Many physicians employed by a medical center, research facility, or large practice may receive benefits from their employer. That can bring a sense of security, knowing that your basic insurance needs are covered. This is especially true when you believe your income is protected with employer provided disability insurance benefits. However, this article will point out that there may be hidden risks, so your sense of security may not be well founded.
Your Disability Benefits Are Most Likely Limited
Disability insurance provides income if you are ever sick or injured and cannot work. At that time, you would need funds to pay your bills, your mortgage, and your family’s living expenses. Unfortunately, your employer-paid plan may provide some coverage – but not enough to ease the financial strain that can come with not being able to work for an extended period of time.
In fact, having a plan from your employer might give you a false sense of security about how much income protection you really have. So here are some compelling reasons why you may want to consider supplementing your employer plan with your own disability plan.
- Your benefit is taxable. If your employer pays for your coverage, your benefit will be generally taxed as income. So after getting paid your benefit, it would be reduced further by federal, and local taxes. (Please consult your tax professional to determine your tax liability.)
- Your benefit will be limited. Many employer-paid disability plans cover only 60% to 65% of your base salary. Could you live on 60% of your salary?
- Your employer has imposed a cap on your benefit. Many employer-paid plans come with a cap on benefits – typically $10,000/month. If your salary is $200,000 that would mean your insurance benefit would be capped at the maximum benefit of $120,000/year. Any salary over that amount would not be covered. And remember, you’ll still have to pay all your bills which will remain the same every month.
- Your salary has increased. If you continue to work for your employer, it’s likely that your salary will increase over time. So, too, will your family’s living expenses and financial responsibilities. If your disability benefit has not been adjusted accordingly, it may not cover your family’s needs if you are unable to work and draw a salary.
- Your coverage is not portable. If you were to leave your current employer, your disability plan will not automatically follow you to your next position. So you would likely need to obtain your own policy. If you leave when you’re older and have health issues, you may be turned down for coverage.
- Your bonus will not be covered. Your employer plan does not cover your annual bonus, which means your benefit may be lower than you thought. If you depend on your annual bonus, you may want to consider how to supplement this income in case you become disabled.
We Can Help Protect More of Your Income
Adding more income protection, fortunately, can be simple and affordable. TMA Insurance Trust works with leading carriers so we can provide you with a number of options to supplement the coverage you have now or get a new plan if you have no coverage at all.
One option available exclusively to TMA members is the TMA Member Long Term Disability Insurance Plan issued by The Prudential Insurance Company of America. It can work with virtually any employer-paid plan and comes with these features and discounts:
- Simplified underwriting compared to an individual plan. Members can apply for up to a $4,000/month benefit without the need to verify your income, and regardless of any other coverage you already have.
- Own Occupation coverage that will pay benefits until you reach Social Security retirement age.
- 30-day waiting period. Some disability plans require that you wait 90 days or more before you receive any benefits. TMA members can choose a shorter waiting period – so you’ll get your benefits when you need them most.
- Student Loan Reimbursement benefit for insured members ages 40 and under – an additional 25% of your monthly benefit amount up to $250,000 is available to help pay for any outstanding education loans you may have at no additional cost.
- 25% Thank You Credit* This means your monthly premiums will be 25% lower – potentially saving you thousands of dollars over the course of your career.
There are also options for non-members as well. This includes disability plans from Guardian, a national leader in individual coverage that comes with discounts of up to 20% for the life of the policy.
Speak With An Advisor or Apply Online
If you have any questions at all, please speak with one of our advisors. That’s what they’re here for. One difference between our advisors and other agents and brokers is that they do not receive any sales-based commissions – so their advice and recommendations are free from bias. You'll benefit from their years of experience and can be assured that you and your insurance needs are always their top priority.
To find out about your options, call us for a cost-free consultation at 800-880-8181, Monday through Friday, 8:00 to 5:00, CST. Or, if you’d prefer, you can easily apply online with our streamlined application process. To apply now click the button below.
For over 60 years, TMA Insurance Trust advisors have been serving Texas physicians, their families and staff. TMA Insurance Trust prides itself on offering unbiased information and strategies to members, along with exclusive group rates on a range of the highest-rated plans in the industry.