With Disability Insurance Awareness Month (DIAM) coming up in May, now is an ideal time to highlight the top five reasons physicians, dentists, and other healthcare professionals need a custom disability insurance plan to fully meet their income-protection needs. Specifically, what they need is a “specialized disability insurance” policy.
Specialized disability insurance is purposely built for a certain group of professionals in order to fill the gaps created by traditional policies. In this case, a specialized policy can be layered on top of an individual disability insurance (IDI) policy to enable a healthcare professional to achieve the true income protection they cannot get via a standard group long-term disability (LTD) plan. Most insurance carriers cannot offer this type of specialized coverage simply because they are focused on the broader market.
Here are the top five reasons healthcare professionals should seek a specialized disability insurance policy, which brokers can offer by partnering with a company like MGIS.
1) High earnings mean a need for protection beyond the coverage available in an IDI policy.
According to The U.S. Bureau of Labor Statistics, the top 10 highest-earning occupations in the country are healthcare professionals, and the median annual wage among physicians and surgeons is approximately $208,000 per year. This is nearly four times more than the $56,310 per year made by the average American.
Most healthcare professionals carry the IDI policies they secured during medical school, which offered them an income-replacement level that was suitable at the time. But these professionals generally have more income to protect as they advance in their careers – more than any other class of professionals, in fact. So they must consider a specialized disability insurance policy that fills in any gaps with their existing coverage and creates a true 60-70% income replacement for current earnings. This can be easily accomplished with a supplemental group plan.
2) Healthcare professionals need access to protection for income sources beyond their salaries.
While many Americans collect a salary and nothing else, healthcare professionals often earn income from other sources like bonuses and K-1 (partnership) income. These other income sources are not often covered by standard disability policies.
A specialized disability insurance contract that’s built for healthcare professionals protects other common sources of income by considering them as part of the pre-disability earnings calculations. This means the monthly benefit amount will be based on all sources of income for the healthcare professional, making it a much stronger policy that adequately protects their financial interests.
3) The risk of a disability is real, and healthcare professionals need insurance that offers protection for any disabling event.
According to the Social Security Administration, more than one in four of today’s 20-year-olds will become disabled before they retire. The Council for Disability Awareness (CDA) also reports that accidents are usually not the culprit of disability. Back injuries, cancer, heart disease, and other illnesses actually cause most long-term absences from work.
Healthcare professionals may face a greater risk of disability than some other professionals because many rely on their bodies to perform their jobs. A surgeon, for example, may develop a hand tremor that prevents him from performing surgery. However, his tremor may not be considered disabling enough for benefits under a standard disability plan because the tremor would not prevent him from working as a family physician. A specialized disability insurance plan works like IDI by paying out benefits based on specific CPT/CDT-coded procedures (like surgical procedures), and therefore would consider the surgeon fully disabled. Having a specialized policy means the surgeon would receive a monthly benefit for his disability, whereas with a traditional LTD policy he may receive nothing at all.
4) Healthcare professionals need extra coverage for their student loans.
According to the most recent data from the Association of American Medical Colleges (AAMC), 73% of all medical school graduates hold student loan debt and the average amount is $200,000. Many of these healthcare professionals are carrying debt for years or even decades while they work.
A specialized disability insurance plan helps ensure they receive a sufficient monthly payout to cover their loans. In the above scenario, the payments could be nearly $2,250 per month on a 10-year federal repayment plan at 6.25% interest. A specialized plan could be written to account for not only the monthly student loan burden, but also for federal taxes on benefit payments that could lead to a default. Many physicians are surprised to find their monthly payments are reduced by thousands more than they expected, simply because taxes on benefits are due at claim time for employer-paid group plans. Sometimes there is not enough left to make the loan payments.
5) Adequate coverage for mental health disabilities and addictions is more important than ever.
The COVID-19 pandemic introduced even higher levels of burnout for physicians, which led to an increased incidence of disability and a more urgent need for better coverage. A specialized disability insurance policy is one way to offer healthcare professionals the full coverage they need for burnout- or stress-induced disabilities. This is done through improved Mental & Nervous and Drug & Alcohol (MNDA) benefits.
The American Journal of Medicine estimates that 40-50% of physicians experience burnout in an average year. Their studies also suggest this burnout regularly transitions into major depression, substance abuse, and even suicide. So it is important for physicians to have specialized policies that will pay out for multiple occurrences of mental health or addiction issues, that do not have a cap on benefits, and that do not exempt preexisting conditions like depression from coverage.
MGIS offers the specialized disability insurance healthcare professionals need for their many unique circumstances and is the only company that can deliver this type of plan. To learn more about how to offer it to your clients, contact us for information on becoming a partner.