If you have investigated the topic of disability insurance, you quickly learn it is complex. However, since residency, you have been told your most important asset is your ability to earn a good income, and disability insurance is the best way to help protect it. We respect that you have worked hard for years to become a physician, and have earned the opportunity to make a good income. We want to help you protect it well.
TMA Insurance Trust is an independent, full service insurance agency with decades of experience counseling generations of Texas physicians on how to help protect their incomes and assets. This article will provide an overview of the TMA Member Long Term Disability Insurance Plan, issued by The Prudential Insurance Company of America, and the comprehensive nature of the benefits and features built into the coverage, and how that coverage compares to an individual disability policy.
The TMA Member Plan Starts With “Own Occupation” Coverage
The purpose of disability insurance is to help replace a portion of your income when you become too ill or injured to work. The TMA Member Long Term Disability Insurance Plan provides Own Occupation Coverage. This means if you cannot perform the duties of your occupation including your medical specialty due to illness or injury, and have a loss of income of 20% or more, you may receive benefits. If your disability is permanent and you cannot practice, you will continue to receive benefits until you reach your Social Security retirement age. Should you become disabled after age 70, you can receive up to 24 months of benefits.
If your injury or illness limits you to practicing part of the time and your income decreases by 20% or more, you can receive a Partial or Residual Disability Benefit commensurate with the percentage of income that is lost. This valuable benefit is built into the TMA Member Plan. It is an optional coverage (known as a rider) that is available for an additional cost with an individual policy. We consider the partial/residual disability benefit to be mandatory coverage for physicians because a significant number of claims either begin as a partial loss of income or evolve into a partial loss of income while the physician is recovering and returns to work on a part time basis.
More Benefits Built Into The TMA Member Plan
The TMA Member Plan includes benefits that are available only as coverage options on individual policies for additional costs. The TMA Member Plan also has features included that will not limit your ability to maximize your coverage like some individual policies do. These are outlined below.
- No Offsets: Unlike individual policies, the TMA Member Plan does not impose an offset. In other words, your benefits will not be reduced (offset) due to any other insurance benefits you may receive. Individual insurers impose this limit to ensure your total benefits from all sources will not exceed the percentage of your income covered by their policy. This is a valuable provision of the TMA Member Plan because your benefit is not reduced by any other disability benefits you may receive.
- Catastrophic Coverage: Disability insurance claim adjusters use what is known as “Activities of Daily Living” (ADLs) to determine the severity of a disability claim. These are tasks that a person conducts that define their ability to live independently. Examples include being able to dress one’s self, conduct personal hygiene, manage personal grooming, etc. With the TMA Member Plan, if the claimant cannot perform two ADLs, their benefit will be automatically increased by 20%. This benefit is included in the TMA Member Plan. It is an option on an individual plan for an incremental cost.
- Future Increase Option: Many physicians secure their disability insurance early in their careers. However, over time, as their incomes increase, their coverage will no longer properly protect their income. The Future Increase Option allows a physician who is covered prior to age 40 to increase their coverage without the need to go through underwriting again prior to them attaining age 45. This eliminates the need for medical and financial underwriting, including sharing tax documents and the need to take a medical exam. So, while your additional premium will reflect your age, it will not reflect any changes in your health or financial situation. This valuable feature is included in the TMA Member Plan, but it is an option you will pay extra for with an individual plan. We consider this a valuable coverage for residents and young physicians who could see dramatic increases in their incomes.
- Student Loan Reimbursement: Many physicians have loans to pay back once they graduate medical school. Loan payments add an extra financial burden to a young physician’s budget. Have you ever considered what would happen if you could not practice due to an illness or injury? The loans still need to be paid back and now you are without an income. If you had a family member or friend co-sign your education loan, they are now responsible to make those payments. When you are covered with the TMA Member Plan before age 40 and have outstanding education loans, your monthly benefit will automatically be increased by 25% (up to a maximum benefit of $250,000) to help you make your outstanding education loan payments. Unlike individual policies, this benefit is a no-cost to you provision of the TMA Member Plan. The value of this benefit is apparent. The additional benefit will help preserve your primary benefit for living expenses and help keep your loan payments current.
- 25% “Thank You” Premium Credit: The 25% Thank You Credit will equal 25% of your insurance premiums.1 That means your premium payments will be 25% lower, which could effectively save you thousands of dollars over the life of the policy. This is a savings on top of our already affordable premium rates and our way of helping our members make sure their incomes are more protected. An advantage for women members is our premium rates are gender neutral, so you will not pay more than your male colleagues. Typically, this would not be the case with an individual policy.
- Simplified Underwriting: Applying for the TMA Member Long Term Disability Insurance Plan is significantly more convenient than applying for an individual policy. In fact, for coverage of $5,000/month or less, we will not ask for complex financial statements or tax documents to verify your income. So, we reduce the “hassle factor” and help protect your income sooner.
A TMA Member Plan Option to Consider
- Cost of Living Adjustment (COLA): This optional inflation fighting feature helps protect the buying power of your disability benefits over time. Automatic annual increases to your disability benefits are equal to the lesser of 6 percent, or 50 percent of the increase in the Consumer Price Index for that year. This option makes sense for young physicians with years of practice ahead of them who need to make sure the buying power of their disability insurance benefits are not eroded over time by inflation. However, if you are a physician over age 50 and you think you have accumulated enough of a financial cushion combined with your current disability insurance benefit to carry you through a long term disability event, you may not need this optional coverage. This is when speaking with an experienced advisor is prudent.
The Bottom Line
When we designed our TMA Member Long Term Disability Insurance Plan, we built in many benefits and features we considered to be necessary and valuable to help ensure members’ incomes were well protected. We also strived to keep the cost affordable for members. In fact, if you included all of the benefits and features in the TMA Insurance Trust Plan the annual cost for a 35 year old female physician would be $460.20. An individual policy with the same benefits and features would cost $2,737.24 per year. Given this, we think we were successful in meeting those objectives. And you should know that since the Plan's inception in 1969, no participant's coverage has ever been canceled or not renewed. In the last 20 years, TMA Insurance Trust has paid over $137,000,000 in benefits that continue to be paid today. The Plan's decades of financial stability stand as a testament to our ongoing commitment to TMA members.
For many members, helping to protect their income is a priority. That is why it’s a priority for us. Our experienced advisors stand ready to provide guidance and support so you can make informed and smart decisions for you, your loved ones, and your future. And remember, our advisors are not driven by sales-based commissions - because they don’t receive any. Their focus is to help you put the best disability plan in place for your situation and budget. To speak with one of our advisors, call us toll-free at 800-880-8181, Monday to Friday between 8:00 AM and 5:00 PM CST, or complete the contact request form to have an advisor contact you. It will be our privilege to serve you.
For over 65 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 high quality insurance plans.
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