A common question we receive regarding medical resident disability insurance relates to increasing the disability benefit at some point in the future.
Medical resident disability insurance is capped at $5,000/month. This amount is inadequate for residents/fellows who are about to at least triple their salary as attending physicians.
That is why we include a FIO/FPO (Future Increase/Purchase Option) rider on all medical resident disability insurance policies. This option allows for an increase in disability benefit with no medical requirements needed.
We advise that all residents and fellows maximize their individual disability protection by establishing medical resident disability insurance with an FIO/FPO option prior to completing their training.
This allows the physician to maximize their total disability protection. This is because medical resident disability insurance companies take into consideration any group coverage you may become eligible for as an attending. Also, the higher your annual income, the less total coverage can be obtained on an individual basis. A physician earning $200,000 per year can obtain individual coverage replacing about 55% of that income. In contrast, a physician earning $400,000 per year can only obtain coverage replacing about 48% of that income.
If you wait until after you obtain group coverage to obtain individual coverage that gap in coverage cannot be filled. However, if you obtain individual coverage first, the group coverage limit is higher and thus the gap can be filled. For instance, using the same $400,000 per year income figure above, with group disability coverage, that 48% of total coverage is increased to almost 60%.
Therefore, it is best to think of group coverage as a supplement to your portable individual coverage. Remember, due to this and other reasons (you aren’t in control of the policy or its premium, benefits are taxable, etc) it is best to think of group disability coverage as a supplement to your individual coverage.
Maximize your disability protection by establishing individual coverage with an FIO/FPO rider before you become eligible for any group coverage. Maximize existing individual coverage by utilizing your FIO/FPO rider and then fill any remaining gap in coverage with a supplemental individual or group disability policy.
The medical resident disability insurance specialists at DI4MDs can review your existing individual and/or group coverage to ensure that it is still adequate for your current situation. Contact us today.