Medical Residents are better off with Disability Insurance
None of us ever see it coming. It happens in a flash, and suddenly our lives change forever. For Joanne, a second-year resident in ophthalmology, the long hours of residency finally caught up with her when she fell asleep at the wheel and lost control of her car. The accident so damaged the nerves in her hand it was rendered virtually useless. It’s possible that she could recover partial use of her hand but it will require months of therapy. Her $200,000 investment in a medical career is in jeopardy as is her dream of following her passion. Unfortunately, Joanne didn’t have any disability insurance for physicians.
At 26 years old and typical of most young adults, Joanne was of the mind that “It could never happen to me”, despite the glaring statistics, of which she was told in medical school. In fact, like most residents, she was offered the opportunity to purchase individual disability insurance for physicians while in training, on a few occasions. But Joanne was too busy to consider it and she believed she had plenty of time for that.
Unquestionably, physicians have a tremendous opportunity to earn a high income; however, they are disadvantaged starting out due to the long delay and expense before starting their practice. Most young physicians don’t begin to earn significant incomes until they are well out of residency, so they begin their productive earning years well behind the starting line. All they have in the beginning is the promise of a good income in the future. So, the risk of a disability represents a real economic threat because their debt expense will continue with or without an income.
While resident physicians do have access to group disability plans, they may not fully understand their limitations. Group plans generally include a very restrictive definition of total disability which requires insured residents to be unable to perform the duties of “any” occupation in order to collect benefits.
Also, group plans are not permanent. They can be altered or cancelled at any time, and the coverage with most of these group plans is only available while they are in residency. Once they leave residency, young physicians must either find employment where a group plan is offered or buy individual disability insurance. By not purchasing individual coverage at a younger age, new physicians will end up paying a higher premium for the life of the policy.
The larger concern is, if during the time a resident is covered under a group plan, he or she develops an illness or is injured which could make it difficult to obtain individual coverage. Buying individual disability coverage at the earliest possible age will save you a substantial amount of money over time, and, more importantly, it will lock in your insurability for as long as you need disability coverage.
The best possible course for a resident physician is to lock in both their low premium rate and their insurability with an individual disability insurance for physicians policy. Also, the right policy will not only protect your income, it will protect your specific occupation which is your most valuable asset.
Even further, there are special programs that residents can take advantage of that allow them to acquire more coverage than they would otherwise be able to acquire. Read more about these special programs.
Regardless of what a resident chooses to do, they should at least learn more about these programs, as well as what the premium and benefits could be. Physicians should know how an individual policy compares to a group policy. Just as important, physicians should be aware of the fine nuances in the contracts. The best way to review this is to find specialists that do this type of analysis on a daily basis, like a physician does when entering into a specialty in residency.