There are ways doctors can save significant money on occupation disability insurance.
Disability insurance for physicians can be expensive. Because it’s designed to replace income in the event that you can no longer practice medicine, a doctor typically needs more coverage than most. There are ways doctors can save significant money on own occupation disability insurance.
Buy young. Age is one of the factors that contributes to higher premiums for disability insurance. Therefore, you can save money in the long term by purchasing coverage at an earlier age. Each year that goes by is more money you’ll be paying in premiums.
Commit to health. Healthy people carry less risk to disability insurers than those with chronic illnesses, health conditions or tobacco use. The disability insurance application process will include a paramedical exam that gives the insurer a picture of your overall health. If possible, quit any tobacco use, lose weight if necessary and watch what you eat and drink before applying for coverage.
Know how rates vary. Many doctors are surprised to find out how much rates vary by location. These rate variations among states are due to the differences in claims history in different places.
Compare rates. Don’t assume that all disability insurance policies are the same. In fact, the premium rates on similar policies with similar features offered by the top six insurers can vary by more than 25%. Additionally, different carriers group medical specialties into different occupational classes and may give better pricing to certain types of physicians. Always obtain quotes from an independent agent.
Only buy your need. While an insurance company may allow you to obtain up to $15,000 or $17,000 in monthly benefits, make sure that’s what you really need. A disability insurance calculator can help determine the funds needed to maintain savings if you become disabled. Additionally, disability policies often include optional riders and features that add to the cost. While some of these are worth extra cost, others are too expensive to be of value.
For example, some policies offer a return of premium rider in which you can get some cash back if you do not collect on disability coverage after a certain amount of time. In most cases, this rider is so expensive it’s not worth the potential benefit it provides.
Group up for savings. This type of program provides the cost savings of a group policy with the flexibility and ownership of an individual policy. It requires three or more employees of a common employer to purchase individual disability policies at the same time. Each member of the multi-life program can save anywhere from 10% to 25% on their premiums.
Consider paying premiums annually. Insurance companies reward you for paying your premiums annually and increase your premiums if you pay monthly. In fact, the average increased cost of paying monthly among the top six disability insurance companies is 4%. Just make sure you don’t let your coverage lapse.
Consider a graded premium structure. Some disability policies will offer a choice in premium structure. With a level premium, you pay the same amount for the life of the policy. A graded structure starts with a lower premium that increases over time. Graded premiums may be a good option for those who anticipate eventually dropping their coverage later on in their career, as well as residents with limited income.
Colin Nabity is the chief executive officer of LeverageRx, a digital insurance and lending marketplace for doctors. Send your financial questions to email@example.com.