A physician's greatest asset is typically their income earning ability, which can be protected with disability insurance. With recent market changes female physicians will want to lock in rates ASAP.
As I have addressed in the past, a physician’s greatest asset is typically their income earning ability. With a sound strategy intact, it is often only a matter of time before you accomplish your financial goals as long as you are healthy and keep receiving your paychecks.
There are many aspects of a disability insurance policy that should be considered when choosing a contract, of which I mostly addressed awhile back in “Protecting a Physician’s Most Valuable Asset.” However, an update is needed as market changes have occurred.
One key variable changing right now across the disability insurance landscape is pricing for females. Statistically, females have a higher incidence of disability and often experience longer claims, and therefore are charged more for their premiums. (The same is the case for males with life insurance.)
With this in mind, it was commonplace for many of the main companies in the industry to offer gender neutral/unisex pricing across the board beginning the 1980s if there were three or more employees at any particular employer (what’s known as a multi-life discount). This was meant to promote a highly competitive price advantage so that the logical choice for even more employees was to apply for policies with that company. Financially, this made sense for insurance companies when the workforce had been male dominated by nearly 75/25 at that time; however, this has since shifted to represent more of a 50/50 workforce. Over time, these discounts became fairly easy to get in place and were used quite liberally.
There are really only six big players in the industry that have top definitions and features fully protecting physicians’ incomes (Ameritas, Guardian, Mass Mutual, MetLife, Principal and The Standard). Many companies (The Standard, MetLife and, in the vast majority of cases, Guardian) have already discontinued gender-neutral pricing for physicians in training and in practice (MetLife will still offer unisex pricing for multiple in-practice physicians) in favor of gender-specific discounts, which can make the rates for females anywhere from 120% to 250% of what the rates previously were. Ameritas just announced they will discontinue their unisex rate programs for any applications received after March 31, 2014.
Although there are no formal announcements, my informed assumption is that it is only a matter of when, not if, Principal and Mass Mutual follow this trend.
If you are a female physician and holding off on getting your disability coverage, you should strongly consider getting coverage in the near future to lock these lower rates in for the duration of your entire working career.
For specific company selection, my suggestion is to work with an independent advisor who is insurance licensed or an independent insurance agent/broker who is very familiar with constructing and researching disability policies for physicians. Company selection will vary depending on age, employer, state of residence, specialty, unique health conditions, etc.
Jon C. Ylinen is a Financial Advisor with North Star Resource Group and offers securities and investment advisory services through CRI Securities, LLC. and Securian Financial Services, Inc., Members FINRA/SIPC. CRI Securities, LLC. is affiliated with Securian Financial Services, Inc. and North Star Resource Group. North Star Resource Group is not affiliated with Securian Financial Services, Inc. Please consult a financial professional for specific advice in relation to your individual circumstances. This should not be considered as tax, specific loan repayment for an individual or legal advice. 778117IR/ DOFU 12-2013.