Resident Physician Disability Insurance
Do I Have To Buy It Now?
by Steven L. Crawford

You have probably already sat through several lunch and learns on practice planning, insurance and investments, and almost everybody has told you now is the time to purchase your own individual disability insurance policy before you complete training. During the presentation everything probably made sense, but why did you need to buy it right now?

The number one reason is to protect everything you have invested into being a physician. If you don’t have a true own-occupation disability insurance policy with medical specialty language yet, a sickness or injury could prevent you from being able to protect your income. Nobody wants to go through medical school and residency training only to suffer from a disability that will prevent them from performing their medical specialty before they even get started. Once you have an own-occupation disability insurance policy, you are protected against a sickness or injury preventing you from bringing home a paycheck.

The second reason is your current age; the rates for individual disability insurance typically increase with age, and therefore will never be better than they are today. If you are going to pay a fixed premium until retirement, it makes sense to pay premiums based on a 29 year old for the next 36 years instead of paying the increased premiums of a 30 year old for 35 years. The savings over your lifetime will be significant opportunity costs recaptured.

The third reason does not apply to everybody, but will apply at many residency programs. Many residency programs have endorsements with various insurance carriers, and offer discounts if you purchase an individual disability insurance policy while you are still in residency. Sometimes women can get unisex rates which may save them quite a bit over their lifetime.

Regardless of which reason above motivates you to purchase an individual disability insurance policy, you should know by now that you have to get one. Unless you are so wealthy that you can self insure against disability, there is no logical reason to walk around without individual disability insurance protection, especially as a physician. The best thing you can do is to buy it now, at the youngest age you will ever be able to obtain it. Once you have made the decision to buy a policy, the next decision is to decide which company to purchase it from, and what type of policy to buy.

COMPANY & CONTRACT
For physicians, I would recommend Guardian Life Insurance Company of America, and their wholly owned subsidiary Berkshire Life Insurance Company of America. Their ProVider Plus disability insurance policy is the number one selling Non-Cancellable and Guaranteed Renewable to age 65 (or to age 67) individual disability insurance policy in the industry, and has been for several years now*. They offer medical specialty language in the definition of total disability (only one of two companies to do so), the longest recovery benefits of any DI carrier, and very competitive policy definitions. They also have very competitive graded premium structures that work well for residents. This allows you to secure a high-end disability insurance policy like Guardian’s at an initially lower rate for several years. I like to recommend graded premiums for residents, and put a plan of action to convert from the graded premiums to a fixed level premium 5 years after completing residency. Having a graded premium allows you to own top-notch disability insurance at a much lower rate right now, and converting it to a level premium 5 years later fixes the premiums for the rest of your working years so that the premiums don’t continue to increase every year.


*According to LIMRA 2005-2007 US Individual DI Participants reports, based on annual premium.