Resident & Fellows
Did you hear about the guy who lost his whole left side? He’s alright now!
Injury jokes aside, recently the question has been coming up more and more often; “Why would I buy disability insurance while a student, resident, or fellow?” “Shouldn’t I wait until I can actually afford it?”
The truth is, you cant afford not to buy it, sooner rather than later; and below are just some of the reasons why.
It Can Happen to You
First and foremost, 1 in 4 individuals will suffer an illness or injury making them unable to perform the main duties of their occupation during their working years. That’s higher than the likelihood of a serious car accident, a house fire, or dying. You will not always be insurable, it is important to lock in coverage while healthy in order to obtain the best policy at the best rates.
It Gets More Expensive the Longer You Wait
Second, disability insurance gets more expense as you age. Just like life insurance the older you are the higher the likelihood that you will experience a work stopping illness or injury so your rates increase as you get older. The difference of a few years delay in purchasing your policy could end up costing you thousands of dollars over the course of your career. Where else could you put those dollars to work for your financial stability?
Who Doesn’t Love a Discount?
Discounts, that’s right! For disability insurance there are often discounts for being medical resident, a dental resident, as well as medical and dental students. These discounts can range anywhere from 10 to 50 percent. Some carriers offer large discounts that are called “unisex rates.” That means that since females typically pay more for disability insurance will get quoted at the male and female blended rates and then the discount is applied. What this means is if a female dentist has access to a 25 percent discount because of the unisex rate they receive closer to a 50 percent cost reduction. This can save thousands of dollars per year for the insured thereby saving them tens of thousands of dollars over the course of their working career.
Education is Expensive and you Have a lot at Stake
Student loans are a real drag! We get it, we all have them. Unfortunately, the doctor and dentist population is usually the carriers of the highest debt burdens. We know our customers have anywhere from 100 thousand to 400 thousand dollars in student loans, many of which are private student loans. If you are diagnosed with an illness and cannot work, these loans do not go away, unfortunately this could put you and your family into financial ruins. We can help! Many carriers now offer Student Loan Riders in addition to their disability insurance coverages. These riders provide a benefit to pay back student loans in the event you become disabled. These riders are reimbursement coverages and normally cover 10 to 15 year terms of debt repayment. The student loan riders are usually a fraction of the cost of a typical disability insurance base policy and can help you reduce your out of pocket cost.
More Money, Less Problems
Lastly, the amount of coverage you have is important. Carriers will only issue a certain amount of coverage and participate with other carriers up to a certain coverage level. What this means is you cannot go buy disability insurance from another insurance company after you have maxed out your benefits with the other. The usual amount an individual carrier will issue is 20 thousand a month in benefits and will participate up to 30 thousand per month with your GLTD or Group Long Term Disability insurance that is paid for by your employer. Consider this example, if your future company offers you a GLTD plan that pays 60% of your salary with a max benefit of 10 thousand and you make 240 thousand per year, if you are unable to work due to illness you will only receive a benefit from them of 10 thousand dollars monthly and then this is also taxable to you. Buy buying a supplemental DI policy after completing your residency and signing your contract the insurance carrier will look at the coverage that your employer provides you and then reduce the coverage they offer which is called an offset. The insurance company does this as to make sure you are not “over-insured.” Individuals that are over insured have a greater likelihood of going on claim in the insurance company’s opinion. However, you can get around this buy purchasing a policy while in residency and before signing your employment contract. Because there is no existing coverages they will issue you the amount you are eligible for based off your future income potential, then when you become employed and begin receiving group benefits there will be no disability insurance offset and you will have more insurance coverage in force. If you are unable to perform the duties of your occupation due to illness or injury you will now be receiving benefits from both your GLTD plan and your individual disability insurance which could be the difference of thousands of dollars per month or hundreds of thousands of dollars over your lifetime. This is where not purchasing today could be the biggest financial mistake you make in your lifetime. The good news is, if you are currently a resident or completed your program within the last 6 months, Policy Wizards can help. Click the “contact us” button below and one of our Wizards will be in touch to help you make one of the best financial decisions of your life.