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Top 10 Disability Insurance Myths
Setting The Record Straight
by Anthony DelVecchio

1. All Contracts that have “Own-Occupation” language are the same.

Unfortunately the term “own-occupation“ can be misleading if not fully understood. Here are the 2 most common:
True Own-Occupation- as a physician looking at disability quotes, this is the definition you should focus on. This definition allows you to work in another occupation without the reduction of benefits based on income. Some carriers offer “medical specialty language” which offers true own-occupation protection deeming your medical specialty your own-occupation.
Modified Own-Occupation- a contract with this definition protects you if you could no longer work in your occupation due to injury or illness BUT reduces your benefits if you are earning an income in a separate occupation.

2. It is Too Expensive

REALLY!? Try living without an income for six months and tell me it is too expensive. It is too expensive to try and survive a disability of 3 months or more on savings alone. *71% of American employees live paycheck to paycheck. I understand this may not be you, but do you want to spend down all your assets, your retirement, just to make your everyday bills?
*American Payroll Association “Getting Paid in America” 2008

3. I am young and healthy-there is no need for it today

You are and that is great. You are right you do not need it today, but what about tomorrow? Next year? If I could predict when and if you were going to be disabled I would tell you to wait until that time and let’s get it right before (I would also be the greatest disability specialist in the world and the insurance companies would hate me). I can’t and chances are you can’t either. I just found out I had pre-cancerous polyps and had them removed. I am 34 years old and never dreamed I would have to worry about this moving forward at my age. You never know. If I waited to buy a policy until now, I may have been unable to get coverage, or best case have an exclusion on my policy.

4. I am just worried about Something Catastrophic Happening.

Most people believe that is how they will become disabled some freak accident. In fact most disabilities are not by a freak accident but a gradually decline in over health or a degenerative condition . According to 2010 CDA (www.disabilitycanhappen.org) the musculoskeletal/connective tissue (i.e.: neck and back pain) are the number one cause of disability. Cancer, stroke, heart disease and other illnesses are right behind.

5.Social Security Will Cover Me, I Have Group

If you are depending on Social Security to cover your lost earnings you may be in for a surprise. The average monthly SSDI benefit is $1,004. (Social Security Administration Fact Sheet 2008). Is this enough?

Most group policies have limitations and maximum benefits and the policy is owned by the group and not the individual. What if the policy changes? what if it is dropped? What if the rates are raised? In most cases, especially with physicians, these group policies are covering a small percentage of your actual income. It is important to know what you have and where the gaps are.If you have a group policy know it. Make sure you review what you have. In most cases there is room for additional coverage.

6. I Just Started a New Practice and I have No Income

There are plans available that can offer you coverage even though you are not showing an income. Most companies will offer first year professional limits to physicians or first year limits for new business owners. Before you decide to wait, see what you can get today. Locking in your medical insurability is the most important thing to do right now. This leads me to..

7. "I am a Resident/Fellow my Program Offers It."

Most programs do offer some disability insurance coverage. However once you leave that practice the coverage is lost. As a resident you are working long, long hours for very little pay. It is so important to lock up your medical insurability today with your own policy. If you wait until you have completed your residency there is a chance your medical history has changed. Today almost all the major players for disability insurance will offer a guarantee benefit amount and a future increase option so that you can increase your coverage, without medically qualifying in the future once your income grows. While medical information is not required when exercising your future increase option, applications to exercise an increase option will be financially underwritten.

8. Disability Insurance Is Hard To Qualify For!

It really is not that difficult. Yes, you do have to complete an application. Yes you do have to do blood and urine analysis and they will review your medical records. It takes about 4-8 weeks to underwrite a policy. The time you personally have to spend is about 1 hour. It takes about 15 minutes to complete an application and 15 minutes to do your blood work. That is it on your end. In my opinion, if you are a healthy individual with some minor issues you should have no problem getting an offer from an insurance company.

9. If I Do Get Disabled It Won’t Last That Long

Beware of this one. Just over 1 in 4 of today’s 20 year old's will become disabled before they retire. The average long term disability, 31.2 months according to recent information provided by the CDA 2010 (council of disability awareness). Do you have enough to survive close to 3 years without an income? Most Americans do not. Which leads me to the last myth.

10. I Have Enough Savings and Can Cover My Own Disability

Let’s take a quick look at America’s saving and spending habits.
-Over 70% of working Americans do not have enough savings to meet short-term emergencies.
-Over 50% of the workforce has no private pension coverage and a third have no retirement savings. (Social Security Administration 2007)
-More than 35% of workers with a 401(k) or IRA plans have not thought about or don’t know what would happen to their contributions if they were unable to earn an income. For a period of time.
(Council for Disability Awareness, 2007 Disability Survey)