits will stop, even if you are unable to work.

Remember: Long-term disability insurance is a contract with an insurance company. You make regular premium payments to the insurer. You can pay by the month, quarter, or once a year. In exchange, the company agrees to pay you contracted benefits if you suffer a disability that affects your income. The benefits replace some or all of the income you lost by being unable to work.

Other policies will pay until you reach a certain age, typically 65. A few companies have an option that pays lifetime benefits if you remain disabled for life.

Choosing the optimal length is tricky. On the one hand, many disabilities are temporary. You may not need benefits to age 65.

But say you become permanently disabled at age 40. If you have a 10-year benefit period, you will lose benefits at age 50.

The best way to determine your need is to look at your budget. Balance that with how long you plan to work in your specialty.

What length of elimination period (waiting period) should I get?

The longer the elimination period on your policy, the less you will pay in premium. For most disability insurance policies, 30-day elimination periods are considerably more expensive than 60-day periods. The difference in cost between 60-day polices and 90-day ones is significant as well.

That’s because short-term disabilities lasting one to three months are much more common than long-term disabilities. A policyholder with a 30-day elimination period has a significantly higher chance of filing a benefits claim than one with a 90-day waiting period.

A 30-day elimination period may provide more coverage. But the higher cost over time will almost always outweigh the potential benefits.

On the other hand, once elimination periods reach 90 to 120 days, there are little savings to be had by increasing the length. Disabilities lasting that long take longer for you to recover. Therefore, there is little additional risk to the insurance company if they have to provide benefits after 90 days as opposed to 120. The premium costs between these elimination periods will be negligible.

Can I get physician disability insurance if I already have a chronic illness or other medical concerns?

In most cases, you can qualify for disability insurance. But the policy may have exclusions and limitations based on your condition or lifestyle choices. You may have a higher premium also. Even if one carrier won’t cover you, others will. It’s a competitive market. Some insurers cater to certain individuals that others may restrict coverage to.

Should I get physician disability insurance while still in residency?

Even though it may be more difficult to afford, there are several reasons to consider buying disability insurance as a resident.

It can protect your future income potential. Buying physician disability insurance today, while still in residency, can provide sufficient income in the event an accident or illness prevents you from practicing medicine.

You likely have student loan debt to repay. Without your physician's income, you won’t be able to repay your student loan debt. Even if you declare bankruptcy following a disability, student loans are very difficult to discharge.

With a disability policy, you can use part of your insurance benefits to repay your monthly student loan bills. In addition, many policies offer an optional rider that will pay off your student loan debt in the event of a disability. (See the previous section about understanding disability insurance riders).

It will never be more affordable. As mentioned in a previous section, age is a major determining factor of how much insurance will cost. The younger you are, the less you will spend. Waiting until you think you can “afford” it will add to the cost.

You can always buy more coverage later. Disability insurance coverage is based in large part on your current income. For doctors in residency or fellowship, benefits are typically capped between $5,000 and $6,500 a month. This is regardless of specialty or income.

That won’t be enough once you have the income of a practicing physician. But you can add a Future Purchase Option rider to your policy. (See above section, Understanding disability insurance riders). This enables you to add more coverage once you’re through residency without having to go through medical underwriting again.

You may be able to obtain higher coverage if post-residency employment is established. Some insurers will lift the residency coverage cap if you have an employment agreement for residency completion. The company bases your coverage on the income you stand to earn as part of that agreement.

How will disability benefits affect my taxes?

The effect disability insurance payments have on your taxes depends on the type of policy. Other factors include how premiums are paid and who pays them.

Premiums for individual disability insurance are not tax-deductible. The policy benefits will be tax-free income if you pay the premium. This is true whether you’re buying a group plan or your own individual policy.

If your employer pays the premiums without including the cost in your gross income, the policy’s benefits will be taxable income.

Consult a tax advisor with questions about the tax treatment of disability insurance premiums and benefits.

Should I pay a level or graded premium?

Some policies have a choice between paying a level premium or a graded premium.

A level premium means you pay the same amount for the life of the policy. A graded structure starts with a lower premium payment that gradually increases over time. The amount may increase each year. There may also be a step-up rate every five years.

A level premium is advantageous if you can afford the amount due at policy issue. It will be easier to budget for something that never rises in cost.

A graded structure might work better if you’re a student, resident, or beginning your practice. This will enable you to have more affordable coverage while your income is lower. Plus, you’re likely paying off student loans.

What is the difference between critical care insurance and disability insurance?

Critical illness insurance benefits are usually limited to acute illness, not chronic diseases. The primary illnesses you’re insured against include cancer, heart attack, and stroke. Some policies may also include coverage for organ transplants, kidney failure, or paralysis.

Disability insurance, on the other hand, covers most injuries or illnesses that prevent or limit people from working. Another difference between the two types of policy is what it pays for. Critical illness insurance covers the expenses of a serious illness. It can help you pay medical bills while ill. Disability insurance replaces the income you lose due to an illness or injury.

Critical illness and disability policies also differ in the benefit duration. Critical illness policies pay a single, lump-sum payment. This is paid once the insured is diagnosed with a covered condition. The amount can range from $10,000 to $1 million.

Disability policies will pay a monthly benefit. Benefits may last for a pre-established period of time, such as five years. They could also last until the insured reaches a certain age, typically 65.

Can my life insurance policy cover a disability?

The short answer is, not likely. Many life insurance policies offer disability riders to make them more attractive. But these riders do not provide near the coverage an individual disability insurance policy does. A life insurance rider will pay much less in benefits. This is especially true for physicians with high incomes to replace.

