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Welcome to the latest episode of the Physician Cents Podcast, where we explore complex financial topics tailored specifically for physicians. Whether you're a medical student, resident, fellow, or attending physician, you're going to find valuable insights that can help you increase your financial IQ, further your financial journey, and improve your overall well-being. Hosted by Chad Chubb and Tyler Olson, let’s dive in!
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If you're a physician, your biggest financial asset is not your car or your house, it's your ability to earn. That income comes from a unique skill set you've spent years building, and it can't be replaced quickly if something goes sideways.
This post breaks down the real-world disability insurance and term life insurance questions that come up over and over, especially for residents, fellows, and early attendings. You'll see the tradeoffs behind COLA riders, graded vs. level premiums, dual-physician planning, term ladders, and what actually happens when someone files a claim.
A lot of insurance talk feels abstract until you put it in physician terms. You're not just protecting a paycheck, you're protecting the whole runway you built through med school and training.
Disability insurance is meant to cover the scenario where you can't do your job the way you do it now. For physicians, that usually means some form of true own-occupation coverage, where the claim hinges on whether you can perform the "material and substantial duties" of your specialty.
There's also a timing issue that doesn't get enough airtime. The day after you finish training is a weird mix of "I've made it" and "I haven't been paid yet." You've invested years, you're lined up for the attending income, but you haven't actually collected it.
July 1 after your final year of training (and the day after) is often described as the highest-risk point of your career: the earning power is finally there, but you haven't had time to build the financial cushion.
If you want a directory of professionals the Physician Cents team works with (including disability insurance help), start with the Physician Cents Best of the Best list.
A COLA rider (cost of living adjustment) increases your monthly disability benefit while you're on an active claim. If you never go on claim, it does nothing. If you do, it helps your benefit keep pace as time passes.
The simple problem COLA tries to solve is purchasing power. A $5,000 monthly benefit might feel fine today, but it's a very different lifestyle 20 years from now if prices rise and your benefit stays flat.
From the planning side, the argument is pretty consistent: you buy disability insurance to protect against the catastrophic version of the story, not the mild one.
Yes, many disabilities are shorter. Still, the long claims are the ones that can permanently change your financial life. And when that happens, "but the odds were low" doesn't pay your mortgage.
A practical way to think about it is pensions. If you've ever heard a parent or grandparent complain that their pension didn't have a COLA adjustment, you already understand the emotional pain of fixed income over decades.
There's also an underwriting reality that matters a lot in the real world:
Some agents leave COLA off because it makes the premium look lower. That might help them "win" a quote comparison, but it's not always aligned with what a younger physician is trying to protect.
There is one legitimate tradeoff that can come up, though. If your budget is fixed, you might be choosing between:
For an attending who's farther along and already has meaningful assets, that can be a real conversation. For residents and fellows, it's trickier, because you're early in the career and the long-term risk is exactly what you can't afford to ignore.
This isn't always a "stop buying lattes" situation. A lot of residents have private student loans, credit card balances, or high cost-of-living housing that eats the margin. Some people truly feel like they've got $100 a month left, total.
That said, the planning instinct is to open the hood first. Sometimes there is wiggle room, it's just hiding in plain sight because spending feels automatic during training.
When money is tight, the priority is usually "get something in place" rather than punting the whole decision. Two common levers that came up:
Another concept that comes up is Guaranteed Standard Issue (GSI). If your residency or fellowship program has a GSI offering, you may be able to secure individual disability coverage with limited or no medical underwriting. Programs can change, and carriers monitor claim experience, so it's not wise to assume it will be there forever. Still, it can be a meaningful option for trainees who are squeezed.
This is where it gets uncomfortable, but useful. A lot of financial stress comes from not separating:
Personal finance is personal, and the "right" answer depends on your values. Still, if you're trying to protect the income that supports everything else, it's worth being honest about what's actually in your control.
A level premium stays the same until the end of the policy term (often to age 65). The insurer is basically smoothing the cost over time, so you pay a higher amount early than your risk might "justify," and a lower amount later than your risk might "justify."
A graded premium starts lower and increases each year as you age. It matches cost more closely to risk, but it can get expensive later.
At some point, many people on graded premiums switch to level premiums. That switch is the key. The question is not "graded vs. level forever," it's "does graded help me get covered now, and what does it cost me later?"
Level premiums are boring, and boring is kind of the point. They're predictable, easy to budget, and often the better long-run deal if you expect to carry the policy for a long time (which many physicians do).
Graded premiums can still make sense when cash flow is tight in training, especially if the plan is to switch to level soon after becoming an attending. The mistake is staying on graded too long, letting the annual increases sneak up until it feels painful.
So the practical takeaway is simple: graded can be a tool, but it's not a "set it and forget it" setup.
In a two-physician home, it's easy to think, "If one of us is disabled, the other can carry the household." Sometimes that's true, but the drop-off can still be life-changing.
Even a high-income household can't lose $15,000 a month without something giving way. Retirement contributions shrink. Kids' plans shift. Big goals get delayed. Meanwhile, medical costs related to the disability are unknown from today's vantage point.
Another point that came up is simple but sharp: if you think your income is valuable enough to save and invest now, it's also valuable enough to protect.
