The occupation “doctor” covers a lot of different fields (we’ll go into how these differences affect insurance costs later). But all doctors have something in common: More than any other job, doctors need disability insurance.
Because more than any other profession, their education investment sacrifices current income for potential future return.
Why doctors need disability insurance
There are stereotypes about doctors — medical school is expensive and they get paid a lot — but they’re largely true. According to the Bureau of Labor Statistics, 2016 median pay for physicians and surgeons (the jobs that come up when you simply search for “doctor”) was more than $208,000, or over $100 an hour.
That’s a lot of money, but it’s also after getting an undergraduate degree, spending four years in medical school and then spending three to seven years in a residency program where they’re not earning much.
That’s a lot of debt building up with the payoff coming potentially a decade down the line. That’s why it’s important for doctors to buy disability insurance while they’re young. It keeps coverage affordable, and protects future income potential — and the ability to pay off debts.
All financial advisers have stories of doctors who became disabled prior to realizing their earning potential. Disability insurance can prevent future doctors from becoming cautionary tales.
Best disability insurance companies for doctors
|Company||30 years old||40 years old||50 years old|
|Ameritas||$136.54/mo | $1,581.20/yr||$222.34/mo | $2,578.90/yr||$350.62/mo | $4,070.43/yr|
|Guardian||$142.34/mo | $1,708.06/yr||$216.53/mo | $2,598.38/yr||$325.46/mo | $3,905.52/yr|
|Principal||$123.09/mo | $1,405.80/yr||$185.53/mo | $2,119.05/yr||$274.26/mo | $3,132.45/yr|
|The Standard||$155.80/mo | $1,780.55/yr||$264.18/mo | $3,019.13/yr||$441.85/mo | $5,049.71/yr|
|MassMutual||$137.55/mo | $1,611.28/yr||$220.72/mo | $2,572.80/yr||$358.01/mo | $4,160.00/yr|
These rates assume the applicant is a male, non-smoker in New York with a degree and an income of $100,000.
The plans offer a $5,000 benefit with a 90-day waiting period and benefits to age 65, as well as the following features:
- Own-occupation: You receive the disability benefit if you can’t work in your own profession, even if you can work other jobs.
- Partial or residual disability: If you’re able to work but not to the extent you could before your disability (for example, because of reduced hours) you still receive a partial benefit.
- Future purchase option: The ability to get more coverage later in life without going through the underwriting process again.
- Non-cancelable: Your rates cannot go up.
- Automatic increase benefit: Raises the benefit automatically for the first four-to-five years of the policy.
Your exact policy and rates depend on your specific needs, so while these prices are good guidelines, talk to a licensed expert about your situation.
What doctors need to know about disability insurance
It’s important for doctors to have disability insurance — and to have the right kind of insurance. Here are some specific points doctors should keep in mind when they’re shopping.
True own-occupation coverage is a must
True own-occupation coverage means if you can’t do all the duties of your medical speciality, you can still collect a benefit even if you are working in a different role. For example, someone who can no longer perform surgery but could work as a general hospitalist or teach would still be eligible to collect the monthly benefit and their income.
Because doctors are so specialized, a true own-occupation policy provides the maximum amount of protection.
Disability riders doctors should consider
Riders are modifications made to customize your policy. Some disability insurance riders doctors should consider are:
- Cost of living adjustment (COLA) — This increases your disability benefit while you’re on a claim based on the Consumer Price Index.
- Student loan rider — This automatically allocates money to make student loan debt payments while you’re on a claim.
- Retirement protection — Puts funds into an irrevocable trust while you’re on a claim that pays out during retirement to make up for retirement savings you might have missed out on while disabled.
- Future purchase option — Lets you lock in insurability now and purchase more coverage later when your income increases. It's important if you're buying a policy while in med school or as a resident, when you're not yet bringing in the big bucks.
Know your coverage limits
Disability insurance companies allow doctors to “overinsure” at various stages of their career. For example, med school students can buy a policy with a disability benefit of $2,500 even though they have no income. During residency, they can get coverage starting at $5,000 a month. It’s a good incentive to lock in your coverage early.
Your medical specialty matters
Our sample disability insurance policy rates above are based on a general physician applicant. But depending on your specialty, your rates may be higher or lower.
- Typically more expensive: Anesthesiologists, Anesthetists, Surgeons (Specialty dependent), Emergency Room (ER) physicians, Gynecological Oncologists, Neurosurgeons, Obstetricians, Gynecologists, Orthopedic surgeons, Otolaryngologists, Pain Management Physicians,
- Typically the same: Allergists, Cardiologists, Dermatologists, Family Practice, Geneticists, Immunologists, Internist, Neurologists, Ophthalmologists, Pathologists, Physiatrists, Psychiatrists, Radiation Oncologists, Radiologists, Urologists
- Typically less expensive: Endocrinologists, Gastroenterologists, Geriatricians, Hematologists, Hospitalists, Neonatologists, Nephrologists, Oncologists, Pediatricians, Pulmonologists, Rheumatologists
Some carriers offer you a discount on your coverage if you buy while in residency.
Supplement your work coverage
Many physicians start as an employee at a specific hospital but end up as a 1099 employee at multiple hospitals later in their careers. This offers benefits, like writing off expenses, but has drawbacks – specifically losing any group coverage a hospital may offer. It’s dangerous to rely on workplace insurance, because it’s tied to your employer, and for doctors — who move around a lot over the course of their careers or choose to open their own practice — it’s an even bigger risk.
Disability insurance companies realize this, so, unlike other professions, they’ll let doctors buy the maximum amount of coverage even if you have workplace coverage. That way, you’re fully protected no matter where your residency is.
Graded premiums are a good option
You can buy a disability policy that has level premiums — they’ll stay the same for as long as you own the policy — or graded premiums that start low and increase over the life of the policy.
Graded premiums can be a good option for residents who are still on a tight budget because the initial cost will be lower, and you could subsequently convert to a level policy when your income increases. It lets you lock in coverage when you’re young, because as you get older and your health naturally deteriorates it’s harder to get the best rates. However, if you can afford it, level premiums are the most cost-effective option in the long run.