Employer Sponsored Long Term Disability
Free Disability Insurance means forfeiting Own Specialty Benefits
Employer-Sponsored Long Term Disability Insurance is NOT Own Specialty
Free is never better - While employer-sponsored Group Disability Benefits may be appealing to your wallet, the risk associated with the need for a physician to file a claim for coverage can be catastrophic. Proper Disability Planning is the cornerstone of financial planning because having the right plan allows you to maintain control of your career and earning potential.
"My human resource department says they offer Own Occupation Coverage" - The fact is that Own Occupation Disability Insurance actually means something different within the inner circles of insurance language than it does in the mind of a physician.
Within "Insurance Language," Own Occupation describes a disability plan that considers you disabled if you can no longer work in your current occupation without forcing you to work in another occupation, this doesn't mean you are allowed to work in another occupation. Group disability plans protect you from the inability to work in your medical specialty without forcing you to work in another occupation, however they do not allow for you to earn another income while collecting your full disability benefit.
In the mind of a physician, Own Occupation Disability Insurance not only protects you from the inability to work in your specialty without forcing you to work in another occupation, but it also adds an extra level of control to your career and finances by not restricting you from earning another income. True Own Specialty Disability Insurance allows you to earn another income while still paying your full disability benefit.
Shortfalls of Employer-Sponsored Long Term Disability Insurance
Group coverage is NOT True Own Specialty - Group Disability Insurance does NOT allow you to earn another income if you are collecting your disability benefit, it's one or the other. True Own Specialty Disability Insurance pays your Full Tax-Free monthly benefit if you suffer a sickness or injury that prevents you from working in your specialty without limiting restricting your ability to continue to work in another occupation.
Benefits are taxable - While suffering a disability the last thing you need to worry about is your tax bracket. Although the cost of the coverage is FREE, the tax liability attached to your group benefit seriously impacts your ability to provide for your family and your current lifestyle.
Partial Disability/Residual Disability is extremely unrealistic to qualify for - Your group policy might offer you a 90 day elimination period but that waiting period must be met over 90 consecutive days. Statistically speaking, the majority of disability claims arise from a disability that has been developing gradually over time, making 90 consecutive days of missed work impossible to satisfy if partially disabled. In order to qualify for partial disability, the insured must first be totally disabled and then return to work on a part-time or limited income basis.
Cost of Living adjustments are non-existent - the cost of living continues to increase regardless of our ability to work. And while an applicant is collecting disability their policy should be increased to keep pace with the rise of inflation. Employer-Sponsored Long Term Disability policies rarely include a provision to protect against cost of living increases.
Your Income is not fully covered - Employer-sponsored Long Term Disability Insurance only provides coverage for up to 60% of your BASE income up to a specified Cap. If your base income is only 100,000 per year but your total income is 300,000 per year, your Group Policy will only provide you $5,000 per month of taxable benefits because coverage limits are calculated off of your contracted base income.
Coverage is not guaranteed - although you may have a group policy today that doesn't mean you will have a group policy tomorrow. Your Employer-Sponsored plan can be canceled, changed, or modified leaving you and your income vulnerable.
Coverage may not be portable - If you change jobs or elect to go into private practice you may not have the choice to bring your policy with you. If you do have the choice the premiums are expensive and not guaranteed.
The True Benefits of Employer Disability Insurance
No Health Exam - Certain pre-existing conditions may limit your ability to qualify for an Individual Own Specialty Disability Insurance making the benefit of an Employer-Sponsored Group Disability plan worthwhile, although certain individual Own Specialty plans may still be available to you through carriers like Lloyds of London and Peterson International who often insure applicants with a less than perfect medical history.
It can be layered on top of your individual coverage to provide additional benefits - Once you've maxed out your individual Own Specialty Disability Insurance, Group Disability insurance can be layered on top to provide you a little extra benefit in the event of a Total Disability. You would be able to collect your full individual coverage while also collecting all or a portion of your Group Disability Benefit depending on your pre-disability earnings.
Never cancel your individual coverage or forgo the purchase of individual coverage just because your employer offers a group disability policy.
We understand the cost of owning your own Individual Specialty Specific Disability Insurance policy can be expensive. But your most valuable asset is your ability to earn an income and you need to spend the money to protect it.
Currently, six disability carriers offer True Own Specialty Disability coverage to physicians - Ameritas, Guardian, MassMutual, Ohio National, Principal, and The Standard. Prices vary based on your age, sex, medical specialty, available discounts, and health history. Be sure to ask your agent to quote all six carriers to ensure you are getting the best value for the coverage you need.
Your group policy exists, so now what do you do?
Most Employers don't know that True Own Specialty Disability Insurance exists. From our experience in discussing this topic with human resource directors, sadly it falls on deaf ears. Your human resource department is focused on keeping things simple and universal for all the employees under their establishment. They are tasked with establishing benefits that work for not only the physicians but the full-time executives, nurses, janitors, orderlies, etc. The Janitors, orderlies, general staff, and nurses would be content with a disability plan that pays them 60% of their "BASE" income while restricting their ability to earn another income, but this isn't a good fit for the physician employee. But the coverage is there, you can't opt-out, so now what?
Contact an experienced disability agent right away to review your base/bonus income to help you determine how much individual own specialty disability insurance you qualify for with the existence of your group plan. Once your agent determines if you are eligible to add an individual Own Specialty Disability plan, do it. If you have the ability to add a future purchase option rider to your individual plan, add it. This will allow you to increase your coverage in the future without the need for new medical underwriting. You can take advantage of your ability to increase your coverage if you have earned additional income or if you leave your employer and are no longer a victim to your employer-sponsored plan. We care about your disability insurance, you can schedule a call with one of our experienced agents to help you determine how much individual coverage you qualify for - schedule a call with one of them today.