AMA vs. Individual Disability Plans
Everything you need to know before buying an AMA Disability Insurance Plan
There are several ways physicians can purchase disability insurance. You can choose from different individual planse, or you have the option of purchasing through a professional association, like the American Medical Associate (AMA). The AMA offers the AMA DisabilityPro Insurance Plan, which is backed by The United States Life Insurance Company.
While the AMA Disability Insurance Plan may seem like the obvious go-to, it can provide very different options than an individual disability insurance plan. The options provided may be more rigid than the ones you have when choosing an individual plan.
We’ve done a comparison of the AMA Disability insurance Plan vs. individual plans, so that you can evaluate your options to find the best plan for you.
Definition of Total Disability
To start with, the most important thing to know about any plan is how it defines total disability. The wording of this is not the same in every policy, and it will determine how your insurance company will handle your injury or disability as they determine how and if they will pay out your benefits.
Under the AMA policy, totally disability means you are unable to carry on performing the major functions of your job and also that you are not able to do any other jobs on the side. Basically, even if you aren’t able to perform your normal work duties, but you are able to work in another occupation, you will not receive the full benefits. This is where an individual disability insurance policy can differ. In some plans, you can receive full benefits even if you are working on the side or in another specialty. Your coverage is based on your ability to perform your duties within your specific occupation.
Cancellations or changes to your policy
Some insurance policies offer options that are non-cancellable, guaranteed renewable, and cannot be changed by the insurance company. If you choose a plan that does not specifically include those terms, then changes can be made by the insurance company—which means they could modify the features of your plan or increase your premiums.
The AMA disability plan is not non-cancellable or guaranteed renewable. Therefore, an AMA disability policy can be changed, the premiums can increase, and the policy can even be cancelled by the company that offers the policy.
On the other hand, the individual disability insurance policies for physicians like you that are offered by the major disability insurance companies are all non-cancellable. So once you purchase a plan, you are locked into that plan and the company cannot make changes or raise premiums, as long you make your scheduled payments.
Types of Disability
Now what if your disability arises from mental or nervous disorders or substance abuse issues? Some policies will limit the benefits paid for these types of disabilities for a period of time, and they may not pay benefits for the entire life of the policy.
In the AMA disability insurance plan, benefits paid out for mental, nervous or substance abuse issues are limited to 24 months. This means if you suffer from a disability related to a mental or nervous condition, the insurance company providing the AMA plan will only pay your benefits for two years, even if your disability lasts longer.
Growing your coverage as your career grows
You may want to have the option to increase your coverage as your income grows. The AMA plan has a few restrictions about choosing to increase your coverage. While they will give you a future purchase option, coverage can only be increased once in the first three years of the policy, or before your 40th birthday. This can be a significant hang up for physicians who are in residency or in early practice, with a lot of room to grow in their careers.
With an individual disability plan, you have the option to increase your coverage every one to three years up until to the age of 55. These plans provide more flexibility for you to choose the coverage that is right for you throughout your career. At the same time, it locks in the cost of these additional benefits at the time your plan is purchased, so you know exactly what your options will be moving forward.
Cost of Living Adjustment
Including a cost of living adjustment, or COLA, in your benefits will help make sure your disability plan keeps pace with inflation, by providing annual increases in benefits that are paid out. These are typically either tied to an inflation index or are at a fixed percentage.
Unfortunately, the AMA plan does not offer a COLA feature. This means that the benefits you receive will not keep up with inflation, and will feel like less money as the years go by. On the other hand, all individual plans will provide a COLA adjustment with your policy.
More Flexibility and Ownership
When it comes down to it, individual plans may provide you with more flexibility and ownership over making the coverage and policy choices that are right for you, your career, and your family. Life changes, and we change with it. We can help you make a choice now that will give you the freedom to make the best decisions in the future about your Disability Insurance.
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