People tend to grow out of things. When we’re very young, our parents lament at how quickly we grow out of our shoes and jeans. As we get older, we may grow out of our apartment, our vehicle. As you’ve advanced through your career, you likely grew out of your first job; you wanted something that fit your training and needs better. Of course, as we get older, we grow in experience. Our wisdom deepens. Our income grows as well.
What may no longer fit in your life? Perhaps it’s time to look at your disability insurance and see if the protection still fits. Will it adequately cover your expenses? Will it replace your current income? Take a look at your current policy; if you find that a significant portion of your income is not protected, you have options to obtain more coverage.
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.
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, leaving you with a gap in protection.
To help you understand your potential risk, try our free Income Calculator. It can help you see how much of your salary will go unprotected into retirement.
Individual or Association Group Coverage: Which?
Perhaps 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.
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. A group disability insurance plan is 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.
A Group Plan that Works for Texas Physicians
The TMA Member Long Term Disability Plan is a group plan that has been designed for Texas physicians. The definitions of coverage are broader than in an individual policy, but are specifically designed to meet the needs of physicians. This plan also features a 10-year “own occupation” benefit, which may be extended after this initial benefit period. This can provide income protection that may carry you until retirement. When you compare the cost of the TMA Member LTD plan with the cost of an individual policy, the savings could be significant.
Even if you have amassed investments and savings that allow you to “self-insure” some of your income until retirement, the TMA Member LTD Plan provides a way to fill any income protection gap and help reduce the risk of lost income. The TMA Member LTD Plan allows members to apply for a monthly benefit of up to $4,000, (or $48,000/year) without income verification – and regardless of any other disability coverage you may have.
Are You Missing this Benefit?
Another strategy that may benefit you is to check to be sure you are taking advantage of a Future Increase Option that you may have opted for in your current policy. This is a time-sensitive option, so do not delay. This option allows you to add more coverage without any medical underwriting. This is a valuable benefit that you may have been paying for and could be worth taking advantage of.
An Option to Fund Your Retirement
Once their careers are established, many physicians begin to think of funding their retirement. Could you benefit from Guardian’s Retirement Contribution rider? This rider may make sense for you if you need more income protection and you want your retirement contributions to continue, even if you cannot earn an income due to a disability.
An Option for High Income Earners
TMA Insurance Trust also offers a high-benefit plan from Lloyd’s of London that pays benefits regardless of any other coverage you may have. With this plan, high income earners could apply for a benefit of up to $100,000 per month, and members receive a 20% discount off the premium rates.
We’re Here for Texas Physicians
Perhaps at this point you have a clear picture of what will work for your needs. 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 in this stage of your career. 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.