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Physician Insurance: The Key Role of Individual Disability Coverage

man in wheelchair short term disability

You chose medicine as a career to help people and make a difference. But what happens if you can’t practice — either temporarily or permanently — due to an accident or illness?

What happens to the financial obligations you’ve incurred and the income to fund the lifestyle you enjoy?

If you’re fortunate, you won’t have to worry about that happening. But as a physician, you probably deal with people who didn’t think accidents or illnesses would happen to them either.

Individual disability insurance is something most people should consider owning. For physicians, dentists, and other high-earning medical professionals, this type of coverage is an absolute must-have.

What Is Individual Disability Insurance?

Also known as personal or private disability insurance, individual disability insurance protects your income in the case of an injury or illness making you unable to work.

Like life insurance and health insurance, these policies are paid on a monthly basis, and the terms of receiving benefits are outlined ahead of time.

Group vs. Individual Disability Insurance

In your experience, you may have heard of both group and individual insurance. What makes them different?

Group disability insurance policies are usually employer-offered as one of your job’s benefits. You and the other employees share group coverage. You will most likely be dropped from the group policy if circumstances change and you no longer work for that employer.

Individual disability, on the other hand,  is purchased in lieu of or as supplemental insurance to group policies.

Although an individual disability insurance plan is more expensive, it provides better coverage. It can also be tailored to your own needs and budget and last as long as you want, no matter where you work.

Short-Term vs. Long-Term Disability Insurance

The obvious difference between short- and long-term disability insurance is the period of time that you can receive coverage, but that’s not all.

Short-term disability insurance benefits can last anywhere from a few weeks to a year, and they kick in faster than long-term disability benefits.

In other words, they have a shorter elimination period.

Employers usually cover short-term disability insurance premiums, and these benefits typically cover a more significant fraction of your salary — about 80%.

Long-term disability income takes longer to kick in but can last for years. These policies are often purchased individually and provide a benefit of about 60% of your current salary.

Why Physicians Need Individual Disability Insurance

Is income protection really necessary for physicians? Can’t they just use their money wisely and live a safe and healthy lifestyle?

Unfortunately, the truth is that high-earning professionals, such as physicians, need an individual disability insurance policy more than most, and here’s why:

Disabilities Happen Every Day

Study after study shows that 25–30% of American workers will endure some type of temporary disability during their career preventing them from working.

You may not have a dangerous job or lifestyle, but there are still several ways you could become too sick or hurt to practice medicine.

No matter how careful you are, you can’t guarantee that you won’t be an accident victim. Simply being at the wrong place at the wrong time can result in tragedy.

Debt Isn’t Absolved if You Become Disabled

Most physicians incur a sizable amount of medical school debt. If you still owe money on those student loans when you become disabled, that doesn’t mean it will simply be forgiven. You still have to find a way to pay.

The same goes for homeownership. If you took out a physician mortgage to finance your home, you would still have to make your monthly payment even if you can’t work.

Your credit card debt will also still need to be paid. An individual long-term disability insurance policy can provide the income you need to continue making those payments if you can’t work or have a reduction in your salary.

Your Income is Fragile

As a physician, you have specialized skills that require exceptional cognitive abilities, complete vision, and full use of your hands.

Lose any of these capabilities in any capacity, and you may have to reduce your workload or even stop practicing altogether. This negative impact could be temporary or permanent.

If your disability is permanent, you are eligible to continue receiving benefits for the remainder of your benefit period.

Even a Partial Disability May Cost You

Consider what you would have to give up if a disability costs you, say, 25% of your income.

If you earn $300,000 and suddenly have your income reduced by $75,000 due to a disabling event, could you still save for retirement? What aspects of your current lifestyle would you have to do without?

Long-term disability insurance policies can cover a partial loss of income through a residual disability insurance rider.

These riders provide features that will replace your income in the event that a disability causes a partial loss of salary, but you are still able to work in some capacity.

Mental Health Counts

Physical disability isn’t the only type of financial risk you should be mindful of. The stress of your profession, life circumstances, or the onset of mental illness can impact your ability to work as well.

According to the Council for Disability Awareness, mental health issues accounted for over 9 percent of long-term disability claims in 2018.

Needless to say, physicians are not immune to mental health issues. This is more apparent today than ever, as physician burnout continues running rampant through U.S. healthcare.

Fortunately, individual long-term disability insurance usually provides benefits when mental disorders, breakdowns, or abnormal stressors affect your ability to work.

Individual Disability Insurance is the Most Comprehensive

Many people believe they can rely on Social Security Disability Insurance (SSDI) to help them financially through a disability. However, SSDI doesn’t pay nearly enough to compensate a high-income physician or dentist.

Likewise, workers’ compensation only pays a fraction of your current salary. And even then, that’s only if you’re injured on the job.

