The Essentials of a Resident's Disability Insurance Policy

Several months ago, this blog addressed the wisdom and foresight of having disability insurance as a medical resident. Just as important as having disability insurance is understanding which policy is best for you. This blog will help you sift through financial and insurance jargon and determine what you actually need in a policy.

There are three features that any policy a resident is considering must have:

• Own Occupation Coverage – Considering a physician’s earning power, this is especially important. An own occupation policy considers the insured totally disabled even if he or she can work in another occupation. For example, if a surgeon making over $200,000 per year is disabled and can no longer perform surgery, but can still work as a professor (with a considerably smaller income), an own occupation policy will help compensate for that loss of income. Plans that are not own occupation specific may only cover total disability and not pay benefits if the policyholder is partially disabled or can do other work. Social Security Disability Insurance (SSDI) only covers total disability and the inability “to adjust to other work” because of medical conditions.

• Future Increase Option (FIO) Rider – This benefit allows the insured to increase coverage at later dates without providing further evidence of medical insurability. An FIO Rider gives you the flexibility to add coverage even if your health status declines.

• Guaranteed Renewable and Non-Cancelable – These policies cannot be canceled or altered by the insurance company due to change in health status or age (up to 65), and can be renewed at the same premium for as long as the policyholder desires.

Besides the aforementioned essentials, there are also other things to watch for. With the long-term nature of disability insurance and its payable benefits, choosing an insurance company that is financially strong and highly rated is essential. For example, Doctor Disability recommends companies with nothing lower than an “A” rating by AM Best. Doctor Disability also offers some additional shopping tips.

If you have specific questions about what you should look for in a disability policy, feel free to post them below and I will answer as soon as I see them.