Contrary to popular belief, large paychecks do not always ensure financial stability for healthcare professionals. A survey published in February of 2020 found that even workers making $100,000 or more per year can have financial problems, with 18% of them living “paycheck to paycheck.” Because money involves vulnerability no matter the amount, even the most highly compensated works need to pay attention to their financial risks.
To put this safety net in place, insurance brokers working with healthcare professionals must evaluate the different disability insurance options available to their clients. Brokers considering individual disability insurance (IDI) as a solution for their clients should be prepared to discuss the rigors of the required paramedical exam that all IDI applicants must go through, and how the results could affect their benefits.
What to expect during the exam
Although the paramedical exam usually lasts no longer than thirty minutes, the resulting underwriting has the power to determine the accessibility and benefits of a chosen plan. A broker may or may not have had the experience of a disability insurance examination. The exam is much like an annual physical and includes:
- Height and weight measurements
- Pulse and blood pressure check
- Blood and urine tests
Aside from the physical tests, the physician asks several questions to evaluate the background of the applicant. These questions include:
- Family health history
- Lifestyle
- Existing medications
- Pre-existing conditions
- Mental health
Because IDI policies are “individualized” and do not benefit from risk spread, carriers depend on the thorough paramedical exam to determine which applicants they will cover, the benefit limits they will offer, and at what price. Depending on the potential health risks found in the exam, a hopeful applicant may find themselves suddenly facing exclusions on their chosen plan, higher-than-expected premiums, or even caps on benefits.
Remember, too, that many healthcare professionals bought an IDI plan when they were younger and could easily pass a health exam. The policy they decided on in their twenties may no longer provide the recommended 60-70% income-replacement coverage now that they are established in their careers, and IDI is usually only secured once.
Provide your clients the best advice by having candid conversations
Insurance brokers need to pay careful attention to each client’s unique situation to point them toward the best possible disability insurance solution. Here are two examples to consider.
“Dr. Gray” is a 50-year-old gastroenterologist who is a partner in an established medical practice and performs regular bowel surgeries. He suffers from several stress-induced physical ailments including high blood pressure, thyroid dysfunction, and prediabetes. He has carried the same IDI plan from his medical school days and has not taken the time to make sure his health conditions aren’t listed as exclusions on his IDI, and that the policy provides enough coverage for his current salary and K-1 (partnership) income.
A supplemental group plan would be the best way forward for Dr. Gray, since he already has IDI coverage and would benefit from a group plan because it usually won’t require a medical exam. He could also easily secure a supplemental group plan as a practice owner.
On the other side of the spectrum, “Elsa” is 25 years old and is a hopeful pediatrician. She is looking for her first IDI policy as a third-year medical student. Because Elsa is young and in good health, now is the ideal time for her to secure a solid IDI policy that relies on a medical exam for underwriting. She should have no issue satisfying all health requirements for the insurer, and a robust IDI plan could be recommended with confidence by the broker.
What about Guaranteed Standard Issue (GSI) disability insurance?
GSI disability insurance, also known as Standard Issue, is still individual insurance but offered on a group basis through employers. Because these plans are not employer-owned, they provide more portability than group disability plans do. And very few GSI plans require paramedical examinations unless an applicant requests coverage above the limits offered, so GSI could be a good option for someone like Dr. Gray. GSI could also be a great option for healthcare professionals who need to fill a widening gap in IDI coverage or for those professionals looking to expand their coverage without a negative impact from preexisting conditions or poor health.
