7 Myths About Group Long-Term Disability for Doctors

Reliable income is the foundation of a sound financial plan; without it, financial consequences can be devastating and long-lasting.  For doctors, given their unique occupational risks, income protection is especially critical. Yet there are misconceptions about the need for disability insurance, and Group Long-Term Disability (LTD), in particular.

MYTH: “Doctors won’t buy Group LTD because they already have individual disability coverage.”

REALITY: Most doctors buy individual disability insurance (IDI) while in residency, but these policies are often based on their much-lower income at that time. Many doctors have only 10%-40% of their income protected.  Can highly paid doctors really live on only $120,000-$180,000 a year in income? LTD is an excellent way to supplement a doctor’s current IDI coverage with an additional $10,000- $15,000 of monthly disability income protection.

MYTH: “Doctors can’t buy Group LTD because they already have individual disability coverage.”

REALITY: Having individual disability coverage does not affect a doctor’s ability to purchase Group LTD coverage. Just be sure they purchase as much IDI coverage as they want prior to buying Group LTD, since IDI carriers limit how much protection THEY will provide if an applicant already has group LTD coverage.  Use Group LTD to supplement a doctor’s current IDI coverage with an additional $10,000- $15,000 of monthly disability income protection.

MYTH: “Group LTD is too expensive.”

REALITY:  Group LTD typically costs less than ½ to 1/3 the cost of comparable IDI coverage amounts and is an excellent value. On average, premiums are only about 1%-1.5% of payroll. Although LTD requires a minimum number of doctors and employees to be covered, LTD plans can limit eligibility based on job titles, incomes, years of service, etc. Plus, Group LTD requires no medical underwriting required, so it is easy to buy. 

MYTH: “LTD policies always protect a doctor’s ability to perform the procedures and duties the claimant actually performed prior to disability.”

REALITY: A minority of LTD policies define a doctor’s “occupation” as specifically as desired.  It may be as broad as MD; or it may be the duties generally performed in a particular specialty or subspecialty. However, if the doctor is “specializing” in a particular area of medicine not recognized by the American Board of Medical Specialties (such as back/spine surgery, knee surgery, eye surgery, etc.), then they are typically not protected if a disability prevents them from performing these procedures. It is critical that the LTD policy defines a doctor’s material duties as the specific procedures they were performing at their practice.

MYTH: “All Group LTD plans look at a doctor’s earnings pretty much the same way.”

REALITY:  Some LTD plans may not insure income from bonuses and K-1 earnings.  In addition, most LTD plans require an income loss (typically 20%) in order to qualify for disability. The problem, however, is that some LTD plans may include ALL the income a doctor is receiving while disabled — receivables, salary continuation and K-1 earnings – and the combination of this income, plus income from partial work, may result in a claimant being unable to qualify for, and receive, a disability benefit. Also, be careful that ownership income is not listed as an “offset” – income that reduces the LTD benefit.

MYTH: “All Group LTD plans pay about the same benefit if a doctor is partially disabled.”

REALITY: For the first 12 months a claimant is partially disabled (disabled, but working), most LTD plans pay the same benefit. After 12 months, however, LTD plans differ greatly. Some plans use a “50% Offset” formula that can result in highly paid doctors receiving a monthly benefit as low as $100! 

Learn More by Contacting the MGIS RVP of Sales in Your Area

If you would like more information or help in addressing these myths, please reach out to the MGIS RVP of Sales in your area. They are experts in our products and can provide valuable support in overcoming misconceptions about group disability.