Education Center

Physician Disability Insurance Tips

Why Physicians Need Disability Insurance

For physicians, disability insurance is a necessity. Individuals who build successful careers as doctors spend many years and hundreds of thousands of dollars in training expenses preparing to pursue careers in the medical profession. No one enters medical school expecting to experience a debilitating disability but it’s a fact that injuries can strike anyone at any time, regardless of occupation.  There are many situations in which a physician could become unable to perform the essential functions of his or her job due to an injury or illness, either on a temporary or permanent basis. The right type of disability insurance can provide income replacement during such times and can also provide a source of income while the doctor is building his or her practice back up after being able to return to work. Working as a doctor, in most cases, is a fee for service occupation. A physician’s ability to earn a living is tied to his or her ability to perform the duties involved in practicing medicine. When a doctor isn’t able to see patients, he or she isn’t able to earn an income. It’s as simple as that. That’s why physician disability insurance is such an essential investment.

Physicians Understand Disability Insurance Necessity

On a percentage basis, more physicians take out disability insurance policies than individuals working in any other profession. Who better than a physician to understand just how important disability insurance is? After all, healthcare professionals see the impact of unexpected illness and injuries firsthand every day. Fortunately, disability insurance for doctors is widely available and most physicians choose to include this important type of income protection in their financial planning portfolios. The best physician disability insurance policies feature “own occupation” coverage specific to practice specialty. Additionally, rather than paying benefits only until the doctor is able to return to work, one should include a residual benefit that pays benefits until the insured’s income returns to a large percentage of pre-disability levels. After all, it may take years for a physician to rebuild his or her client base after an extended absence, regardless of hours worked or duties performed.

Residual Coverage with Time and Duties Provision: Not a Good Choice for Physicians

Many disability insurance policies pay benefits until such a time as the insured individual is able to return to his or her pre-disability work schedule and occupational duties. With a time and duties policy, no benefits are paid once the insured person has returned to his or her usual work schedule. While this type of coverage can be beneficial for people whose pay is based on hours worked, it is not recommended for physicians.

The fact that a disabled physician is able to return to work full time, performing the same duties he or she handled before getting sick or being injured is a certainly good thing. However, it doesn’t mean that the doctor’s income will return to normal. The fact that a doctor is physically able to go back to work doesn’t indicate that the individual’s earning potential is back to where it was before the setback.

Building a successful practice takes years. Following an absence from work, it can take years for one’s practice to rebound to the level it was at prior to experiencing the disability. That’s why doctors need physicians’ disability insurance that includes residual disability coverage, paying benefits in proportion to the percentage of income lost, until their earnings have returned a great percentage of the level that they were at before the disability.

Best Choice for Physicians: Loss of Income Residual Disability

When choosing disability insurance, physicians need to look very closely at how partial disability is defined in the policy’s terms and conditions. In many disabilities one comes back to work, so it’s essential to understand how benefits are paid while the insured individual is recovering and begins to return to work. The best disability insurance for physicians provides coverage for loss of income when they can’t work because of sickness or injury and also provides residual (partial) benefits after going back to work or while recovering and working part time. Upon returning to work following a disability, it can take a significant length of time for a physician’s practice to recover to the level it was before the disability. That’s why residual benefits are so important for doctors. Physicians who are covered by loss of income residual disability insurance will receive benefits in proportion to the percentage of income lost after returning to work, for up to the complete term of the policy.

How to Choose Disability Insurance for Doctors

  • Verify that the policy uses the “own occupation” definition of disability rather than the “any occupation” definition.
  • Search for a policy that clarifies “own occupation” as your particular medical specialty rather than as the general medical profession.
  • Make sure the policy has a recovery benefit.
  • Look at the insurance company’s financial strength ratings to verify you’re purchasing coverage from a company likely to be around and able to pay if you ever need to file a claim.