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Disability insurance can help you to protect your ability to earn an income. Ask yourself this question: What if you were no longer able to perform surgery or even to see patients due to an unexpected illness or injury? What if that inability to earn a living was long-term, or even permanent? What would happen to your income – and ultimately to your lifestyle?

The truth is that throughout your working years, the likelihood of becoming disabled is much higher than most people think. In fact, according to the U.S. Census Bureau, more than 51 million Americans are classified as disabled – that’s 18 percent of the population.

Further, the Social Security Administration estimates that 1 in 4 of today’s 20-year olds will become disabled before they reach the age of 67. So if a disability happens, it’s essential to have a good solid disability insurance policy in place to take over where your working income left off.

How Disability Insurance Works

Disability insurance typically pays out between 60 and 80 percent of your working wages. At the time you apply for a policy, you set the time period for the payment of benefits. This can be a certain number of years, or until you reach a certain age such as 65 or 67. (At that time, your retirement benefits from Social Security or other sources may begin to pay out).

Will Your Benefits Be Taxable?

Should you need to rely on the benefits from a disability insurance policy, it is important to know whether or not the income received will be taxable. The way that the plan is purchased will determine this.

For example, if you purchase the plan using your own funds using after-tax dollars, then the benefits you receive from the insurance policy will be tax free. Conversely, if the plan is paid by an employer or your practice and the funds that are used to pay the premium are not included in your gross income, then benefits that are received from the policy will be considered taxable income and will be taxed as such.

What Medical Professionals Should Look for In a Disability Insurance Policy

While there are important factors for anyone to look for in a good solid disability insurance policy, there are aspects that are of particular importance to those who are in the medical profession. These should include:

  • Option to increase your coverage in the future
  • Payment of medical school student loans in addition to your monthly income benefit
  • Coverage worldwide, not just in the U.S.
  • Ability to keep coverage, even if you leave your current practice

In addition, you will also want to ensure that you secure coverage from a reputable insurer that has financially strong ratings from A.M. Best, Standard & Poor’s Insurance Rating Services, Moody’s, Fitch Ratings, or Weiss Ratings.