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Income Protection for the Most At-Risk for Disability: Healthcare Professionals

By Lacey Trejo 10:12 pm MDT 9/14/2020

The challenges of maintaining medical and dental practices are considerable, particularly in today’s environment. Putting aside the obvious financial struggles due to current economic conditions, there are other financial challenges for physicians and healthcare professionals–not the least of which is the potential consequence of a disabling event.

Healthcare professionals utilize disability insurance

The 2020 Milliman Annual Survey of the U.S. Individual Income Insurance Market reported that four different IDI carriers issued over 40% of their total individual disability insurance (IDI) to doctors and surgeons, and that this occupation has made up the highest percentage of IDI annualized premium since 2015. This should be no surprise, since much of their success—and income—comes from their ability to physically treat patients.

Four different IDI carriers issued 40% or more of their total IDI to doctors and dentists

Indeed, many medical specialties are very physically demanding or require finely tuned reflexes. Think about how much an orthopedic surgeon performing hip replacements resembles a CrossFitter or Division One athlete when considering his or her strength, dexterity, and stamina. These are all physical activities that can weaken or fail over time. If a healthcare professional loses these physical capabilities, would they still be able to practice their specialty?

While many healthcare professionals generally understand the need for income protection, many don’t have the time to think about or understand all the layers of a disability insurance policy. Therefore, they can’t ensure their policies are suited for their individual needs.

Put yourself in their shoes

When discussing disability insurance with doctors, dentists, and other healthcare professionals, it is important to see things from their vantage point. Many healthcare professionals earn income from multiple sources, and this must be considered when selecting an insurance policy. Many younger doctors and dentists also have high debt from costs associated with years of education and training and, sometimes, expenses related to starting or taking over a practice.

More seasoned professionals have invested decades building their practice and developing a lifestyle built on their ability to perform a specific set of medical procedures. Of course, the more specialized their practices and patient bases become, the more difficult it will be to replace their income if they become disabled. This is because many group long-term disability (LTD) policies define disability broadly and subjectively. The more specialized a healthcare professional becomes, the harder it is to find an LTD contract that defines disability appropriately for their needs.

A good way to help healthcare professionals understand what they need in a disability insurance (DI) policy is to ask some probing “what if” questions. Get them thinking about scenarios they might face and help them contemplate the consequences. Here is an example you might start with:

What would happen if you developed an illness or injury that disabled you from performing your highly specialized procedures? For instance, could you (a neurosurgeon) continue to perform complex and delicate procedures with rheumatoid arthritis? Could you sustain the same lifestyle if forced to transition to family practice?

It’s not one-size-fits-all

Good disability insurance policies are not designed to be one-size-fits-all; the specifics of a policy do matter and require an extra look. For example, many DI policies will reduce or cancel benefits if the carrier decides that the healthcare professional can continue to work in a different specialty or position in the medical field.

Would any surgeon be happy if they learned that their benefits were being reduced because an insurance carrier decided they could transition into a hospital administrator role? How might they address the impact of the reduction in income on their practice, partners, family, and lifestyle?

For all these reasons, it is important to break down policies with your healthcare professional clients to ensure they have the right amount and right type of income-replacement coverage to best fit their needs.

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