Navigating Disability Insurance for Doctors: What Makes Doctors Different?

Eddie Whalen

Disability insurance is a key aspect of financial planning, particularly for professionals in the medical field. Doctors face unique challenges and risks in their careers, from long hours and high stress to the physical demands of performing surgeries and other procedures. These factors not only increase the risk of disability but also highlight the importance of having a tailored disability insurance plan. In this blog post, we will explore what makes doctors different when it comes to disability insurance, including their needs and financial considerations.

Understanding the Needs of Doctors

Doctors have unique requirements when it comes to disability insurance because of their specialized skills and high income. As highly trained professionals, doctors spend years in intense education, accruing substantial student debt. The potential loss of income due to disability could significantly impact their ability to pay off this debt and other debts (such as mortgage payments) and maintain their standard of living.

Additionally, doctors often have high earning potential, which means they may need a higher level of coverage to replace their income if they become disabled. This is particularly important for specialists, who may have higher incomes than general practitioners. In fact, 65% of doctors are specialists.

Unique Risks and Responsibilities

The medical profession is uniquely physically demanding, placing doctors at a heightened risk of injuries and conditions that could impair their ability to work. These physical demands vary significantly across different specialties but generally include long hours of standing, repetitive movements, and the need for precision under pressure, all of which can contribute to both acute injuries and chronic conditions. In essence, doctors perform blue-collar duties in a white-collar setting.

According to a recent survey, most U.S. physicians work on average 50 to 59 hours per week, a significantly higher number of hours than the traditional American workweek. Overworking and high stress levels contribute to an increased risk of musculoskeletal conditions, mental health issues, substance abuse, and chronic fatigue that can increase the chances of disability.

High Risk of Exposure to Infectious Diseases:

Doctors are also frequently exposed to patients with infectious diseases, which increases their risk of contracting these illnesses. This is especially true for specialists who work closely with specific patient populations, such as infectious disease physicians or emergency medicine doctors.

Broker Tip: When discussing disability insurance options with your clients, make sure to emphasize the importance of an Infectious and Contagious Disease benefit. This type of benefit can provide a residual benefit based on the percentage of income loss due to being unable to work as a result of an infectious or contagious disease. This can provide peace of mind for doctors and their families and serve as a selling point.

The Doctor Shortage

A recent study by Mayo Clinic has highlighted an alarming trend: 62.8% of physicians report at least one burnout symptom. This can lead to decreased productivity, increased medical errors, and even substance abuse among doctors. This issue of burnout, coupled with the aging population and increased demand for healthcare services, has also contributed to a growing doctor shortage.  The Association of American Medical Colleges (AAMC) predicts that by 2034, there will be a shortage of up to 124,000 physicians in the United States.

With this growing doctor shortage, it can be difficult for healthcare employers to attract and retain top talent. Doctors have much more negotiation leverage and want higher salaries, better benefits, and improved work-life balance.

Offering a comprehensive disability insurance plan is a valuable tool employers can use to attract and retain high-quality doctors. It shows that the employer values their employees’ well-being and is willing to invest in their financial security. This can make a significant difference for doctors considering multiple job offers or thinking of leaving their current position due to burnout.

Broker Tip: When working with healthcare groups, mention the importance of offering a comprehensive disability insurance plan to attract and retain top talent. Emphasize how this can also improve their bottom line by reducing turnover costs and maintaining a stable workforce.

The Financial Landscape for Doctors

Given that many doctors begin their careers with sizable debt, it is critical for them to have a solid understanding of their financial landscape. This includes managing student loan debt, saving for retirement, and protecting against potential income loss due to disability. While many may not see the inherent value in employee benefits, they are willing to spend money on their own personal needs and wants. For this reason, doctors are the #1 buyers of individual disability insurance (IDI).

Doctors often purchase IDI early in their careers, as they are told it is the best way to protect their income. However, as doctors progress in their careers, their income typically increases significantly, especially as they specialize further or take on more senior roles within healthcare settings. As their income rises, the benefits from IDI may not be enough to cover their financial needs, especially with lifestyle inflation.

For example, a policy that covers 60% of a $200,000 annual income won’t suffice once the income reaches $500,000, covering only 24% of their income. Additionally, as doctors’ financial responsibilities increase—perhaps due to family growth, larger home purchases, or increased lifestyle expenses—the gap between their actual income and their disability benefits can become financially straining. This can leave them vulnerable to unexpected income loss and financial difficulties.

To reach the recommended 60% income replacement ratio, doctors may need to supplement their IDI with additional insurance products such as group or high-limit disability insurance. Group disability insurance policies are typically offered through employers and can provide additional coverage to supplement IDI.

Broker Tip: When discussing insurance needs with doctors, it’s important to consider not only their current income but also their projected future income and potential expense increases. This can help identify potential coverage gaps and ensure adequate protection is in place. Many doctors think LTD is “just an employee benefit “and not for them. However, it’s unlikely they’ve been offered the specialized coverage they need. MGIS uses a CPT code Definition of Disability, meaning that if doctors cannot perform one or more of their usual procedures, they are considered disabled. It’s also important to note that doctors can be skeptical of insurance companies and like to see the fine print in their policies.

Compensation and Income Sources

Doctors often benefit from a unique compensation structure that combines a high-income potential with various sources of income. This can include salary, bonuses, production-based, and profit-sharing if they own a private practice.

Ownership income can make up more than 50% of a practice partner’s income. Some popular group long-term disability (LTD) carriers have a policy where they factor in the income received from ownership while the claimant is disabled. This can result in a significant reduction in the LTD benefit. In some cases, the benefit could be reduced to as little as $100 per month instead of the expected $10,000 or $15,000. This can have a devastating impact on a disabled doctor’s financial stability, and many doctors may not even be aware of this potential coverage gap.

Broker Tip: Ask this question to open the door to a conversation with doctor groups, “How does your current LTD policy account for ownership income that you (or a partner) would still receive if disabled?” Once they realize the potential coverage gap, most will be eager to discuss solutions that best protect them and their practice.

Considerations for Retirement

In the event of a disability, retirement plans and contributions may also be affected. For example, if a doctor cannot work and contribute towards their retirement plan, the accumulated total may be significantly reduced. This can majorly impact their financial future and long-term retirement plans.

To address this concern, some LTD policies offer an optional rider, allowing contributions to continue towards the doctor’s retirement plan while the doctor is disabled. This can provide a sense of security and financial stability for the doctor’s future. While this rider may come at an additional cost, it can be a valuable investment in the long run. When reviewing a Group LTD or IDI plan, always consider the available optional riders and how they can benefit the doctor’s unique situation.

MGIS and Reliance Matrix Offer Specialized Insurance for Doctor Group Practices

The unique challenges and financial realities doctors face underscore the need for a specialized insurance solution. MGIS and Reliance Matrix, recognizing these needs, have introduced Disability Guard for Doctors™. This unique policy is tailor-made for doctors, taking into account the factors discussed above—from the physical risks and mental stresses associated with the profession to the distinct financial considerations. Disability Guard for Doctors™ is designed to protect doctors’ incomes and assets in the event they become disabled, ensuring financial stability and peace of mind during a difficult time. To learn more about Disability Guard for Doctors™, visit our product page.

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