Need advice on Disability Insurance

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Topic Author
investor220011
Posts: 2
Joined: Mon Jun 15, 2015 8:07 pm

Need advice on Disability Insurance

Post by investor220011 »

Hello,

Longtime lurker, but first time poster - would appreciate insight on this topic.

My wife and I are trying to determine whether we should obtain extra disability insurance. We both are residents and have standard policies through our hospital. We do not have any kids, but do plan to have some in the future. We are trying to determine whether getting extra disability insurance would be worth the premium.

Certainly the pro of getting a private disability insurance policy is better income security in case either one of us gets disabled. However, I wonder if it would be reasonable to "self-insure" - we are both in relatively high paying specialty and should one of us get disabled, the other's income would be more than adequate. Of course this falls apart if both of us are disabled at the same time. My wife is more conservative and is leaning towards getting additional disability insurance whereas I'm leaning towards "self-insuring" and saving the monthly premium.

What do you guys think? What do most 2-physician couples tend to do in this situation?

Thanks!
Iorek
Posts: 1569
Joined: Fri Mar 08, 2013 8:38 am

Re: Need advice on Disability Insurance

Post by Iorek »

You might want to look at what emergdoc a/k/a the white coat investor has to say on the topic-- I haven't read these particular posts but IME/O he is very much worth reading-- http://whitecoatinvestor.com/tag/disabi ... ce/page/2/

I think there are DI agents on Bogleheads who may be able to weigh in but I can say from my limited experience shopping for DI the terms of the policy, especially the definition of disability and own occ were critical, so the amount of coverage you have through your employer may matter less in deciding whether you need to supplement than the terms of the coverage.
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JonnyDVM
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Joined: Wed Feb 12, 2014 5:51 pm
Location: Atlanta, GA

Re: Need advice on Disability Insurance

Post by JonnyDVM »

Standard policies are not nearly as good as personal policies. I would lean towards additional disability polices. I'm guessing the strain on one spouse working to support the newly disabled other spouse plus dealing with a precipitous decline in income would not be pleasant. Check out the WCI blog for more info on physician policies if you haven't already.
I’d trade it all for a little more | -C Montgomery Burns
Strayshot
Posts: 833
Joined: Thu Mar 05, 2015 7:04 am
Location: New Mexico

Re: Need advice on Disability Insurance

Post by Strayshot »

You want true own-occupation disability insurance, both while you are resident/s and also as you start your careers, that is not tied to your employer. Particularly during residency, although it will seem very expensive, you want additional DI. Getting disabled in residency will absolutely screw you and you want to protect against that as much as possible. Many insurance companies will offer residents more monthly benefit $$ than their salary would typically allow (example, our policy through MetLife started as an intern had a $3500/mo benefit with a $2100/yr premium which was 100% of resident salary rather than 60-70% as typical). If you are a CIR member they offer competitive DI through The Standard. I realize that ~$4K of premiums is a chunk of change on a dual-resident salary, but it is worth the peace of mind.

If you decide to self insure 5-10 years out of residency because you've saved enough, good deal and all you have to do is stop writing the annual payment checks.
Gemini
Posts: 1029
Joined: Sun May 20, 2012 8:10 am

Re: Need advice on Disability Insurance

Post by Gemini »

You def need disability insurance. There are many variables in deciding which policy fits you and yours best. IMO, you need to find a DI agent you trust and have him/her guide you through the process. This is the route I used after obviously researching till my wits end :D
BruDude
Posts: 4211
Joined: Wed Dec 29, 2010 11:28 pm
Location: Las Vegas

Re: Need advice on Disability Insurance

Post by BruDude »

investor220011 wrote:Hello,

Longtime lurker, but first time poster - would appreciate insight on this topic.

My wife and I are trying to determine whether we should obtain extra disability insurance. We both are residents and have standard policies through our hospital. We do not have any kids, but do plan to have some in the future. We are trying to determine whether getting extra disability insurance would be worth the premium.

Certainly the pro of getting a private disability insurance policy is better income security in case either one of us gets disabled. However, I wonder if it would be reasonable to "self-insure" - we are both in relatively high paying specialty and should one of us get disabled, the other's income would be more than adequate. Of course this falls apart if both of us are disabled at the same time. My wife is more conservative and is leaning towards getting additional disability insurance whereas I'm leaning towards "self-insuring" and saving the monthly premium.

What do you guys think? What do most 2-physician couples tend to do in this situation?

Thanks!
You definitely should have individual DI for each of you. The policy provided by your residency program will end when you leave and the conversion option is likely going to be expensive, inferior to an individual policy, or both. Group coverage that may be provided by a future employer will not be anywhere near as comprehensive as an individual policy. While you may be able to get by on one income, how would you feel if after all those years of studying, hard work, and taking on six-figure debt, you became disabled and lost out on $20M+ of future earnings?

As residents you can qualify for $5,000/month of individual coverage regardless of current income or group benefits. Guardian and MetLife both have "graded" premium options which start out with a lower cost in the early years and increase the premiums over time. You can change back to a "level" premium on any policy anniversary, but the trade-off is a higher long-term cost. Many residents choose the graded option so they can more easily afford the policy before going into practice and earning more money, and in some cases just until they figure out some of life's plans (kids, one parent staying home, etc). There are also discounts that might be available to you as a resident which are not available after starting practice. The earlier you buy, the cheaper the policy premiums will be every year for the next 30+ years since rates are based on age.
Childay
Posts: 76
Joined: Wed Jan 25, 2012 10:07 pm

Re: Need advice on Disability Insurance

Post by Childay »

As a dual physician couple we both have individual policies. I signed up for graded premium with the intention of cancelling early (before 60 or 65) once we can truly self-insure. The breakpoint was cancelling around age 50 to make graded cheaper, though it varied by company. We did not sign up during residency though we should have. Some companies will offer you a smaller policy with the option to increase once your income does. PM if you need more specifics.
Topic Author
investor220011
Posts: 2
Joined: Mon Jun 15, 2015 8:07 pm

Re: Need advice on Disability Insurance

Post by investor220011 »

Thanks everyone!
It appears that most people would recommend getting disability insurance - I will definitely look into this sooner rather than later.
Appreciate everyone's help!
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