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How to Choose a Long-term Disability Policy in Under 20 Minutes

Feb 4, 2016 2:50:00 PM

For physicians, long-term disability insurance, also known as income protection, is one of the most important investments that can be made. No one wants to think about an unexpected illness or injury, but it is wise to arm yourself with the facts. Young workers today face a three in ten chance of being disabled before they retire, and medical problems are the reason stated in over sixty percent of the bankruptcy cases. In fact, the most startling statistic regarding disability comes from The National Safety Council, which states 498 Americans become disabled every ten minutes.

When it comes to having a career as a physician, long-term disability is especially important. Being employed in the medical profession brings along greater on-the-job risks. In addition to working in a more dangerous environment than most, physicians have higher rates of mental conditions and musculoskeletal disorders, two health issues that have the potential to dramatically affect one’s earning potential.

In order to better protect your assets, family and well-being, obtaining a long-term disability policy should be a cornerstone of your financial plan. Depending on the policy you choose, you can receive a monthly cash benefit that will help make up lost income as a result of a partial or total disability.

You may be wondering how to pick the most appropriate policy for your needs. Before we discuss what to look for, let’s take a quick look at the types of long-term disability policies that may be available to you.

Types of Long-Term Disability Policies

  • Employer-sponsored group disability – This type of disability plan is most often offered by mid-to-large sized practices either as a subsidized benefit or by a deduction in payroll. The majority of these plans are limited and only offer fifty to sixty percent of your income if you become disabled.

  • Individual disability – This type of policy can be purchased from your insurance advisor and tends to offer many additional features and coverage options over an employer-sponsored policy.

  • Association-group disability – If you are a professional member of an association or group, you may have been offered this type of policy as a benefit. Some of these policies provide similar features and coverage options as those offered in an individual plan.

When speaking to a knowledgeable advisor, they can guide you on how to obtain optimal insurance protection. This may include purchasing an individual or association policy and then taking part in your employer’s plan. By combining multiple policies and adding specific coverages, you can help  cover potential income gaps should you become disabled.

What to Look For in a Long-term Disability Policy

Now that you know the types of policies available, here are several items to keep in mind when considering the purchase of a long-term disability policy:

  1. Tailored to your needs – For physicians, it is crucial to add specific coverages and provisions to your policy because of your career. For example, you will want to add an “own occupation” provision. With this provision (and if you are still able to work in some capacity), your long-term disability policy will continue to pay your benefits, in most cases, even if you are able to take on some other type of work using your specialized skills. Without this provision, you may not receive any benefits as long as you can manage any type of employment.

  2. Benefit Period – How long your benefits will be paid depends on your policy. Speak to your advisor about selecting a benefit period that ensures you would receive benefits up until “Social Security Normal Retirement Age.”

  3. Portability – This important feature of an individual disability policy allows the insured to take their coverage from one job to another, and from one state to another.

  4. Non-Cancelable and Guaranteed Renewable – Securing a policy with these provisions ensures that the policy can't be canceled and the contract provisions can't be changed without your consent, and the premium can't be raised for the life of the policy as long as you continue to pay your premiums.

  5. Comprehensive coverage – Speak to your advisor about whether or not your policy may contain exclusions due to any pre-existing medical conditions. Also, keep in mind that mental and nervous conditions are one of the most common reasons stated on disability claims by physicians. Note that many plans limit the benefit period for a claim due to a mental or nervous condition.

  6. COLA adjustments – This adjusts your benefit payments annually to help with increases in the cost of living.  

  7. Future-increase riders – This rider would allow you to increase your coverage limits at any point in the future.

  8. Catastrophic disability rider – In addition to your regular benefits, this rider would provide extra benefits if you are considered “catastrophically disabled,” meaning you cannot perform two or more activities of daily living or have become cognitively impaired.

Long-term disability insurance cannot easily be secured once you have become ill or injured, so plan today for your financial future and any unexpected interruptions in future earnings.

For more information about the long-term disability “must-haves” mentioned above, feel free to request a quote. We’ll partner you with an experienced advisor who can answer your questions and provide any additional information for you.

Visit our disability page to learn more about physician-specific plans today.

Topics: Life Insurance, Disability Insurance

Posted by the TMA Insurance Trust Team
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