For doctors, the financial stakes are higher than most — from the cost of education and training to the income potential that follows.

You chose medicine as a career to help people and make a difference.

But what happens if you can’t practice medicine - whether temporarily or permanently — due to an accident or illness? What happens to the financial obligations you’ve incurred and the lifestyle you enjoy?

If you’re fortunate, you won’t have to worry about that happening. But in your profession, you deal with people who didn’t think accidents or illness would happen to them either.

Disability insurance is something most people should consider owning. For physicians and medical professionals, it’s even more important to own an individual disability insurance policy.

If you’re a typical doctor, you:

  • Don’t even start your career until your early to mid-30s because of the education and training involved.
  • Start your career earning about $50,000 a year as a resident.
  • Earn an average yearly salary between $200,000 and $600,000, depending on specialty and area of practice.
  • Graduate medical school with around $190,000 in student loan debt.

Physicians need disability insurance because:

  • According to the Social Security Administration, about 25 percent of 20-year-olds will become disabled at some point before reaching age 67.
  • They have specialized skills that require exceptional cognitive abilities, complete vision, and full use of hands. Lose any of these capabilities in any capacity and you may have to reduce your workload or stop practicing altogether. The impact could be temporary or permanent.
  • It’s possible to endure a disability that limits how much or how often you can work. You may lose, say, 25 percent of your income during a period of disability, which can be a lot of money for doctors and physicians. Without disability insurance, how will you get along without that lost income?
  • They enjoy nice lifestyles based on earning high salaries that would be impossible to maintain without their career income.
  • They have few to no options for replacement careers that come close to paying what they make.
  • Even if a disability is temporary, you could fall behind on your mortgage or car payments, rack up more debt, and be forced to sell valuable items or tap into retirement accounts for needed cash.
  • Many medical professionals are also business owners. If a disability keeps you from practicing for an extended period, many of your patients may find other providers by the time you can return to work.
  • Studies show mental illness is prevalent among physicians and dentists. Physician disability policies typically provide benefits when mental disorders, breakdowns, or abnormal stress affect your ability to work.
  • Unless your student loan debt originated from a federal government program AND you can prove total and permanent disability, your student loan debt will not be forgiven if you can't work due to a disability.
  • Even if you don’t make a lot of money today because you're a resident, that will change in several years. It’s better to buy disability insurance at a young age.

Your monthly disability insurance premium will depend on the following factors:

  • Your age and health. The younger and healthier you are, the less you will pay.
  • Your income. Disability insurance is designed to replace a percentage of your income if an injury or illness limits your ability to work as a nurse. You can expect to pay between 1 percent and 4 percent of your current income.
  • Where you live.
  • The benefits and features of your disability insurance policy.
  • Medical specialty.

Disability insurance companies group jobs into specific occupational classes. These classes take into account the hazards of the job and the difficulty in returning to work following a disability. Another factor is the claim experience associated with certain professions.

Insurance companies generally classify occupations on a scale of 1 to 5 or 6. Typically, the higher the numerical value of the classification the lower the rate available from the insurance company. Many insurers also have a specially designated rating for medical professionals, often using the letter M.

These classes take into account the hazards of the job and the difficulty in returning to work following a disability. Another factor is the claim experience associated with certain professions.

It can be challenging for physicians to evaluate different disability insurance policies because:

  • The occupational classifications can vary widely by specialty.
  • Different insurance companies may assign different classes to the same profession or specialty.

One reason rate classes can vary by specialty is that some medical professionals earn far more than others. That means an insurance company will have far more income to replace if disability affects a physician’s ability to practice. The higher the potential benefit payments, the more an insured will pay in premium.

Another reason is that some specialists may be more impacted by injuries and illnesses. For example, arthritis, while painful, may not prevent a psychiatrist from practicing, but it could affect a surgeon’s ability to work.

In general, specialties in the highest-risk occupational classes are those that regularly engage in high-risk practices or that have strenuous manual duties. Examples include anesthesiologists, registered nurses, and podiatrists.

All types of surgeons are grouped in high-risk occupational classes as well, along with emergency room physicians and physicians who perform interventional procedures, such as obstetricians.

The lowest-risk medical specialties are those that do not typically perform surgery or interventional procedures. Examples include general practitioners, internists, and family practice physicians, as well as most dental specialties.

In addition, one insurance company may classify, say, oncologists in their 4M class, while a competing company may designate them as a 5M. In some cases, the discrepancy between insurers for certain specialties may vary by two class numbers.

In fact, you would be hard-pressed to find a specialty that all the major carriers classify the same.

Jack Wolstenholm is the head of content at Breeze.

The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.

Published October 31, 2019

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