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Disability Insurance: Best of the Five Sources of Disability Income

Posted Feb 14 2012 10:50pm

Individuals can attempt to protect their income and ability to work through five different forms of “insurance,” but for most physicians and surgeons , only a non-cancellable guaranteed renewable disability insurance policy will truly protect future income.  As the rest of this blog details, each of the other four options pale in comparison to the protection that an individual disability insurance policy offers.

Workers’ Compensation

Disabled doctors may be able to receive up to two-thirds of their current salary through workers’ compensation insurance. While all states require that employers offer this form of disability coverage, “workers’ comp” only pays benefits when an individual’s disability is related to work—meaning that an individual remains heavily at risk because the majority of disabilities occur away from the workplace. This form of coverage can be useful for short-term injuries, but workers’ compensation fails to provide proper resources for long-term disabilities. It is important to note that most doctors who own their own practice are the employer, and are not typically protected by workers’ comp.

State Disability Insurance Programs

California, New Jersey, New York, and Rhode Island, and Hawaii all offer state-sponsored disability insurance programs. Coverage typically lasts four to six months, and workers normally pay through payroll deduction. Much like workers’ compensation, state-sponsored plans only prove effective in the event of a short-term disability.  Moreover, in most cases state disability insurance benefits would amount to only a fraction of the benefits under an individual plan.

Employer-Sponsored Coverage

Employers often offer group disability insurance plans to their employees. Options include both short-term (STD) and long-term (LTD) plans. Short‑term disability provides coverage for around three months, while long-term plans will typically pay around half of the insured’s salary for an extended period of time. While these group plans are typically easily accessible through an employer, they hold a limited definition of own occupation and terms are not specifically suited to the physician.

Social Security

While the federal government does offer potential coverage to most workers in the U.S., qualifying for benefits is far from a guarantee . Roughly 60% of first-time applicants are initially turned down, and benefit payments are usually only around $1000 per month. There are also several questions surrounding funding, and overall survival, of the program in general.

Individual Disability Insurance

An individual disability insurance policy is the most valuable, versatile, and reliable source of protection. Policies move with insured physicians as they change employers, and benefits are tax-free when premiums are paid with after-tax dollars. Individual policies hold the broadest definitions of own occupation , and the terms of the contract remain in effect until age 65. Benefits equal up to 60 percent of a physician’s income—an amount that simply is not available through the aforementioned limited forms of income protection.

Physician’s Disability Insurance Agency works with doctors and surgeons nationwide, offering individual disability quotes which are customized to their personal needs. Visit our website to request quotes or call 1-800-518-1190 to discuss options with an agent. When it comes to protecting the valuable asset of income, there is no reason to settle for or rely on subpar disability coverage.

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