A disability can have a massive effect on your ability to provide for your family. Disability insurance policies can come in a variety of different options and coverages. Using an experienced agency can help clarify these different coverage options and provide you with coverage that meets your needs.
DID YOU KNOW...
The four most common causes of long term disability claims are:
1) Musculoskeletal Disorders (29%)
2) Cancer (15%)
3) Pregnancy (9.4%)
4) Mental Health Issues (9.1%)
The Long Term Disability Insurance provided by your employer is taxed:
While this may not seem like a big deal right now, think of your ability to pay bills and provide for your family if you had a drastic change in income. Most group policies cover 60% of your income, subtract out say 20% in taxes and you are left with only 48% of your current income. Your personal insurance should cover this gap.
The list of available riders is long and complex.
Non-Cancellable, Guaranteed Renewal, Own-Occupation, Own-Specialty, Partial/Residual Rider, Cost of Living Adjustments, Future Purchase Options, Recovery Benefits... These policies can get complicated quickly.
Throughout our over decade of experience we have seen as individual disability insurance policies have grown in popularity amongst young physicians as they enter the final stages of their training. Unfortunately with this growth in popularity has come agents/advisors that have geared their practices towards capitalizing on this surge in new policies. While we agree these policies are an important part of your overall financial plan, you should be aware of a few facts before purchasing your policy:
1) Only 5% of the workforce between the ages of 21-29 experience a disability claim. This percentage decreases substantially when you factor in type of work.
2)The most common causes of physician disability claims are chronic, long-term issues such as arthritis and back pain.
3) The increase in insurance premium between 23 year old and a 27 year old is typically only a few dollars a month.
All of this to say that during residency you should only be purchasing disability insurance if you can afford it and do not have other higher interest debts that should be address first. Any insurance purchase should be one that clearly has a risk/reward component and for most residents it simply isn't there.
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