Physicians buy individual disability insurance a lot, and there are several reasons for it. No other occupation can say that a larger percentage of them own individual disability policies. During residency you probably saw at least 5 or 6 agents give lunch and learn seminars on practice management and insurance, and most of them addressed individual disability insurance with you. You are also in an occupation that sees disabilities every day, none of you are foolish enough to believe you’ll never become disabled. A computer consultant might not own DI because they believe if they can think and type that they can work, you on the other hand know better. Nobody is doing a lot of anything during cancer treatments, or because of severe back problems preventing you from sitting in a chair. Now that we understand a little bit more about why so many physicians own disability insurance, let’s dive into what a physician should be looking for in a personal DI policy.
Own-Occupation Definition of Total Disability With Medical Specialty Language
Every policy is going to have a definition of total disability, it is the legal language that dictates when the DI policy will pay you a total monthly benefit. To read this definition, just open up your policy and read it. If you are evaluating several policy choices in the buying process, ask your agents for specimen policies. Don’t just assume you have an excellent definition of total disability because somebody told you it is, read it in the policy, or in the specimen policy. The definition of total disability is what dictates whether or not you have an own-occupation, a modified own-occupation, or a gainful occupation disability insurance policy.
Agents will refer to a pure own-occupation, and a modified own-occupation policy as own-occ. They couldn’t be more different from each other, and a pure own-occupation policy is all that a physician should own. A pure own-occupation policy can pay you a total monthly benefit if a sickness or injury prevents you from performing the material and substantial duties of your regular occupation, even if you are at work in some other capacity. A modified own-occ policy will pay a benefit for the same reason, but would reduce benefits by any other earned income during a claim. Essentially with a pure own-occupation policy you could double dip during a claim.
There are only a handful of carriers that go one step above a pure own-occupation policy for physicians, and offer you medical specialty language in the definition of total disability. If you have limited your practice to a single medical specialty, the insurance company will deem that medical specialty to be your occupation. Therefore if you were a diagnostic radiologist, and became disabled from performing the material and substantial duties of a diagnostic radiologist, you could collect your total monthly benefit even if you were still able to teach at a university or practice some other type of medicine. Very few carriers offer medical specialty language built into the definition of total disability, if you are a physician don’t settle for any disability insurance policy that does not contain medical specialty language in the actual definition of total disability.
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