You’re a young physician, and your own long-term disability insurance may seem like an insurance product that you do not need. You are healthy. You are a hard worker and in control of your life. You make good choices. But the reality is that sudden accidents and serious illnesses may strike at any time, to any person.
You’ve worked so hard to get to where you are in life, but a serious injury or illness could happen - and it could derail your financial security. Long-term disability lasts 2 years and 7 months, on average.* Can you pay your bills and live that long without an income? Long-term disability insurance would help replace your income and alleviate major financial stress while you were recovering.
But not all physicians will need the same type and amount of coverage. Though you may feel that a discussion of disability insurance is not exciting, you do want to help protect your income in case you become seriously ill or injured. To get the right coverage (and not pay more than you need to), it helps to have a general understanding of the options available to you.
Individual or Group Coverage: Which?
Maybe you’ve seen articles that warn physicians against purchasing a group or Association long term disability (LTD) insurance plan. But the truth is, both individual and group policies can each play a role in providing the right income protection. Do you know which one is better for you?
At TMA Insurance Trust, we want what’s best for each physician in Texas. So we offer options: individual LTD policies through Guardian and other leading national carriers, as well as the exclusive TMA Member LTD plan issued by The Prudential Insurance Company of America.
Employer-Provided LTD May Not Fit Your Needs
Many young physicians are employed, so they receive group long-term disability insurance through their employer as a benefit. If you have disability insurance through your employer, it’s important to look closer at your plan. Does it provide the right monthly benefit so you could maintain your lifestyle and cover your expenses if you become disabled and cannot work? There may also be tax implications for you that could reduce your benefit if your employer pays your premium.
Individual Policy vs. Association Group Plan: the Differences
What are the basic differences between an individual policy and a group plan?
An individual disability insurance policy is more comprehensive because it is developed specifically for an individual. Costs are based on:
- the policyholder’s age,
- their personal state of health (including their family history),
- the specific work they perform, and
- the benefit amount of the policy.
An association group disability insurance plan, with broader definitions of coverage, is designed to meet the needs of a group of persons. The cost of a group disability insurance policy is often less expensive than individual disability insurance. This is why a group LTD plan can work so well for young physicians, early in their career. It’s also practical for seasoned physicians who want to add to their current coverage in order to protect more of their income. Because the insured pays the premiums for this group coverage, the benefits will be free of any income tax for the majority of those who take the coverage.
Meeting Young Physicians’ Needs
Many physicians secure an individual policy that will protect them until they retire. How do they tailor their coverage so it fits their needs as they move through their career?
They use additional protection options, known as riders. These help tailor a policy to fit specific needs and situations. These riders may include:
- Cost of Living Adjustment rider: prevents the insurance benefit from being devalued from inflation over the years.
- Future Increase Option: preserves the right to purchase additional insurance amounts, even if the insured is not in the best of health.
- Residual Benefit: helps supplement income if the insured’s return to work is gradual or part-time.
A Group Plan that Works for Texas Physicians
The TMA Member Long Term Disability Plan is a group plan that has been designed for physicians. The plan offers the riders listed above and comes with a 10-year “own occupation” benefit, which may be extended after this initial benefit period. Importantly for young physicians, the plan comes with an additional benefit of up to $250,000 in student loan payments at no additional cost.
Options for Young Physicians
The best time to purchase long-term disability insurance is when you are young and healthy. Premium rates are based on your age and health, so the best price you’ll likely receive is now.
Still, the cost of coverage is a consideration, especially if you have a family to support and education loans to repay.
We understand your need for balance: the right protection, at the best possible price. Here again, we offer you options.
Individual Disability Insurance: Save Up to 20%
You have the option to secure an individual policy and lock in your lowest rate through retirement. TMA Insurance Trust has negotiated a permanent discount of up to 20% from Guardian that you can enjoy through your whole career. Even if you want to obtain more coverage in the future, you will receive your discount on that new premium as well.
Here is one possible strategy: secure an individual policy with a lower benefit amount now. Take advantage of the specific true own occupation definition for your specialty, and have the option to increase your coverage in the future. You will have the ability to secure more coverage as your income grows without the need for medical underwriting. (While you will pay more for your increased age on this portion of your premium, you will not be penalized for any changes in your health.) This Future Increase Option gives you the benefit of knowing you are guaranteed to be approved for additional coverage when you need (and can afford) more.
TMA Member LTD Plan: Save With Our 25% Credit
If you would like increased affordability and the coverage that fits many Texas physicians’ needs, you may choose this option. The TMA Member Long Term Disability plan is effective in helping to provide income protection, and the group rates are less costly than those of an individual plan. Plus, TMA Insurance Trust is providing a 25% “Thank You” credit that effectively decreases your premium payments by 25%.†
The TMA Member LTD Plan has additional valuable features for young physicians, like the student loan payments rider mentioned above. The TMA Member LTD Plan also offers the option to select a 30-day waiting period so you can receive benefits fast (most individual policies have a 90-day period before benefits are paid).
We’re Here for Young Physicians
Perhaps at this point you have a clear picture of what will work for you to help protect your income in the event of a disability. Or maybe you have many more questions. Our advisors (who don’t receive sales-based commissions) are ready to talk with you and answer any questions you may have about protecting your income. They can be reached toll-free at 1-800-880-8181, or you can fill out the contact form below and we will be in touch with you. Whatever your needs for income protection, it will be our privilege to serve you.
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.