With each passing day, COVID-19 is transforming our lives in ways we might never have been able to predict. It is redefining how we live and how we work.
As a result, many physicians are reassessing the kinds of protection they have in place for themselves and their families as they try to navigate an uncertain path forward.
Disability Insurance is Key to Income Protection
One essential component in the protection plan of most physicians is disability insurance. It is important because it can help replace lost income if we become ill or injured and cannot work for an extended period of time.
At TMA Insurance Trust, we are dedicated to helping our members find the most comprehensive coverage at the lowest possible cost.
To achieve this goal, we often suggest taking an approach that may not be obvious without the guidance of an experienced advisor.
Stacking – The Strategy of Getting More For Less
One strategy we may recommend is known as “stacking.”
The idea of stacking is to own multiple policies to obtain the most comprehensive coverage at the best possible cost. It is a strategy that can work well for many physicians. Here is how stacking might work for you:
Supplement an Older Policy
If you are like many physicians, you might have obtained disability insurance when you were in the earlier stages of your career – either in residency or not long afterwards.
Today, your income has probably grown – and presumably so too have your living expenses. So the policy you secured years ago might not protect enough of your income today.
So what if you want more protection now?
Rather than find a new policy we might recommend that you get an additional plan to supplement your current policy.
If your current policy was purchased when you were younger – and healthier – it’s likely your premiums were less expensive. If you wanted to buy that same policy today – given your current age and health – it would likely cost much more to get that same coverage.
So, for example, if you have an older policy that provides a $5000/month benefit, you could supplement that policy with a second policy with a monthly benefit of $5000. In this case, ‘stacking’ two policies with a total of $10,000/month coverage may cost you less than one new policy today.
Increase Your Total Monthly Benefit
Stacking policies can also provide a way for you to increase your maximum monthly benefit when there is a limit on how much your current plan will cover.
Often disability insurance carriers will have a limit on the maximum monthly benefit they will pay – as well as the total maximum monthly benefit that can be collected from all disability insurance policies owned by an individual.
So what if your current policy limits your monthly benefit to $15,000 – and your income is much higher than that?
You may wish to increase your total amount of coverage.
If your current policy has a total monthly benefit limit of $30,000 from all your plans, you could get a second plan with a $15,000/month benefit – and increase your total monthly income protection to $30,000.
More Options For More Savings
Combining multiple plans may also allow you to configure a set of options that can work to your personal advantage.
For example, one factor that can impact the cost of a plan is the length of the elimination period – or how long you must wait before you receive a benefit. The longer the elimination period, usually the lower the cost of the policy.
Another factor is the length of your benefit period. The longer the benefit period the more it can cost.
So if you have been a practicing physician for a long time you may not need as long a benefit period until your retirement. Getting a second plan with a shorter benefit period could help lower the cost of your second policy – while increasing your total amount of coverage.
Get The Best of Both Plans
Or, if you are a first time buyer, you might purchase a primary policy that covers you through retirement – but with the longest elimination period.
Then you could “stack on” a supplemental policy with a shorter elimination and shorter benefit period. This combination of options could help drive down the total cost for both policies – while providing a more affordable way to get more comprehensive coverage.
Personal Advice From Experienced Advisors
If you wish to consider a stacking strategy, it’s a good idea to work with an experienced advisor.
Our TMA Insurance Trust advisors have accumulated knowledge from decades of helping Texas physicians. At this time, they are available to help you carefully configure an income protection strategy that can work best for your particular needs.
Their guidance is offered at no cost. And because they do not receive any sales-based commissions you will not feel any pressure or obligation.
If you would like assistance with structuring your best plan for income protection, contact one of our advisors now. They 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.