As a physician, you may have spent a significant amount of time planning to produce revenue, therefore you have less time to develop wealth. While many doctors emphasise budgeting, student debt repayment, increasing retirement plan contributions, and developing an asset protection strategy, they seldom address safeguarding your most precious asset: your capacity to make an income.
Anyone who is working and has not yet attained financial independence needs disability insurance. You may enjoy what you do, but you have to work in order to make a living. You must safeguard your income, and the only efficient method to do so is to obtain disability insurance. Here are three reasons why you should protect your income with Disability insurance.
Group Long-Term Disability Insurance Provided by Employers/Sponsored by Employers
If you work for a big practice, multi-speciality clinic, or hospital, chances are you are supplied with or given Long-Term Disability (LTD) insurance. While I would not advocate it as the cornerstone of your disability income protection because of the typically less favourable contractual restrictions connected with it, it may have some major benefits when combined with an individual disability insurance policy.
Employer-provided or sponsored group LTD plans will pay a portion of your earnings up to a monthly benefit ceiling. A typical LTD plan, for example, would give 60% income coverage up to a monthly limit of $10,000 or $15,000. However, the proportion of income restored might vary, as can the plan’s maximum monthly benefit. When acquiring or upgrading your individual disability insurance coverage, it is critical to understand the coverage given by your employer, if any.
Limits on Disability Insurance
Insurance companies do not want you to make more money while you are disabled than when you are working. As a result, most insurance companies will limit the amount of disability insurance offered.
In an ideal world, you would have 60-80% of your earned income replaced in the case of incapacity. However, having group insurance in place limits the amount of individual coverage accessible – even if you are ready to pay for more coverage.
As a result, when shopping for individual disability insurance, provide your insurance agent or financial advisor with a copy or summary of your employer-provided LTD insurance plan, if any, for review, as well as your annual income, a description of your job duties, and if you have any health issues and/or are taking any prescription medication (s). Then he or she may show you examples of coverage from several insurance providers and assist you in comparing the advantages and drawbacks of each in terms of cost vs. benefits.
Unisex Rates
Female premium rates are much higher than male premium rates due to a greater morbidity rate. This is attributed to a greater rate of claims originating from mental/nervous and/or drug addiction illnesses, as well as a higher rate of autoimmune conditions.
Female physicians can avoid this by purchasing insurance with a unisex (gender-neutral) rate structure and a discount. This is a blended rate that heavily favours females and can yield savings of 40-50% off standard female premium rates.
