For many busy healthcare professionals, the possibility of becoming disabled is not top of mind. For this reason, brokers might neglect to discuss disability benefits in detail when presenting group benefits to their healthcare clients. Many employers, thinking they might need only basic coverage, mistakenly choose the cheapest option.
Brokers need to emphasize quality group disability plans early and often, in part because disability in adult professionals is quite common. One in four 20-year-olds will become disabled at some point before retirement. Logically, healthcare professionals are at an increased risk for disability due to their highly specialized and physically-intensive work. What would happen if they were to suddenly become unable to work due to an accident or an illness?
For most professionals, when work stops, income stops. Individual healthcare clients who do not already have thousands of dollars in personal savings, and who also lack income protection, may see years of financial planning undone quickly. But practice owners are especially vulnerable to a hit, because a loss of income or assets means an inability to meet daily operating expenses and payroll, unraveling the years—even decades—it takes to build an established practice.
Currently, no U.S. laws require employers to provide long-term disability (LTD) coverage. Most employers do offer some sort of short-term sick leave or disability policy, and just about half of all companies offer long-term coverage, but many group plans are often inadequate simply because they aren’t a focus in group benefits discussions.
Traditional group disability plans often sacrifice quality for affordability.
It’s easy to see why some healthcare providers choose traditional group plans by default. Group benefits replace up to 60-65% of lost income up to a specified cap per month, and they offer cheaper or more flexible premiums. Additionally, employer-paid, pre-tax premiums allow organizations to take advantage of business tax deductions.
But group plans also have several downsides, and these should be explained by the broker. They tend to be less comprehensive and more limiting in their definitions of disability than individual disability insurance (IDI) policies, often requiring clients to be totally disabled before they are eligible to receive payouts. Benefit caps also make it harder for high-earning employees to replace enough of their income. Additionally, employer-paid premiums are taxable (meaning benefit payouts may be worth less) and group plans may not carry over between companies. Or, as policyholders gain more experience, group plans can become more costly or done away with entirely.
Making disability insurance an important part of your conversations.
Differentiate yourself among healthcare professional clients and prospects by offering them group disability insurance (DI) that offers the superior benefits and coverage of an individual plan and meets physicians’ unique needs. A good group LTD policy will perform similarly to gold-standard IDI coverage, making it perfect for general practitioners and specialists alike. You can expect this “IDI supplement” coverage to define disability using CPT/CDT coded procedures—ensuring that should any illness or injury prohibit them from performing even just one of their procedures, they would be considered disabled and would receive their benefits.
Minimizing disability products out of concern for the client’s budgetary constraints won’t help you compete in the disability insurance industry and isn’t good for your clients. Competing brokers will often come in at a lower price point. If you can fully explain the pitfalls of insufficient LTD coverage to healthcare professionals, they may be willing to spend more on premiums in order to get the benefits they didn’t realize they needed.
