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Learn how disability insurance market has evolved.
Q: I've heard that there have been many favorable developments in the disability insurance marketplace for physicians. How have things changed?
A: In the past few years, the policy provisions, available benefits, and pricing indeed have become much more favorable to physicians. A challenge physicians used to face was finding policies that contained an "own-occupation" definition of disability for the entire benefit period of the policy (typically until age 65 or longer). Now, depending on the insured's specialty and geographic location, as many as six companies may offer this definition of disability to physicians.
Another challenge had been buying enough coverage to replace earnings. In the past, most carriers would issue and/or participate up to $15,000 per month of coverage, depending on the insured's medical specialty and earned income. Today, most carriers will issue $15,000 to $17,000 per month of coverage and participate up to $25,000 per month. Additionally, by taking advantage of "high limit" disability insurance plans, coverage of up to 65% of earned income is available. Many companies offer special rates for residents, fellows, and physicians starting out in practice.
Send your money management questions to firstname.lastname@example.org. Answer provided by Lawrence B. Keller, CFP, CLU, ChFC, founder of Physician Financial Services in Woodbury, New York.