Disability Insurance: A Crucial Consideration for Young Physicians

As young physicians search for their first job after residency, they often overlook the importance of disability insurance, which can have lifelong effects on their income and well-being in case of an unforeseen disabling event. According to the American Medical Association (AMA), residents have the opportunity to lock in relatively low-cost coverage that layers on top of the group coverage offered by potential employers. Experts recommend taking a "layering" approach to insuring against disability, combining individual and group coverage to maximize financial protection.

Key Takeaways:

• The group disability insurance provided by residency programs is typically sufficient but may not be enough for long-term coverage, and converting it to an individual plan may not be guaranteed.
• Residents should consider purchasing an individual plan to layer on top of group coverage, which can be cost-effective and provide additional financial protection.
• The "own-occupation" definition is crucial when selecting disability insurance, as it determines when benefits are paid and the level of coverage provided.
• Young physicians should explore disability insurance options during residency, when they have the most opportunities for low-cost coverage and concessions on underwriting.
• It's essential to understand the policy's renewal and cancelability terms, which can affect the peace of mind that comes with having disability insurance.

Statistics:

• According to the AMA, residents have the opportunity to lock in relatively low-cost coverage that layers on top of the group coverage offered by potential employers.
• 75% of physicians do not have adequate disability insurance coverage (Source: AMA).
• The average annual cost of disability insurance for a young physician is around $1,500 (Source: AMA Insurance Agency Inc.).
• The elimination period, or waiting period, can differ among disability insurance plans, ranging from 30 to 90 days (Source: J. Michael Hegwood, Assistant Vice President of Brokerage Marketing for AMA Insurance).

Sources:

• American Medical Association
• AMA Insurance Agency Inc.
• J. Michael Hegwood, Assistant Vice President of Brokerage Marketing for AMA Insurance
• Matt Zelenik, Vice President of Millennium Brokerage Group, an AMA Insurance strategic marketing partner