Frequently Asked Questions
Having been on countless Disability Income meetings through the years, I have answered and dealt with many concerns a Resident Physician has when they are considering purchasing a policy. I would like to address a few of these concerns and thoughts now.
1. “Why would I consider a policy now? I have two more years before I finish my training. I'll worry about a policy next year”. Buying a disability policy should be treated as an “investment”. You are spending money (by way of an insurance premium) to protect your financial well-being. You should not jump into any long term contract without doing some homework. With that said, these are a few thoughts on why you should consider doing a policy sooner rather than later. How do I know you can qualify for a policy two years from now? Once you lock into a policy you are locked in and a carrier can not modified the contract. You will then have a Purchase Option locked in for future increases with no medical qualification. Buying a policy at a younger age will be less expensive as the base policy will be locked in at the approved rates for the life of the contract. Before you do commit to a policy you want to make sure you can comfortably afford the premium each month.
2. “I think I will wait to purchase a policy until I see what my new employer will provide in disability coverage”. How many of you have stated this? Although typically not a bad idea in avoiding “over insuring” oneself, when it comes to a personal disability policy this may not be that wise. If you join a practice and find out the group disability is not as complete as you would like it to be, an individual carrier will still take this group coverage into consideration when you apply for a policy. The group coverage will now limit what you would be eligible for on your personal policy. If you had purchased coverage during your residency, your individual policy can never be reduced. Additionally, consider this…..you join a practice that provides coverage. A year or so later the practice environment is not right for you. You decide to move on and join another practice. This new practice is a fine working environment but offers no disability coverage. You are back to square one with no protection. You have to start your search all over again for personal protection and accept the plans that are now available to you on the private market. Can you guarantee to yourself that you will be healthy enough to qualify for a policy? Consider purchasing a policy WITH a Purchase Option. This Purchase Option allows you to increase coverage in the future without going through medical underwriting.
3. “I am joining a group and they provide Group LTD (Long Term Disability)”. My first reply is great!! This simply means you do not have to purchase as much personal disability coverage BUT a personal policy with a Purchase Option STILL makes sense. Let’s say your Group LTD will cover you for 60% of your income to a $10,000 monthly maximum. If the premium is not paid by you, this group benefit will be taxable. Is a taxable group benefit enough to meet your monthly obligations? Your personal policy would be a wonderful supplement to the LTD plan as this benefit would be tax-free. Additionally, as I mention in comment #2, how do I know this group coverage will always be there? Whether you stay at the same job or change employers, you might lose some or all of your Group LTD coverage. If this does happen and you go to apply for a personal policy, will be an older age and still have to qualify medically. If you have a personal policy with a Purchase Option and a life changing event happens , you can fall right back on this Purchase Option in your policy for an automatic increase!
4. “I can not afford extra costs in my life right now!”
This is common among Residents and certainly understandable. My suggestion here is to create a place where you keep important items to review in the near future. This could be in a paper file cabinet or even a folder on your computer. I tell a client to place my literature on Disability Income in this location. When they sense they have a few extra dollars each month to spend on a policy, I’ll have them to pull this information out and we'll resume the education process on this coverage. There are many times where I do meet a Resident and the timing simply isn’t right to purchase a policy. We’ll keep in touch every six to nine months and when they feel the time is right, I am there to assist them.
5. This last comment can be tough to address with a prospect but I feel it is extremely important to address. There are times where a Resident Physician would like to pursue a policy but feel they have a “medical issue” and would not qualify coverage and bringing this issue up to me is either embarrassing or uncomfortable for them to discuss. PLEASE KNOW that all off our conversations are strictly confidential. I can not effectively help a client unless I know your medical history. Not every prospect I meet is 100% healthy and we have to “pre-underwrite” a case before we apply. As I mentioned earlier, I represent many carriers in the industry. It is not uncommon for me to send an email to a respective carrier explaining the prospects “medical issue” to see how they might handle. This email is anonymous to protect your privacy. The benefit with this email is to get a idea whether it is worth pursuing submitting an application without actually applying. I discuss this with the client and we mutually decide if it worth applying or waiting.