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Disability insurance for physical therapists: What to know in 2021

Why physical therapists should protect their financial future with disability insurance, what they should look for in a policy, and how to apply for personalized coverage online.

As a physical therapist, you help people overcome the effects of injuries or illnesses.

You help patients regain the ability to do normal tasks after surgeries on their back, neck, or knees. You get previously injured people back to work through rehabilitation. You treat those with chronic conditions to help them manage their pain and lack of mobility.

So what would happen if instead of being the therapist, you become the patient? What if you suffered an injury that made it nearly impossible to do your job for an extended period. Or how would you make a living if treatment for cancer or heart disease made you too weak to handle the physical demands of your career?

The answer is disability insurance

If you can’t work for an extended period, you could lose a significant amount of income and all that your income supports. Even if the 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.

You’re at less risk to lose your income in these circumstances if you invest in disability insurance. Disability insurance is designed to replace a major portion of your income if you are unable to work due to injury or illness.

There are two main sources for where to get disability insurance: You can buy group disability insurance as part of a large group plan, either through your employer, or professional association; and/or purchase your own individual disability insurance policy.

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Why do physical therapists need disability insurance?

You have a lot to lose if an injury or illness limits your ability to work as a physical therapist.

You’ve invested many years and a lot of money into your training. Your skills won’t easily translate to other careers if you can’t be a therapist.

Even if you could do other work, it’s not likely you’ll be able to earn as much as you do in your chosen career.

According to the U.S. Bureau of Labor Statistics (BLS), the median annual wage for physical therapists was $91,010 in May 2020. The lowest 10 percent earned less than $63,530, while the highest 10 percent earned more than $126,780.

Your career also has a bright future. According to BLS, employment of physical therapists is projected to grow 18 percent from 2019 to 2029, well above the average for most other occupations.

The demand will be fueled by the aging of the U.S. population combined with the growing prevalence of chronic conditions such as diabetes and obesity. In addition, advances in medical technology have increased the use of outpatient surgery to treat a variety of injuries and illnesses. Physical therapists will be needed to help these patients recover from surgery.

The physical demands of your profession

Much of what makes physical therapists susceptible to disabilities is the physical nature of their work. Injuries to your back, neck, or extremities can make your job very challenging, as could general weakness caused by illnesses and the treatments for those ailments.

Among the many tasks of physical therapists, the most physically demanding include the use of exercises, stretching maneuvers, hands-on therapy, and equipment to ease patients’ pain, help them increase their mobility, prevent further pain or injury, and facilitate health and wellness.

Physical therapists also spend much of their time on their feet, working with patients. Because they must often lift and move patients, they are vulnerable to back injuries.

How much does disability insurance cost for physical therapists?

Here are examples of what physical therapists might pay for the cost of disability insurance:

  • A 30-year-old male physical therapist working in Boston, Massachusetts, and earning $110,000 a year can get a $1,900 monthly benefit for $62 a month, a $3,700 benefit for $121 a month, or a $5,590 monthly benefit for $182 a month.
  • A 37-year-old female physical therapist working in Birmingham, Alabama and earning $75,000 a year can get a $1,400 monthly benefit for $66 a month, a $2,800 benefit for $132 a month, or a $4,200 benefit for $199 a month.
  • A 44-year-old male physical therapist who owns his practice in Minneapolis, Minnesota, and earns $90,000 a year can get a $1,600 monthly benefit for about $78 a month, a $3,200 benefit for $156 a month, or a $4,750 benefit for $232.
  • A 51-year-old female physical therapist who owns her practice in Sacramento, California, and earns $125,000 a year can get a $2,100 monthly benefit for about $243 a month or a $4,200 benefit for $487 a month.

These scenarios all assume a five-year benefit period and a 90-day elimination period.

What determines how much you’ll pay

Insurance companies set your monthly premium 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 an attorney.
  • Where you live.
  • The benefits and features of your disability insurance policy.

What occupation class is a physical therapist?

Another factor that strongly influences what you pay for disability insurance is your job.

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.

Occupational classifications for physical therapists vary by carrier. Some companies even have different classifications based on your education level, the type of facility where you work, and the type of therapy you specialize in.

One insurer rates all physical therapists in the 3rd out of 4 rating classes.

Another insurer rates physical therapists between a 2 and 4 out of 5 rating classes. The difference in classification is based on the level of education. Therapists with a master’s or doctorate degree are ranked a 4. Those with a bachelor’s degree are rated a 3 and those with an associate’s degree are classified as a 2. Physical therapy assistants are rated a 1 by this insurer.

Another insurer with 6 rating classes classifies physical therapists who work in a hospital, clinic, or office as a 4. Therapists who specialize in home health care are put in this insurer’s 3rd occupation class.

What physical therapists need in disability coverage

As you shop for disability insurance, here are a few considerations:

The most important provision you need to have included in your policy is that a disability is defined as one that prevents the insured from working in his or her own occupation.

An own-occupation disability policy typically pays full disability benefits if your disability limits your ability to work as a physical therapist, regardless of whether you can perform another type of work.

Another rider you should consider is residual disability. This feature may provide benefits if you can still work following a disability but are not considered totally disabled. It is designed to protect you against partial income loss. It comes into play if you are able to perform some, but not all, of the material duties of your occupation or if you are unable to work for a set percentage of the time. Benefits are typically calculated as a percentage of your loss of earnings or what you would receive if you were unable to work.

Finally, if you own your own practice, your disability coverage should also include business overhead expense (BOE) insurance.

Whereas regular disability insurance covers individual income, a BOE policy will help cover your monthly business expenses if an injury or illness impacts your ability to work.

BOE policies vary but you can typically get one that pays a maximum monthly benefit between $15,000 and $25,000. If you obtain BOE that is bundled with your personal disability policy, the maximum benefit may be a factor of that benefit amount; for example, the BOE benefit maximum might be equal to 12 times the benefit on your personal policy.

BOE benefits can help you cover:

  • Rent or mortgage payments on your business facilities
  • Utilities
  • Taxes
  • Employee salaries and wages
  • Business loan repayments
  • Business insurance premiums
  • Equipment maintenance
  • Building maintenance and janitorial services
  • Office supplies

Joel Palmer is a freelance writer and personal finance expert who focuses on the mortgage, insurance, financial services, and technology industries. He spent the first 10 years of his career as a business and financial reporter.

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.

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