Imagine that you were unable to provide medical care to patients or earn money for an entire year. How would your life change? How would you replace your income if you got too sick or injured to work? Some people have enough money saved away to sustain themselves through long periods without an income – but what if you didn’t? In the United States, living paycheck to paycheck is the most prevalent financial lifestyle, with a rising number of even high-income individuals living this way. Disability insurance (or disability income insurance as we like to call it at Asteya), is your financial safety net should the unpredictable happen. Disability isn’t just a theoretical possibility, in fact, one in four working adults will become disabled during their working years.
Why does every physician need disability insurance?
To answer this question, let's start by defining what disability insurance or income insurance as we like to call it at Asteya, is a policy that supplements your income in the event you’re unable to work due to illness or injury – you can think of it as your financial safety net. Disability insurance is often time overlooked because people either are unaware that it exists or have the wrong idea behind what it actually is.
Many professionals don't think disability insurance is important because they think it covers the same kinds of injuries that can happen on a construction site or factory floor. Little do they know that most disabilities are actually caused by health problems.
In fact, and according to study, cancer, heart disease, and arthritis cause 90% of long-term disabilities. The same study reveals that 95% of accidents and illnesses that can get in the way of your work are not actually caused by the job itself.
Physicians are firsthand witnesses to the immediate impact a medical crisis can have on a person's life: as a you would have an overwhelming amount of medical costs leaving you unable to meet important payment dues even with your savings, such as mortgage, child school tuitions, the cable bill, groceries etc. Not to forget that the road to recovery can also be costly. Your disability can have psychological effects such as mental anguish, loss of enjoyment, stress, and so on.
“I have an emergency savings account that I can rely on, I don't need disability insurance"
You might be thinking, “I have an emergency savings account, so I don’t need disability insurance” – if that’s the case, that’s incredible! But even if you do have enough savings to provide you with a financial safety net when the unexpected happens, have you thought about how long your savings could sustain you? Or what draining your savings might mean for the future? For example, you now might not have the capacity to afford college tuition for your kids.
The reality is that disabilities are unpredictable – they can happen anytime, anywhere, and will no doubt effect your financial wellbeing, which influences your overall wellbeing.
“I can get benefits from SSDI, I don’t need additional coverage”
For some people that become disabled, they can get Social Security Disability Insurance (SSDI) benefits from the Social Security Administration (SSA). However, disability benefits from Social Security are insufficient. The payouts can be small and limited.
As of 2021, the average monthly payment received by people with a disability through social security benefits is approximately $1,280 per month, or $320 per week, which is usually not enough to meet basic living costs, let alone retirement and other long-term goals. Having a private disability insurance policy can be the best way to protect your income sufficiently as it typically covers 60-80% of your income as a physician.
“Disability Insurance is super expensive, I’m not sure I can afford it”
Protecting your income shouldn’t be a luxury, so here at Asteya, we’ve created affordable and easy solutions that won’t drain what you’re trying to protect (your income!). We offer disability insurance (or disability income insurance, as we like to call it) that’s simple, fast, and affordable. Our 100% digital process means we don’t tire you out with proof of income, medical exams, phone interviews, or wait times, so you can go from applicant to insured in no time. Our prices start as low as:
Permanent Disability Income Insurance: starting at $6.05/month
Sickness & Injury Disability Income Insurance: starting at $5/month
How much disability coverage do physicians need?
It’s highly advisable that you get yourself a disability insurance policy when you’re in the resident status because the sooner you get disability insurance in your medical career, the lower the rates are. You might be able to get a policy that pays a monthly benefit that's a little more than what you're making as a resident.
As your income goes up, you'll probably want your disability insurance benefit to go up as well. So, it's a good idea to get a policy that lets you buy more disability insurance without having to take another health exam. This is called an "additional purchase benefit."
To guarantee that your income is appropriately protected, we advise carrying the maximum disability benefit allowed. Typically, this represents 60% of your salary.
Let's say you're a doctor who earns $500,000 a year (approx. $40,000/month), you’d need $24,000 per month in disability benefits (60% of $40,000). So, if you have an employer-group plan that provides a $10,000 monthly benefit. Is it enough? No. Since your employer is paying for the physician's group coverage, the $10,000 benefit will be taxable and would average at $6,000 (at a 40% tax rate).
