We have been working with physicians for the last 30+ years. When we started providing income protection solutions, there were over 125 disability income companies. Out of those 125, there were approximately 25, give or take a few, that had the contractual language that included a specialty specific definition. Today there are approximately 25+ carriers with this coverage of which only 3 in CA contain the preferable language; specialty specific definition for a urologist.
Over that period of time we have seen medicine change dramatically. Disability companies have responded by removing or changing favorable contract provisions, i.e.:
- Reducing benefit periods
- Increasing waiting periods
- Removing the specialty specific own-occupation definition
- Increasing premiums
- Tougher medical underwriting
- More stringent financial underwriting
- Stricter claims handling processing
In the last 30 years we have seen many friends and clients die and become disabled. We have seen physicians not only become HIV positive but contract AIDS, be stricken with Leukemia, brain tumors, prostate cancer, heart disease, incur severe back injuries, get diagnosed with cognitive diseases and much more. We have seen the value in our recommendation. We have seen hardship experienced by some who didn't take our advice.
The protection of your income should be the foundation for your overall financial plan. When all is said and done, disability coverage allows you to meet your financial obligations. It allows you to focus on getting well and trying to overcome your injury or illness. It allows you to live with dignity.
Remember the first rule of insurance, insure first that which you can least afford to lose.... your income, your health and your life.
If you had a goose which continuously laid golden eggs, would you rather insure the eggs or the goose? The smartest decision would be to insure the goose's ability to lay those golden eggs. If you are like most of our high income clients, the single greatest asset your family has is your earning power.
The probability of at least one long term disability (90 days of longer) occurring before age 65 is 50% for someone age 25, 45% for someone age 35, 38% for someone age 45 and 26% for someone age 55.
Inadequate disability coverage can be more costly than death, divorce or a lawsuit. If you have never heard of a living death, well...disabilities happen!
Give yourself an income protector checkup:
- How long does your coverage last?
- How much is my monthly benefit? i.e. $10,000
- Can I live on that amount per month?
If you earn $500,000 per year or $41,667 per month, that represents only 24% of your pre-disability income. If you walked into your office tomorrow and your income was cut by 76%, could you survive?
- Is my policy specialty specific for the entire benefit period? Most group policies will be for only a 2 to 5 year period.
- Who pays the premium? You typically want to pay premiums personally. This way the benefit is received tax free. There are also other issues as to why you do not want your corporation paying and deducting premiums. Some physicians have been told to write off premiums until you run into a potential situation where you will get disabled and then pay your next premium post-tax. The theory being that your last premium was not deducted; therefore, the benefit will be tax free. Do not believe it and do not take that advise.
- Do I have adequate overhead coverage? Many physicians who contact us have inadequate coverage.
- Do I have a contractual provision in my buy-sell agreement providing for disability buy-out if I or one of my partners become disabled and how is it funded?
- Is my carrier financially stable?
- Is my policy non-cancellable? Group policies or associate coverage can be cancelled, premiums can be increased. With a non-can product you will pay a fixed premium throughout the contract term.
- Does my policy contain a cost of living adjustment?
- Does it pay if I am partially disabled?
- Are my future pension contributions covered?
We hope this information has been of value to you. Our desire is to help as many physicians as we can make educated, informed decisions when protecting their income.
Over that period of time we have seen medicine change dramatically. Disability companies have responded by removing or changing favorable contract provisions, i.e.:
- Reducing benefit periods
- Increasing waiting periods
- Removing the specialty specific own-occupation definition
- Increasing premiums
- Tougher medical underwriting
- More stringent financial underwriting
- Stricter claims handling processing
In the last 30 years we have seen many friends and clients die and become disabled. We have seen physicians not only become HIV positive but contract AIDS, be stricken with Leukemia, brain tumors, prostate cancer, heart disease, incur severe back injuries, get diagnosed with cognitive diseases and much more. We have seen the value in our recommendation. We have seen hardship experienced by some who didn't take our advice.
The protection of your income should be the foundation for your overall financial plan. When all is said and done, disability coverage allows you to meet your financial obligations. It allows you to focus on getting well and trying to overcome your injury or illness. It allows you to live with dignity.
Remember the first rule of insurance, insure first that which you can least afford to lose.... your income, your health and your life.
If you had a goose which continuously laid golden eggs, would you rather insure the eggs or the goose? The smartest decision would be to insure the goose's ability to lay those golden eggs. If you are like most of our high income clients, the single greatest asset your family has is your earning power.
The probability of at least one long term disability (90 days of longer) occurring before age 65 is 50% for someone age 25, 45% for someone age 35, 38% for someone age 45 and 26% for someone age 55.
Inadequate disability coverage can be more costly than death, divorce or a lawsuit. If you have never heard of a living death, well...disabilities happen!
Give yourself an income protector checkup:
- How long does your coverage last?
- How much is my monthly benefit? i.e. $10,000
- Can I live on that amount per month?
If you earn $500,000 per year or $41,667 per month, that represents only 24% of your pre-disability income. If you walked into your office tomorrow and your income was cut by 76%, could you survive?
- Is my policy specialty specific for the entire benefit period? Most group policies will be for only a 2 to 5 year period.
- Who pays the premium? You typically want to pay premiums personally. This way the benefit is received tax free. There are also other issues as to why you do not want your corporation paying and deducting premiums. Some physicians have been told to write off premiums until you run into a potential situation where you will get disabled and then pay your next premium post-tax. The theory being that your last premium was not deducted; therefore, the benefit will be tax free. Do not believe it and do not take that advise.
- Do I have adequate overhead coverage? Many physicians who contact us have inadequate coverage.
- Do I have a contractual provision in my buy-sell agreement providing for disability buy-out if I or one of my partners become disabled and how is it funded?
- Is my carrier financially stable?
- Is my policy non-cancellable? Group policies or associate coverage can be cancelled, premiums can be increased. With a non-can product you will pay a fixed premium throughout the contract term.
- Does my policy contain a cost of living adjustment?
- Does it pay if I am partially disabled?
- Are my future pension contributions covered?
We hope this information has been of value to you. Our desire is to help as many physicians as we can make educated, informed decisions when protecting their income.
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