CHAPTER 5

Get ‘own occupancy’ disability insurance as soon as possible.

Are you ready for a painful, realistic financial truth? Here it is: You have invested a lot of time and money into being a physician. And at this point in your career, you have not yet seen any of the returns on that enormous investment of time and money.

With tremendous mental energy, commitment and focus, you have dug a big financial hole that you have yet to climb out of. You have taken a solid gamble, but a gamble nonetheless. You wagered some of the most productive years of your life for essentially no compensation on the assumption that you would succeed in having a long and healthy career as a physician spanning 30+ years. You are nearing the inflection point that will change everything and begin to reap the rewards of your efforts. But you are not there yet.

Injuries sustained at this point in your career can be devastating if you are no longer able to work as a physician. Even something as relatively minimal as losing a thumb can be catastrophic for someone in a procedural specialty such as surgery, interventional radiology, anesthesia, or emergency medicine. What if you go blind from a stroke right after you start your radiology residency? What if you suffer a brain injury that leaves you without the intellect to practice any type of medicine? With that in mind, we want to encourage you to consider your mind and your skills to be massive investments in your future that need to be protected.

This is where the concept of disability insurance comes in. Disability insurance is at least more fun than life insurance in that you are not dead. See, things are looking up already! Disability insurance provides a fixed monthly income after you become disabled. Disability can be defined in different ways and this is important. Disability insurance typically kicks in after 90 days of being disabled and will pay you until approximately age 65, when you would have otherwise retired.

There are a few different types of disability insurance you need to be aware of in order to understand the coverage that you need.

● Basic Disability Insurance: provides benefits if you are unable to perform any occupation for which you are reasonably qualified. In other words, you have to be very disabled in order to benefit from this type of insurance (i.e., not able to hold any job at all). Most medical school policies and some basic employer plans are of this type. Hopefully, it’s obvious to you that this type of insurance just won’t cut it. If it is free, you should accept it, but you shouldn’t pay any extra for it because it isn’t worth much.

● “Intermediate” Disability Insurance: highly variable depending on the definition of “disability” and the definition of “occupation”. Most commonly, these policies pay you only if you are no longer able to work in your broader field at all (i.e., you develop arthritis and can no longer work as a surgeon, but you could still work as a general practitioner or other application in the field of medicine, so you don’t qualify to cash in your policy). It is often priced at $50-90/month, and it is not at all worth your money.

● Own Occupation Insurance: the only type of disability insurance you should actually pay for. These policies provide benefits if you are no longer able to work in your chosen medical specialty. If you’ve spent 10 years becoming a neurosurgeon and you become disabled, you receive benefits. Even if you can retrain and become a radiologist or become a successful venture capitalist or literally anything that is not a neurosurgeon.

Yes, it is more expensive. But it is worth it! This fully protects the investment of time you’ve made in your chosen specialty. It would really be a drag to quit neurosurgery residency after 9 years and go back and do another 5-year residency to be a radiologist, but you know what would make it a lot easier? $5,000 a month tax-free plus your residency salary and the continuation of benefits after you become a full-fledged radiologist in 5 years.

In general, you should expect to pay more money for coverage the older you are (for obvious reasons), if you’re female (more on this in our book!), and based on your speciality. Specialties with higher incomes, procedure-based specialties, and specialties with higher disability rates should expect to pay more (so expect to pay a lot more as an interventional cardiologist than as a pathologist).

However, once you have locked in coverage, your rates will not increase over time, even as you get older, or even if you change your specialty. Therefore, if you are planning on becoming an interventional cardiologist, you can lock a much lower rate if you buy your insurance as a young internal medicine intern and your rate won’t increase as you complete your cardiology fellowship(s). Sneaky!

See why it’s important to get this coverage as early as possible during training? To be explicit:

Rates are lower when you are young and healthy
You almost certainly won’t get healthier as you get older
You can keep your coverage even if you switch specialties, develop health problems, and as you age

In addition to “own occupation”, a few more terms you should make sure that your insurance policy has:

Non-Cancellable: The insurance company can’t change your rates.
Guaranteed Renewable: As long as you keep paying the premium, the insurance company has to keep insuring you.
Residual Benefit: If you’re partially disabled, you get partial benefits.
Benefit Increase: The insurance company will offer you increased coverage to an attending level salary without a repeat medical screening.

Once you receive a policy, you may be subject to certain modifications to the basic policy, which are referred to as ‘riders’. This basically means that they’ve made specific note that some circumstances will or will not be covered by your policy.

There are only 5 companies that provide true “own occupation” insurance. Once you’ve picked one, you will begin the extensive application process. For more information about these companies, the application process, policy riders, and other tips on disability insurance for medical residents, check out Chapter 5 of our book Advanced Wallet Life Support: How to Resuscitate Your Finances (And Your Sanity) During Medical Training.