Meanwhile, a group disability insurance plan offered by your employer will typically limit the amount you can receive in benefits. Those benefits will also be treated as taxable income.

Policyholders of individual disability insurance can rest easy knowing they will be able to replace as much of their lost income as possible if tragedy strikes.

You Are Irreplaceable if You Own Your Own Practice

If you own your own practice, you are your most valuable asset. If you become disabled before retirement age, your business could face severe damage.

For private practitioners who still need to keep the practice running if they become disabled, there is an option called business overhead expense insurance.

This additional coverage will help pay for things like rent, utilities, taxes, and employee salaries until you can return to work.

Individual Disability Insurance Coverage, Benefits, and Costs: What to Expect

This section will explain what you can expect from a typical individual disability insurance policy.


Close-up of a man's hand using a crutch/walking cane

Disability insurance covers disabilities due to acute injuries, such as broken bones, or chronic pain, like arthritis.

Some conditions, like PTSD, or illnesses, such as cancer, should they cause you to be disabled, would also be covered by an individual disability policy.

Total disability, which includes a loss of limbs, loss of vision, or paralysis, is included in a disability policy.

What Isn’t Covered

Although disability insurance covers most disabilities, some circumstances or exclusions apply.

Any self-inflicted injuries, such as suicide attempts or from a DUI, will not be covered by this insurance. Acts of war, rebellion, or criminality resulting in injuries are also excluded from this policy.

The underwriter may also include some medical exclusions based on your health history.

Giving birth, unless there are unexpected complications, does not qualify for disability care.


The benefit amount can vary greatly, but mostly depends on your current salary and the amount you can afford.

Policies are tailored to your needs, and you don’t have to worry about losing the benefits because the employer cancels or you lose your job. Therefore it is advisable to secure as high a benefit amount as possible.

Premiums are not taxable, and having this coverage can bring great peace of mind.


The cost of your premiums depends on a variety of factors. These include:

  • Exact profession or specialty
  • Current salary
  • Age
  • Gender
  • Location
  • Lifestyle


What to Look for in an Individual Disability Policy

Now that you know the basics of what to expect, let’s discuss your priorities when choosing an individual disability insurance plan.

Key Features

You should base your policy choice on three main features and a few optional additions.

Own-Occupation Definition

The parameters of what it means to be disabled according to your insurance policy can greatly increase or decrease the chances you have of receiving benefits when you get injured.

True own-occupation policies are the most beneficial ones you can obtain.

Some plans won’t award benefits if you can still work another job. Others won’t if you can still work part of your job.

True own-occupation policies will award you the full amount if you can no longer work your current occupation.

Noncancellable or Guaranteed Coverage

man's hands stacking coins

These policies cannot be canceled or changed for any reason after they go into effect. Also, the premiums cannot increase for the duration of the policy.

Elimination Period

Also known as the waiting period, this is the amount of time you will wait after being disabled before you can draw your benefits. A period of 90 days is the standard.

A longer elimination period may be financially devastating, since you will be going that long without any additional liquidity. However, a shorter elimination period will result in higher premiums.

Optional Riders

Some of the most advised riders that most physicians add to their policy include:

  • Residual Disability
  • COLA Adjustment
  • Future Increase Option
  • Catastrophic Disability

How Much Do You Need?

When determining how much disability insurance to purchase, follow this formula:

Your current monthly living expenses

-The expenses you’re no longer incurring when not working (mass transit, gas, going out for lunch on Fridays, etc.)

-Income from a spouse or investments

= Your monthly benefit needs

Maximum Benefit Duration

How long do you want to receive benefits? Until retirement? The longer your benefit period, the more expensive the policy.

You may want to purchase the longest possible plan, just in case. You can always cancel if you become financially independent.

How to Save on Premiums

Here are some tips that can help you save money on your disability insurance policy:

  • The earlier you purchase, the better: You can get a better rate when you are younger.
  • Pay annually: Most companies offer a discount for this payment option.
  • Live healthily: Insurance companies will offer better rates to those who care for their health. A less risky lifestyle means less risk from an insurance point of view.
  • Women should purchase the unisex rate: This is a better rate, since women’s policies are more expensive.
  • Choose a graded premium, if possible: These plans can help save money long-term and make it more affordable to new physicians.


Best Individual Disability Insurance Companies

We have done extensive reviews of the Big Six insurance carriers, who are known for their top-notch disability insurance policies.

To read the reviews, click on the name of each insurance carrier below:


The main benefit of an individual disability insurance policy is financial security, come what may. This safety net can give you peace of mind.

Some of the most important aspects of individual disability income insurance are the definition of disability and what portion of your income it will cover.

Aside from that, you can adjust and tailor the terms of the policy to suit your specific needs.

Contact the financial professionals at LeverageRx for help finding the best policy for you.