Do you work for a hospital, medical group or medical center?
If so, as an employed physician, it’s likely you have disability insurance. It’s also likely that your coverage is provided as part of your group benefits package.
And while this may be a valuable benefit for most working physicians, we find that many of our members may not be aware that the disability insurance provided by their employer can have certain limitations.
If you have employer-provided disability insurance, it’s important to know the facts about your coverage. Then you can determine how well your income is protected – which can be especially important at this time when there is so much uncertainty in our lives.
The Limitations of Employer-Provided Plans
Disability insurance can help replace part of our income if we become sick or get injured and are unable to work. That’s why it’s good if we have a plan provided by an employer.
Unfortunately, many physicians may believe that because they have this coverage they do not need any further income protection for their family.
Here are 5 reasons why you may not want to rely solely on your group disability insurance to protect the financial security of your family:
1. Your benefit may have limits
Most policies paid for by an employer have limits on how much of your income they will cover. In many cases, your monthly benefit may be capped at a set amount – for employed physicians, that is typically $10,000, or a yearly benefit of $120,000.
It’s up to you to determine if that would be enough for your family to live on. But remember, your monthly expenses – like mortgage and loan payments, groceries, and your children’s school tuition – would not be reduced if you stopped working and were not receiving a paycheck.
And ask yourself: If your income were limited to that amount, would you be able to contribute to your savings and retirement funds? Or put away funds for emergencies?
2. Your benefit is taxable
Another fact that may surprise you is that the benefit received from an employer-provided plan is typically taxable as income. So your benefit could be further reduced by federal, state and local income tax.
That would give you even less income at precisely the time you and your family need more financial resources – when you are not working and earning your full salary. (Please consult a professional about your tax liability.)
3. Your salary has increased – but what about your benefit?
If you obtained your employer-provided coverage a while ago, it’s likely that your salary has grown since then.
Your policy may not automatically be adjusted for salary increases. Or you may need more than your benefit limit. So if you were to receive a benefit today, it may not be enough to sustain the higher standard of living to which your family has grown accustomed.
4. Your plan is not portable
Most group plans are not portable. That means if you were to leave your employer you would lose your coverage.
And it’s important to note: If you purchase your own disability insurance plan at a later time, it could come with a higher cost than what you would have paid when you were younger and healthier.
5. Your plan is not guaranteed
There is always a possibility that due to budget cutbacks, shortfalls or reorganization, your employer may decide to reduce or eliminate your benefits. Even though your employer may provide disability insurance now, there is no guarantee they will continue to provide coverage.
Do You Have Options?
So what should you do if you want a greater degree of income protection and financial security?
We suggest you speak with a TMA Insurance Trust advisor. They have years of experience working with employed physicians. They can help you calculate the income protection gap in your current policy and help you find your own plan with the coverage and cost that could work for you.
Get The Benefits of a Personal Plan
There are many advantages to having your own disability insurance policy. You could find a plan with the options, features and benefits that suit your individual needs.
And don’t forget, your plan would be portable – so you could take it with you wherever you work or whenever you change employers.
Supplement Your Plan to Increase Your Protection
It’s possible an advisor may recommend that in addition to your employer-provided plan, you get a second policy to supplement the benefits of that plan. This could help expand your total amount of coverage, while helping to keep your costs to a minimum.
Speak With a Trusted Advisor Today
TMA Insurance Trust advisors do not receive sales-based commissions – so you will receive unbiased guidance with no sales pressure or obligation. If it is determined that your current coverage is right for you, they will tell you so. They work for your benefit alone.
If you think you might have a gap in your disability insurance coverage and want to help further protect your income, please feel free to set up a conversation. Our advisors are available toll-free at 1-800-880-8181, 7:30 AM to 5:30 PM Monday to Friday CST.
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.