There are edge cases. If a household earns a very high income and saves a huge portion of it, they might decide they don't need to insure every marginal dollar. That tends to show up when people are cautious spenders and their monthly cash flow has a lot of excess.
Even then, the "less coverage" decision should be tied to values and tradeoffs, not just premium sticker shock. If your plan assumes that income will fund a specific lifestyle or legacy goal, cutting coverage means accepting that those goals may change if a long-term disability happens.
When physicians are early in family planning, a 10-year or 15-year term policy can look like a smart move. It's cheaper, and it fits the story of "we'll be financially independent by then."
The problem is emotional reality. Many people don't want to drop life insurance while they still have kids at home, especially teenagers. Even if the math says you could self-insure, the peace of mind often isn't there.
A common planning baseline is to cover the years until the youngest child is at least 18, and often through the end of college (early to mid-20s).
A term ladder means buying multiple policies with different end dates. You might carry more coverage during the years when kids are young and the balance sheet is smaller, then less coverage later as net worth grows.
What's funny is that ladders don't always save as much as people expect. Sometimes, the price difference between "simple long coverage" and a complex ladder is smaller than it should be. That's why it helps to compare options side by side before assuming the ladder wins.
The overall intent stays consistent: term life is there to create instant wealth if something happens early, and as real wealth builds, the need for life insurance usually declines.
Most people never file a claim, so when it happens, it's easy to assume the insurer is "out to get you" because they ask for so much documentation. In practice, the request list is often about getting a clear snapshot of your medical status and your work at the time the disability begins.
A clean approach looks like this:
This is where things can get messy. Own-occupation claims are based on what you're doing at the time of claim, not what you did when you bought the policy.
For radiology, the interventional radiology vs. diagnostic radiology split is a perfect example. If you do both, the insurer will look at the real breakdown of your work and income. There often isn't a clean benchmark like "more than 50 percent" in most contracts, so a near-even mix can land you in partial disability territory instead of total disability.
Partial disability usually ties benefits to income loss, while total disability is the cleaner "full benefit" outcome. That difference is exactly why the "material and substantial duties" description matters so much.
One carrier example discussed was Guardian adding extra wording around a 50 percent threshold tied to surgery or hands-on patient care (with their definitions). Even with that language, gray areas still exist because definitions matter.
In general, disability coverage looks at earned income, which can include salary and other earned compensation. The insurer may require a year or two of history before giving full credit for bonus or incentive comp, because they want to see consistency.
Another "surprise" detail: if you have a meaningful side gig that produces earned income, that can become part of what the insurer considers when evaluating occupation and duties. Passive income (like index funds or real estate income that isn't earned) generally doesn't count the same way.
If your current policy is clean (no exclusions, no ratings, approved as expected), a GSI offer doesn't automatically improve it. GSI is about the underwriting path, not some magical upgraded contract.
Where it can matter is if your original policy came with exclusions or other limitations that a GSI policy might avoid.
Updating can make sense, especially if you started small to keep premiums affordable. If you qualified for more benefit but didn't take it, and your cash flow is better now, you can revisit the monthly benefit amount.
You also want to confirm the policy was designed to grow with your career, usually through some kind of future increase option.
Getting a second opinion can be helpful, but there's one big caution: be careful with anyone pushing a full replacement without a very clear reason. A replacement sale can create a commission incentive, even if your existing policy can simply be adjusted. If someone recommends replacing, it's reasonable to ask for an explanation, and it's reasonable to run it by the original agent as well.
For physicians, insurance decisions get simpler when you remember the point: protect the income you can't replace quickly. In most cases, that means buying a solid own-occupation policy early, being thoughtful about riders like COLA, and using tools like graded premiums only when they solve a real cash flow problem. As your net worth grows, the conversation shifts from "buy more" to "how much do we still need," and that's a good problem. The best plan is the one you can keep in place long enough for financial independence to become real.
➡ Connect with Michael on LinkedIn
The best of the best list is a paid sponsorship, but these are professionals/companies that Tyler and Chad collaborate with within their own practices or have been vetted to earn a spot on this list. By supporting our sponsors, it allows Chad & Tyler to dedicate more time to you and the Physician Cents community. If you ever have a question (or not a great experience, which we don’t expect!) about a sponsor, please let us know. We call it the “best of the best” for a reason, and we will maintain that standard for our listeners & viewers.
This information is for general purposes only. This information is not intended to be a substitute for specific professional financial, tax, or legal advice, as individual circumstances vary. Please see a financial professional, CPA, and/or an attorney in regards to your own individual situation.
Wealthkeel’s Advisory Services and Financial Planning offered through Vicus Capital, Inc., a Federally Registered Investment Advisor. WealthKeel LLC, 615 Channelside Drive, Suite 207, Tampa, FL 33602 -- 267.590.9533.
Olson Consulting LLC, Offering Advisory Services and Financial Planning, is a State-Registered Investment Advisor.
A podcast designed specifically for physicians, offering a breakdown of complex financial topics to help you develop your financial IQ, further your financial journey, and improve your well-being. Whether you're a medical student, resident, fellow, or attending physician, you're sure to learn something new that will benefit your journey.
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