Why You Should Get Disability Insurance Once You Have Your White Coat

‍Once you receive your white coat and begin residency, your journey towards becoming a practicing physician comes with new challenges and sacrifices. This can be an intense period of training, long hours, and accumulating student debt. While your focus may be on honing your clinical skills and navigating the demands of your program, it’s crucial not to overlook your financial well-being and protect your most valuable asset – your future ability to earn a physician income.

Below, we dig into the importance of physician disability insurance for new medical residents and why it’s essential to consider purchasing this coverage early in your career. We will explore the reasons why waiting until you’re an attending physician may not be the best approach, the benefits of securing disability insurance early in residency, and how to find the best coverage for this period of your career.

The Risks of Delaying Disability Insurance

You might wonder why you’d need to invest in disability insurance during your residency when your income is relatively low, compared to your future earning potential as an attending physician. The truth is, the risks of delaying this critical protection far outweigh the initial cost considerations.

1. Protecting Your Income Potential

As a physician, your ability to work and earn an income is your most valuable asset. However, statistics show that there is a significant risk of experiencing a sickness or injury that could prevent you from practicing medicine. In fact, between the ages of 30 and 65, there is a one in three chance of losing your income due to disability. By getting disability insurance early in residency, you safeguard your income potential and mitigate the financial impact of an unexpected event.

2. Locking in Affordable Rates

One of the significant advantages of purchasing disability insurance during residency is the ability to lock in affordable rates. Your initial rate for disability insurance premiums increase as you age, (even from year 1 to the last year of training) so getting coverage at a younger age will save you money in the long run. By securing a policy early with “the small policy strategy,” you’re able to purchase a minimum-coverage policy with a future increase option, allowing you to increase your coverage as your income grows without having to go back though further medical underwriting.

3. Tailored Coverage for Medical Professionals

While group disability insurance coverage offered through your residency program may seem appealing, it often has limitations that can leave you underinsured in the event of a disability. Group policies cap coverage amounts, lack specialty-specific definitions of disability, and be subject to offsets if you receive benefits from other sources. Additionally, the benefits from employer-provided plans are taxable, and can be canceled or changed by your employer at their discretion.

The Benefits of Disability Insurance During Residency

Now that we’ve highlighted the risks of delaying the purchase of disability insurance and the negative impact it can have on your rates, let’s look into the specific benefits the come from obtaining coverage during your residency. By taking advantage of these opportunities available to you as a medical resident, you can lay a strong financial foundation for your future.

1. Minimum Coverage Policies and Discounts

During your residency or fellowship, you are eligible for a base (or minimum) amount of disability insurance coverage without providing proof of financial qualification. These policies are extremely affordable and lock in your rate for the life of your policy – the younger you are, the cheaper your rates are. Additionally, many insurance companies offer huge training discounts to residents. By taking advantage of these options, you can secure valuable coverage at a very affordable price, taking advantage of future savings throughout your career.

2. Own-Occupation Coverage for Medical Specialties

Once you enter residency with your new white coat, your disability insurance policy needs to provide coverage specific to your medical specialty. This means that if you become disabled and can no longer practice in your specialty, you will still receive benefits (even if you can work in a different type of role. Look for policies that have the definition of disability as “own occupation,” which allows you to ensure the specialty you trained for.

3. Portability and Flexibility

Unlike group disability insurance, which is typically tied to your employer or residency program, personal disability insurance is portable. This means that even if you change employers or career paths, your coverage remains intact. Additionally, personal disability insurance policies often offer flexibility in terms of benefit customization and future increase options, allowing you to adapt your coverage as your circumstances evolve without the need for further medical underwriting.

4. Financial Security for Student Loans

As a medical resident, you likely have significant student loans to repay. In the event of a disability, these loans do not disappear. By getting a private disability insurance policy, you create a future in which you can continue to meet your financial obligations (including student loan payments) without burning through your savings or relying on others for support.

5. Peace of Mind and Future Planning

By investing in true own-occupation disability insurance during your residency, you gain peace of mind knowing that your financial future is protected. That way, you can focus on your medical training and professional growth, knowing that you have a safety net in place if the unexpected occurs. Additionally, securing coverage early establishes a framework for your future financial plans, allowing you to build upon your policy as your income increases.

Finding the Right Disability Insurance

Now that we’ve covered the importance of purchasing disability insurance during residency and the benefits it offers, it’s essential to find the right coverage for your future plans. Here are some key factors to consider when selecting the right policy.

1. Independent Agent with Multiple Options

When purchasing disability insurance, you should work with an independent insurance expert, like the ones at LeverageRx. An Independent broker can offer plans from multiple insurance companies. This ensures that you can access a range of options based exactly on your goals, get access to all of your discounts, and have an unbiased guide available to answer all of your questions. Avoid agents who offer only one plan, as they have a conflict of interest and don’t have access to all of your options

2. Specialized Plans for Physicians

Look for insurance providers that offer disability insurance specifically designed for physicians and medical professionals (there are only a handful of these companies). These companies take into account the unique risks and circumstances of your profession, offering comprehensive coverage that addresses the specific challenges that you’d face in the event of a disability. Again, by working with an unbiased physician insurance expert, you can greatly simplify process and eliminate a lot of headaches. 

3. Coverage Customization

Consider the flexibility of the policy in terms of customization and future increase options. A good disability insurance policy should allow you to adjust your coverage to your needs and as your income grows, without the need for additional medical underwriting.

4. Financial Stability and Reputation

When you are ready to choose the insurance company you want to go with, be sure to consider that company’s financial stability and reputation. Look into impartial third-party ratings, such as AM Best Ratings, to ensure the company is financially secure and reliable. Look for ratings of A+ or better to ensure quality coverage and reliable claims handling.

Key Takeaways

As a medical resident, securing own-occupation disability insurance is a no-brainer for protecting your financial future. By purchasing coverage early in your career, you protect your income potential, lock in the most affordable rates, and gain comprehensive coverage for your medical specialty. Take advantage of the base coverage and discounts available during residency (the earlier, the better), and work with an independent insurance expert to find the right policy at the best price. When you prioritize your financial well-being, you’re able focus on your medical training with the peace of mind that comes from knowing you are protected. Don’t delay – protect everything your white coat represents and request your free quotes for disability insurance today.