As a physician, every day you see your patients suffering from unexpected injury or illness, which may require them to miss work that could substantially reduce their income. Often I find that many physicians have the mentality of being invincible, that somehow they can avoid the same ailments that plaque your patients. When was the last time you thought about the chances of a major disability interrupting your career and possibly your future income stream? How long could you make it without that pay check? Could your mortgage or rent get paid?
The fact of the matter is disability is all too common. According to the social security administration, 30 percent of the US working population that are 40 years old or older will become disabled before they reach the age of 65. If that is uncomfortable, think about it this way: The chances of you using your homeowners insurance is about one in 88. The odds of using your auto insurance is about one in 47, but the odds of a disability are one out of every eight people.* Your home is insured, your car is insured, but are you, as your Greatest Asset, properly insured? As long as you have the ability to see patients, the home can be replaced, the car can be replaced. Do you protect the goose or the golden egg?
Many physicians may feel that purchasing adequate disability protection is just too expensive. Is that a myth or reality? Assume that the average physician earns $250,000 per year, would it be wise to spend approximately two percent of that annual income to protect the other 98 percent? While this may be more expensive than other insurances, it also accounts for a much greater risk.
Disability plays no favorites and accidents do happen, but illnesses like cancer equate for 14.6 percent amount of disability, musculoskeletal/connective tissue 28.5 percent, cardiovascular 8.2 percent, disorders of nervous system and sense organs 14.2 percent, and mental disorders 7.7 percent, making up the majority of long term claims.**
If you seek the protection and peace of mind that disability insurance could provide, how do you find the correct plan for you and your specialty? Disability income insurance is becoming increasingly vague, and the need for having a professional review or creating a policy is more important than ever. A trained professional, who understands the legal language insurance companies employ and can spot the subtle details that can alter the entire nature of a policy, is crucial in making an informed decision. Furthermore, an individual who is not beholden to a specific insurance company can typically determine the best possible plan for the client’s specific needs.
One specific aspect of disability insurance the can be unclear is the definition of “Total Disability” and “Own Occupation.” My research has found that many companies are stating “Own Occupation” provisions when, in fact, it’s almost a misrepresentation. Insurance companies define “Own Occupation” in a myriad of ways.
Unable to perform substantial and material duties of regular occupation, meaning no matter what in this world one is qualified to do, if they cannot continue their current occupation in the same manner they did yesterday due to a disability, they would be viewed 100 percent disabled and collect 100 percent of the benefit.
A loss of earnings of at least 20 percent and unable to perform duties. This type of contract is very vague due to the words “perform duties.” Are those the specific duties that one performs to earn a living? Are those the duties another individual in the same specialty may do to earn a living? Or are those any duties that a person with a medical degree is qualified to execute?
Unable to do material and substantial duties of own occupation and not gainfully employed. The words “gainfully employed” are scary. Who makes that call? Typically not the insured.
Unable to perform main duties of regular occupation and not employed in any occupation. Again the words “any occupation” are vague. For example, one may not be able see patients in the practice but may be able to manage the office. That’s an occupation, and the contract would not pay a benefit.
Unable to perform substantial and material duties of regular occupation for the first 12 months (or 24 months) of total disability, thereafter not gainfully employed. This is a great contract for one or two years, but after that period of time an individual may lose their benefits if they are able to work somewhere somehow.
The contracts that have included “not gainfully employed” within their definitions are now written “Own Occupation” without too much emphasis on that one little – very important – caveat. The companies that have changed their definitions imply that their responsibility is to insure one’s income, not occupation. Unfortunately, most disabled physicians know they need more than simply income coverage.
Interpretations of definitions are far more stringent when viewed by the claims and legal departments than by the marketing department. Claim filing time is by far the worst time to debate with the claims personnel, and the legal department has no sympathy for “well, I thought…”
“Own Occupation” is not the only clause in insurance policies that has an indistinct definition; phrases such as “Non-Cancelable, Guaranteed-Renewable” are finding new meaning in the small print of some disability plans. It is imperative that individuals seek the help of a disability specialist that is completely independent, representing only the client’s needs and interests, someone who can analyze and interpret the often-confusing definitions employed by all of today’s disability insurance contracts. A disability plan needs to fit one’s needs and occupation, a plan that will be 100 percent intact when and if it is in need.
WHEN WAS THE LAST TIME YOU THOUGHT ABOUT THE CHANCES OF A MAJOR DISABILITY INTERRUPTING YOUR CAREER AND POSSIBLY YOUR FUTURE INCOME STREAM?
Calvin R. Rasey is President of Physicians Financial Services II, LLC. You can reach him (502) 893-7001 or 1-800-928-8834.Securities Offered Through Securities America,
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INC.• A registered Investment Advisor Calvin R. Rasey • Investment Advisor RepresentativePhysicians Financial Services II, LLC and Securities AmericaCompanies are Not UNDER Common OwnershipRepresentatives of Securities America do not offer tax or legal advice
FOOTNOTES:*Source: US Census Bureau. For more information go to www.census.gov.**Source: 2012 Long-term Disability Claims Review, Council for Disability Awareness. For more information go to www.disabilitycanhappen.com.