It’s not a bad idea to tack on a disability rider to your life insurance policy if one is available. But don’t consider it an adequate replacement for a separate individual long-term disability policy.

Physician disability insurance terminology

Below is a list of terms — not covered in the above sections — to help you better understand the features, benefits, and limitations of physician disability insurance.

Elimination period

Your policy will include an elimination period. This is the period of time between when the disability occurs and when benefits are paid. For example, say you have a policy with a 60-day waiting period. It would not pay benefits for the first 60 days after you become disabled. The longer the elimination period on your policy, the less you will pay in premium.

Buying a policy with a longer elimination period is like buying an auto or homeowner's insurance policy with a higher deductible. In both cases, the policyholder is trying to save a few dollars. They hope they will never have to file a claim. But if the worst happens, they may wish they had paid the higher premium. That’s because of the out-of-pocket costs before insurance benefits kick in.

Recovery benefit

You may suffer an accident or illness that temporarily prevents you from practicing medicine. Even if you fully recover, there is a cost. You will lose income for as long as you’re disabled. You may lose patients to other providers. It may take months to return your practice to where it was before your disability.

To protect you against this potential loss, insurers offer recovery benefits. This feature is typically included on a residual rider.

IMPORTANT: A recovery benefit will help make up gaps between your pre-disability income and what you earn after recovery.

Typical recovery benefits are triggered once you’ve returned to work. This is true even if you work in a limited capacity. In some cases, the insurer may stipulate that you are performing a minimum amount of pre-disability responsibilities. A minimum income loss, such as 15 percent or 20 percent, is also required to collect a recovery benefit.

Coverage exclusions

Your disability insurance policy will likely include coverage exclusions. These will be listed in your policy contract. Their purpose is to mitigate a carrier’s risk of paying a claim resulting from high-risk conditions or activities.

Many exclusions apply to all applicants. For example, disability insurers typically will not pay claims for injury or illness resulting from:

  • Self-inflicted acts
  • Criminal activities
  • Acts of war
  • Civil disobedience or rebellion
  • Operating a motor vehicle while intoxicated

Individual exclusions are based on your medical underwriting or lifestyle choices.

For example, if you have had a herniated disc, your policy may exclude claims resulting from spinal injuries. If you’re an avid rock climber, the insurance company may say it will not pay benefits if you become disabled while participating in that activity.

Coverage limitations

Your disability insurance policy may also include limitations. These are similar to exclusions. The difference is that instead of completely restricting coverage for certain conditions, the policy may limit benefits. Benefits could be less in amount or duration.

Like exclusions, some insurance company limitations are universal. Others may be added to a specific policy based on the applicant’s underwriting.

One of the more common limitations is mental illness or anxiety. Many policies limit the benefit period for mental illness to 12 months or two years. (See more details below).

Mental/nervous limitation

Mental illness and substance abuse is more prevalent and receiving more attention. This has caused insurers to add language that addresses these types of claims. Benefits are often limited in cases of mental disorders because:

  • They are more difficult to diagnose than physical disabilities.
  • It’s more challenging to prove their effect on job performance and ability.
  • They are more likely to be treatable than some physical disabilities that are permanent.

Limitations on mental and nervous disabilities may include a cap on how long you can collect benefits. For example, some carriers place a 24-month limit on disabilities. This would be regardless of the length of your policy benefit period.

Carriers also typically require that you be under the care of a physician to claim a mental disability. That’s because sufferers don’t always seek regular treatment. Many stop taking their medication. Any failure to seek medical help with a mental disorder and to demonstrate a desire to get better can be grounds for the insurance company to deny your claim.

Presumptive benefit

A presumptive disability is when a condition can be “presumed” to be permanent. These are conditions that usually come on suddenly and drastically. Most carriers consider the following conditions to be presumptive disabilities:

  • Loss of sight in both eyes
  • Complete loss of hearing
  • Loss of speech
  • Loss of the use of your hands
  • Loss of the use of your feet
  • Loss of limb

Provisions vary by insurer. Insureds who suffer a presumptive disability typically will not have to wait through their elimination period to receive benefits. Policyholders also would not have to undergo medical examinations to show that their disability continues to impair them.

Survivor benefit

If you die while still receiving disability insurance benefits, a contract with this provision will continue making payments to an eligible survivor, such as a spouse or dependent.

Multi-life discount program

This is a program in which three or more employees of a common employer purchase individual policies at the same time. The insurance company essentially offers a group discount. A multi-life discount program provides the cost savings of a group policy with the flexibility and ownership of an individual policy. Each member could save between10 percent to 25 percent on their premiums.

Free-look period

By law insurance companies must provide a free-look period once your policy is issued. This gives you the opportunity to cancel the policy within the period with a penalty. Each state mandates its own free-look period, typically 10 business days. Some states mandate 20-day periods or more, and some insurance companies have their own period lengths.

Business Overhead Expense (BOE) coverage

BOE policies or riders help cover the business expenses of your medical practice if a disability prevents or limits you from working. BOE is a necessity if you are a partial or full owner of a medical practice.

You can typically get BOE coverage that pays a maximum monthly benefit between $15,000 and $25,000. The maximum benefit period on BOE is typically two years. 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.

BOE benefits can help you cover:

  • Rent or mortgage payments on your business facilities
  • Utilities
  • Taxes
  • Employee salaries and wages
  • Business loan repayments
  • Business insurance premiums
  • Equipment maintenance
  • Office supplies
  • Building maintenance and janitorial services
  • Malpractice insurance premiums paid by the business

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