Building the right policy
Whether a physician is buying a comprehensive individual LTD policy or supplementing an employer-provided group policy with individual coverage, disability insurance should be customized, says Pearson.
“There are little pieces of the puzzle that make up a complete policy,” she says. “Physicians want to make sure that they’re being told what those nuances and differences are.” Here are definitions of some of the important puzzle pieces:
This provides a disabled physician with benefits if unable to perform the exact duties he or she was performing before injury or illness. Almost all LTD policies sold to physicians are “own-occupancy” plans.
For example, Davis says that even with hearing loss, he can still perform some types of work, but not the broad spectrum of clinical tasks that he was doing before becoming disabled. And he certainly can’t earn the same paycheck. But because he has own-occupancy coverage, he receives benefits based on his previous earnings as a primary care physician.
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Partial or residual disability
An illness or injury doesn’t always mean 100% disability. Often, a physician might be able to continue working part-time, but with fewer duties or in a limited setting. “Partial or residual disability” coverage provides benefits in these cases.
“It takes away the all-or-nothing,” says Keller. If a disabled doctor loses income by being able to work only part time, he or she will get benefits to help make up the difference.
Non-cancellable and guaranteed renewable
This means that regardless of the health of a physician, the policy cannot be canceled and premiums cannot be increased, provided he or she continues to pay the premium.
Future increase option
This allows policyholders to increase coverage as their income grows without having to undergo additional medical underwriting.
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Cost of living adjustment (COLA)
This feature allows benefits to increase annually, usually by 3%. The COLA kicks in when benefits start, not when the policy is purchased.