"If you had to stop working, where would your income come from?"
For most people, that answer is usually "I don't know" followed by "I think my employer has something." But the high risks inherent in the medical profession, and the higher financial rewards, mean that most medical residents understand how disability insurance can protect them from dramatic lifestyle change.
That doesn't mean, however, that residents always make the right move at the right time.
"It’s very, very common for residents to leave their medical residency program with no plan for protecting their new assets," says Scott Dial, a disability-income expert who works with TMAIT.
After a grueling residency — new pressures arise
During the challenging years of medical residency, most programs provide a layer of disability protection. But after residency, new pressures and risks enter the picture — and the insurance safety net of the residency program is gone.
"Among working physicians, musculoskeletal disorders are the top disability claim based on current open claims, followed by mental disorders," says Dial.
Losing the ability to work doesn't release anyone from obligations to creditors. So most financial planners agree that long-term disability insurance can prevent disaster.
A solution to a costly disability mistake
Employer-sponsored group disability coverage is often limited in several ways, and may offer less coverage.
"A lot of new physicians tell me 'I have coverage at work.' But how will they handle the gap left by those policies?" says Dial. "Many group disability policies only cover 60 percent of income."
The good news is that physicians can simply combine their employer group coverage with a combination of plans that are tailored for physicians. These could include an association group long-term disability policy tailored to physicians. For example, TMAIT's long-term disability policy has a five-year Specialty Option that recognizes a physician's specialized skills. In contrast, group policy benefits may end as long as the policyholder can manage any kind of gainful employment.
Waiting puts the future at risk
New physicians can often sail through the required physical and receive the lowest rates, because they're still in peak health. Purchasing at a young age also means locking in lower rates for many years — even if physical or emotional health changes.
As Dial explains, it’s a very different story for physicians who wait until mid-career.
"Physicians who wait are viewed as more risky, even if they are in reasonably good health. For example, they might have an injury from the past, or they've developed a history of some condition," he says. "They'll pay higher rates, or not get offered coverage at all — it happens every day."