There are several types of disability insurance for physicians. The strength of the type of disability insurance varies drastically between types. The main types of disability insurance for physicians are individual plans, association plans, employer sponsored group plans, and loss of earnings plans.
We recommend all our clients to obtain an individual policy that protects them in their chosen medical specialty. This kind of policy is defined as a “specialty specific” policy, which protects the income you earn in your own medical specialty and continues to pay the full benefit even if you earn income doing something else. The most comprehensive policies are specialty specific, non-cancelable and guaranteed renewable. These policies put you in total control; not the insurance company, practice or association. The insurance company cannot raise rates, modify features of your policy, add exclusions, or cancel your policy. You are in control, and the policy is portable between employers. The max benefit is determined by your state of residence, income, and medical specialty up to a maximum of $17,000 per month with one company and $30,000 per month when coverage is combined with multiple companies.
The strength and integrity of association plans are determined by the association. You have no control if the insurance company decides to raise rates, reduce benefits, add exclusions, or terminate the plan. The definition of disability is not specialty specific, and partial/residual benefits are typically only paid after total disability benefits are received. You cannot continue coverage if you leave the association, which means you will have to qualify for coverage at an older age, which can pose a problem since almost 40% of disability applications are either issued with exclusions or declined.
Employer Sponsored Group
These plans share the same characteristics of association plans. You have no control if the insurance company decides to raise rates, reduce benefits, etc. Benefits are reduced by state and social security benefits as well as current earnings. Additionally, group plans are governed by ERISA which severely limits the insured’s rights at claim time. Due to the limitations in group disability contracts, they are best utilized as supplements to individual coverage. It is important to obtain an individual plan before enrolling in a group plan in order to maximize the monthly benefit you are eligible for.
Loss of Earnings
These types of policies protect you against a loss of earnings. Unlike specialty specific policies, these policies will only pay if you are disabled and are also suffering a loss of income. The insurance company would pay you a percentage of your full benefit proportionate to what you are earning in your occupation. Submitting income documentation throughout the duration of claim is required. Some individual physician disability insurance companies offer a loss of earnings definition of total disability but under a different name. Review the contractual language carefully.
Contact us with any questions regarding the types of types of disability insurance for physicians.