Hand Insurance vs. Disability Insurance
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.
See also: Should Residents Get Disability Insurance? Yes, and this is why.
What to Look for in a Disability Insurance Policy
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.
