Finding the right income protection policy can seem overwhelming. Understanding the following terms can make the process a little easier.
Non-cancelable vs. guaranteed renewable – With a non-cancelable policy, the insurance company cannot change the contract, the contract language or the premiums. For a guaranteed renewable contract, the company agrees to renew the contract without making changes. However, they can increase premiums.
Definition of disability – For many physicians, especially surgeons and sub-specialty physicians, “own specialty” is very important. If a physician cannot perform surgery but can still do consults, they are not considered totally disabled per the “own occupation” definition (because they are still working in their occupation). Check the policy language to see how “own specialty” or “own occupation” is defined. Also, make sure that the “own specialty” definition is for the lifetime of the contract, not just two or five years.
Residual disability – This is a very important rider for physicians. If the policyholder can do some but not all of their duties as result of a disability (and have a reduction in income), the residual benefit will pay a partial benefit equal to the percentage of income lost. Some companies require that the policyholder is totally disabled first. Look for a company that does not require total disability before this benefit can be used. This rider will also pay if a physician can perform all of their duties but only on a part-time basis, due to a disability.
Business overhead expenses – This policy will pay the expenses of running your practice while you are totally (or residually) disabled. Expenses it will pay for include leases, employee salaries, telephone costs, accounting fees and insurance. This does not pay your lost income.
Retirement disability – If unable to work do to a disability, you will be unable to contribute to your retirement plan because of your reduced income. With this rider, the insurance company will deposit the amount of money you would have contributed into a non-qualified retirement account.
Future increase options – This rider can be a great future benefit for students, residents, fellows or physicians new in practice. It allows the policyholder to increase their monthly benefit as their income grows, without having to qualify medically for it. They just need to show income increases to justify the increase.
Loan repayment – For physicians who have medical school debt, there are a few companies that will pay their medical school payments while they are collecting disability benefits. An additional rider would be added to the disability policy for this.
As with all insurance coverage, please read the policy carefully as language differs between companies. Disability insurance can protect you against financial loss. Work with your insurance advisor to help you ensure the best coverage for you.
For additional information regarding disability insurance, contact WisMed Assure at email@example.com, complete this online form or call 608.442.3810.
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