Getting supplemental disability insurance would be highly beneficial in this case. To know how much coverage you would need, here’s something to help you calculate:
- Add up all your monthly costs, such as your mortgage or rent, insurances, loans, utilities, and other costs, as well as how much you’re saving for your financial goals.
- If your monthly payments are more than 60% of your income, consider looking into the premium disability policies to get higher benefits.
- If your expenses don't take up more than 60% of your income, you might be able to pay for less coverage.
How much does disability insurance for physicians cost?
One of the most important determining variables in how much you'll pay each month is your medical specialty. Specialties are assessed based on their level of risk. For instance, if you work as an anesthesiologist, you’re viewed differently from a primary care physician in terms of risk.
Additionally, insurance companies evaluate the volume of claims for each specialty to identify those that are more vulnerable to claims. In addition to having a higher risk of injury, several specialties also have higher claims of mental illness and drug usage. All these claims are taken into account in the calculation.
Usually, physicians in these specialties pay more for disability insurance:
- Emergency room physicians
- Registered nurses
Physicians in these specialties usually receive lower disability rates:
- Diagnostic radiologists
- Primary care doctors
- General practitioners
In general, you should expect to pay between 1-3% of your annual salary. Your income has a direct impact on the amount of coverage you’ll receive, so the higher your income, the higher your benefit amount and the more you can expect to pay in monthly premium.
As a physician, there are two things you should look for in a disability insurance policy.
Insurance companies categorize jobs into various risk categories based on previous data. The greater your risk of submitting a claim, the higher your premium. According to statistics, the older you are, the more likely you are to become disabled and the more likely you are to have higher premiums. By getting coverage now, you can save money in the long run.
Additionally, as a physician first starting out in practice, it's a good idea to have a policy with a future purchase option, also known as a future increase option, a future insurability option, or a benefits update rider. This lets you buy more insurance coverage for a disability policy you already have through your employer.
And with this, you increase your coverage by showing proof that you can pay for it, without having to go through any more medical underwriting.
Asteya’s disability policy is the right fit for you. It’s quick, easy, and totally online.
At Asteya, applying for disability insurance as a physician is incredibly simple. The application is completely digital so there’s no need for medical exams, blood tests, phone calls or lengthy paper applications. Asteya's underwriting occurs in real-time which means you can obtain a policy in 30 minutes or less!
What are the typical extras that physicians need to add to their insurance?
Student loan protection: When you’ve just entered your profession, you probably came with a sizable amount of debt from student loans on your shoulders and are still a few years away from the high-paying medical income of your dreams. Having a benefit that can provide you with additional funds to pay off your loans is a smart addition because they won't just disappear if you become unable to work and make an income.
Benefits for partial disability: Having an unexpected medical issue of any kind can be stressful, and even less serious disabilities can prevent you from working. If you’re unable to perform some duties at work but don’t require total disability benefits, a partial disability benefit will be paid out to cover your income.
Retirement insurance: You’re aware that you won't be able to practice medicine indefinitely, and you intend to enjoy your retirement with the money you have worked so hard to earn. However, your attention shifts to taking care of your immediate living costs when you’re dealing with an injury or illness. The addition of this protection to your insurance policy can help to supplement those contributions until you're back in regular work because those months or even years of lost retirement savings can have a significant impact on your later years.
Cost of Living Adjustment (COLA): Life is expensive and continues to cost us more and more each year. So, what happens if your benefit amount meets your needs now but won't in a few years due to inflation and the state of the world's economies? To reflect these increases in living expenses, COLA add-ons will raise the benefit amount you receive each year that you’re disabled. If you're taking out a policy when you're younger and can benefit from the lower upfront premiums, this is a great addition.
The bottom line
No matter your occupation or your background, disability insurance should be one of the main policies that you should consider getting. The peace of mind that comes with having disability insurance is knowing that you and your family's living expenses will be covered no matter what happens to you.
If you're still on the fence about whether disability income insurance is for you (hint: it is), here are a few extra points to consider while thinking about it:
- Asteya’s policy is a no brainer, seeing that it is 100% digital. We don't require blood tests or doctor's appointments, unlike other insurers. We'll just ask you a few questions to determine your best policy.
- You’ll be all set once your policy is in place! You'll pay your premiums quarterly, monthly, or annually for the duration of your policy.
- If the unexpected happens and you need to file a claim, our team will be there to assist you in receiving the funds you require as soon as possible. When your claim is approved, you'll receive a payout that you can put toward whatever you need, such as bills, groceries, or medical expenditures.