Disability insurance for students

If you become disabled while in school and have to drop out, disability insurance benefits can help you pay your student loans.

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Amanda ShihEditor & Licensed Life Insurance ExpertAmanda Shih is a licensed life, disability, and health insurance expert and a former editor at Policygenius, where she covered life insurance and disability insurance. Her expertise has appeared in Slate, Lifehacker, Little Spoon, and J.D. Power.

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With disability insurance, you receive monthly benefits from the disability insurance company when you become disabled and can’t earn an income. If you’re a medical or dental school student and will need income protection for your future career, it makes sense to get a policy earlier.

If you become disabled while you’re in school and have to drop out, you’ll still be on the hook for your student loans, and disability insurance benefits can help you make those payments. Plus, you'll pay considerably lower premiums if you get a policy when you’re younger and healthier.

How to get disability insurance while you’re in school

If you’re training to go into a medical field, you need disability insurance. For one, medical school is expensive, and you’ll have many years of student loan debt to pay off when you graduate. Although medicine is a high-paying career, medical school graduates frequently struggle to make large student loan payments when just starting out in the workforce.

The Association of American Medical Colleges requires all medical schools to offer disability insurance coverage to their students. Some schools also require their students to purchase coverage, although in most cases it is optional.

Talk to your school’s benefits administrator to learn whether you have coverage already or need to purchase some.

If you belong to a professional organization, such as the American Dental Association, you should be able to get coverage through it as well. Check the website of your organization for more information.

However, coverage offered by your school or professional organization may not be enough for your needs, and that disability insurance may expire once you graduate or enter residency, so it might be better to purchase your coverage directly from an insurer. A licensed representative at Policygenius can help you find a disability insurance policy that covers you while you’re still in training and after you start your practice.

Pros and cons of disability insurance for students

Disability insurance at any point in your career mostly works the same way. When you become disabled, the insurer pays you benefits during the benefit period or until you recover or die. However, disability insurance when you’re a student has a few differences.

Benefit amount

The benefit amount is how much you’ll receive each month while you’re disabled. Under a disability insurance policy for workers, this amount is typically about 60% of your gross income. For students, insurers usually set the benefit amount at a flat rate of between $1,000 and $2,500.

Your benefit amount can change depending on where you are in your program. Some insurers offer benefit amounts as high as $5,000 to $7,000 when you enter residency.

→ Learn more about disability insurance rates here

Definition of disability

The definition of disability for student policies is a measure of how disabled you have to be before you become eligible to receive benefits. For most policies, you must show that you’re unable to continue attending school. In addition, in order to keep receiving benefits after being disabled for a certain period of time, you may also have to show that you can’t work in any occupation for which you went to school.

Low premiums

Disability insurance for students is some of the cheapest around. That’s because:

  • The younger you are when you purchase disability insurance, the cheaper it is.

  • Some schools and organizations offer it for free or at a reduced group rate.

  • You’re getting much lower coverage while you’re in school.

While disability insurance starts out low when you’re in school, it could increase in price after you graduate. The biggest reason for the price increase is simply that you’ll need to increase your coverage to match your income.

Benefit period

The benefit period is the time during which you’re eligible to receive benefits after becoming disabled. A long-term disability insurance policy can have a benefit period between two years and until retirement.

Student disability insurance benefits can also be paid long after you’d otherwise still be in school. Your benefits will end if you recover from your disability.

Pre-existing conditions

Although you probably won’t have to take a medical exam when you apply for disability insurance as a student, pre-existing conditions you had prior to applying may not be covered by your policy.

Elimination period

As with disability insurance you get when you start your career, student disability insurance also has an elimination period. This is the time you have to wait after you become disabled before the insurer will begin paying you benefits. A common elimination period is 90 days, although shorter elimination periods are available if you’re willing to accept a shorter benefit period or pay a high premium.

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When students don’t need disability insurance

In most cases, you can’t get disability insurance if you don’t earn an income, and you’ll have to prove your income when you apply and go through financial underwriting. Insurers make an exception for medical and dental school students, regardless of specialty. Students in other majors and fields may not be able to get coverage until after they begin their jobs. (You also can’t get covered if you’re under 18 years old.)

How disability insurance can help pay student loans

Student loan debt is a big reason to get disability insurance, whether you’re currently a student or already working. Since high-income professionals also tend to have a lot of student loan debt, disability insurance is especially important not only for doctors and dentists but also for other high-earning professionals, like lawyers, CPAs, pharmacists, and software engineers.

If you’re totally and permanently disabled, the U.S. government may allow you to discharge any of your outstanding federal student loans. But private student loan debt may still need to be paid.

You can also purchase a student loan disability rider for your disability insurance policy. When you become disabled, this rider will pay a monthly benefit directly to your student loan servicer. These benefits are in addition to the usual benefit amount in your policy’s basic coverage, although not every profession is eligible to receive the rider.