Doctors play a critical role in society by providing healthcare and improving the lives of their patients. However, like anyone else, doctors are not immune to unforeseen circumstances that can impact their ability to practice. A sudden illness or injury could result in a temporary or permanent disability, leading to significant financial hardships.

Disability insurance can protect doctors and their families. In this article, we explore what doctors need to know about disability insurance and how it can safeguard their financial well-being.

What is disability insurance?

Disability insurance is a type of coverage that provides financial protection to individuals who are unable to work due to a disability. It replaces a portion of their income, ensuring they can maintain their standard of living and meet financial obligations even if they are unable to practice medicine.

Types of disability insurance

• Short-term disability insurance typically provides benefits for a limited period, usually up to six months. It helps doctors manage their finances during a temporary disability such as recovery from surgery or illness.
• Long-term disability insurance offers protection for an extended period, often until the age of retirement. It provides benefits when a doctor is unable to work due to a severe illness or injury that lasts longer than the elimination period* specified in your policy.

*The elimination period, also known as the waiting period, refers to the length of time an insured individual must wait after becoming disabled before they start receiving benefits. It can range from a few weeks to several months, depending on the policy.

Definition of total disability insurance

True own-occupation disability insurance: The definition of total disability considers a doctor disabled if they are unable to perform the duties of their occupation at the time of disability. If the material and substantial duties of their occupation is that of a medical or dental specialty, the specialty would be considered their occupation.

This definition of total disability coverage permits the doctor to work in another occupation, earn income without limitation, and still receive their full disability benefit (as long as they remain unable to perform the duties of their original occupation at the time of claim). Own-occupation coverage is highly desirable for doctors, as it offers comprehensive protection.

Any-occupation disability insurance: The any-occupation definition of total disability considers a doctor disabled if they are unable to work in any occupation for which they are reasonably qualified by education, training, or experience. While this type of coverage may be more affordable, it greatly reduces the ability to qualify for benefits. If it is determined that the doctor is able to work in another occupation, benefits would not be paid, even if unable to practice.

Benefit amount and period

When selecting disability insurance, doctors should consider the benefit amount and amount of time benefits will be paid. Insurance companies typically will not insure 100% of your income and limit the amount of coverage you can secure based on underwriting guidelines.

The benefit amount is usually a percentage of pre-disability income and the benefit period is often to age 65, 67, or 70. Doctors should assess their financial needs, including living expenses, loans, savings needs, and other financial obligations, to determine the appropriate amount of coverage and benefit period.

Since insurance companies limit your protection to a percentage of your earnings and benefits stop at retirement, it is common for doctors to remain fully insured until they reach financial independence. Doctors should choose the amount of coverage and benefit duration based on a plan that aligns with their financial goals and retirement plans.

Is disability insurance worth it?

Disability insurance can be highly valuable and worth considering for many individuals. It is typically an integral piece of the foundation of a doctor’s financial plan. It protects what is likely your most valuable asset, your ability to earn income. Here are some ways disability insurance could benefit you:

• Protect your income: Disability insurance helps replace a portion of your income if you become unable to work due to an illness or injury. If properly covered, this coverage can help ensure that you can still meet your financial obligations and maintain your standard of living during your recovery period.
• Cover gaps in other policies: While you may have some coverage through your employer or government programs like Social Security Disability Insurance (SSDI), the qualification(s) to qualify for benefits under these programs may be more restrictive and may not be sufficient or accessible to everyone. Your own individual disability insurance should be considered your primary source of income protection, while these programs may potentially provide supplemental benefits.
• Long-term financial security: A disability can have a significant impact on your finances, especially if it lasts for an extended period. Disability insurance helps safeguard your financial future by providing a consistent income stream, allowing you to maintain a standard of living, continue saving for retirement and meet other financial goals.
• Flexibility and control: Unlike other types of insurance that cover specific expenses or assets, disability insurance provides you with cash benefits that you can use as you see fit. You have the flexibility to allocate the funds where they are most needed, whether paying bills, covering medical expenses, or supporting your family.
• Peace of mind: Having disability insurance provides peace of mind, knowing that you have a safety net in place if the unexpected happens. It allows you to focus on your recovery and well-being without worrying excessively about your financial situation.

Investing in disability insurance

Disability insurance is a vital component of financial planning for doctors. It provides a safety net in the event of a disability, ensuring that doctors can maintain their financial stability and protect their families.

Understanding the various types of disability insurance, coverage options, benefit amounts, and additional features can empower doctors to make informed decisions and secure the appropriate coverage. By proactively protecting their income, doctors can focus on their patients’ well-being, knowing they have taken steps to safeguard their own financial future.

Ready to explore your disability insurance options? Panacea Financial has partnered with Treloar & Heisel to provide insurance solutions specifically for physicians, dentists and veterinarians.

Learn more about disability insurance for doctors and request a quote here.