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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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Let's face it, no physician wakes up thinking, "Wow, I can't wait to learn more about disability insurance!" But what if you suddenly needed it? What if a career-ending injury forced you to trade the OR for a whole new world? That's exactly what happened to Dr. Stephanie Pearson. From practicing medicine to becoming a fierce advocate in the insurance world, her story is a real eye-opener. You can read more about her journey here.
Too many physicians have a false sense of security when it comes to their disability insurance. They think they're covered, but are they really?
This blog post is here to educate you, fellow physicians, on the importance of disability insurance. We're going to help you dodge the common pitfalls and make sure you're truly protected.
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Life can change in an instant. Just ask Stephanie Pearson.
Imagine this: You're turning 40, and you get called in to deliver a baby. It's a difficult delivery. The mom can't get an epidural, and the baby's heart rate is dropping fast. You have to act quickly.
As you're guiding the baby out, you get kicked—hard. The first kick hits your brachial plexus, and your arm goes numb. You turn your body, trying to protect yourself, but the second kick comes across your shoulder. You hear a pop, and you know something's wrong.
That's exactly what happened to Stephanie. An injury during what should have been a routine delivery changed the course of her life forever. Initially, she was diagnosed with a torn labrum and told to keep working, like it was no big deal. It wasn't the end of the world, right? Professional baseball pitchers have torn labrums and keep pitching, she was told.
But it wasn't that simple. This unexpected event shows that disability can strike anyone, in any profession.
What followed was a long and frustrating journey. Despite the initial diagnosis, things got worse. Stephanie developed a frozen shoulder, underwent surgery, and faced nerve damage and chronic pain.
The biggest blow came when she was terminated from her job because she couldn't perform 100% of her duties. Her malpractice insurers wouldn't cover her. The group disability policy she had through the hospital denied her claim because it didn't cover work-related injuries. She would have been better off falling off her bike, she was told. Even worse, Worker's comp denied her initial claim, saying her frozen shoulder was her own fault, even though she did what the doctor told her to do.
To add insult to injury, her private disability insurance—the one she thought she'd set up correctly—also failed her due to sheer ignorance on her part. She learned the hard way about the importance of understanding the fine print and having the right coverage. The experience took a huge emotional and financial toll.
But from the ashes of her career as a practicing physician, Stephanie found a new purpose. She started sharing her story with area residents, hoping they wouldn't make the same mistakes she did. With her husband's encouragement, she decided to co-found Pearson Ravitz, an insurance agency focused on helping physicians navigate the complexities of disability insurance. You can find more about Pearson Ravitz here.
What started at her kitchen table has grown into a brick-and-mortar business with almost 25 full-time employees. Stephanie now lectures around the country, educating and supporting physicians. Her goal is simple: to help as many people as possible avoid the pitfalls she experienced.
Okay, let's talk about why disability insurance is so crucial for physicians.
Being a physician is demanding, both physically and mentally. Long hours, high-stress situations, and constant pressure to perform can take a toll. This can lead to burnout, injuries, and illnesses. It's a high-risk profession, plain and simple.
Disability insurance is a financial safety net. It helps you maintain your standard of living and protect your family's future if you can't work due to a disability. It's about ensuring that you and your loved ones are taken care of, even when the unexpected happens.
There's a common misconception that physicians, especially those "Type A" personalities, are somehow immune to disability. "That won't happen to me," they think. But that's just not true. Anyone can experience unforeseen circumstances that prevent them from working. Don't let a false sense of invincibility leave you vulnerable.
Alright, let's dive into the nitty-gritty of disability insurance definitions. This is where things can get tricky, so pay close attention.
"True own-occupation" coverage is the gold standard for physicians. Also known as "specialty specific," it means you're considered disabled if you can't perform the specific duties of your medical specialty, even if you can work in another field.
Think of it this way:
With true own-occupation coverage, you're protected if you can't do your job, the one you trained for and built your career around.
Now, let's talk about the less desirable options. "Modified own-occupation" policies often switch to "any occupation" after a certain period, usually two years. This means that after those two years, you're only considered disabled if you can't perform any job, regardless of your training or experience.
"Any occupation" coverage is the least comprehensive. It means you have to be unable to do any job to receive benefits. This can be a tough hurdle to clear, especially if you have transferable skills.
Can you see the difference? With "true own-occupation," you're protected if you can't do your job. With "any occupation," you have to be unable to do any job. It's a huge difference!
Some policies define total disability as the inability to do your job and not be gainfully employed. This means that if you try to work in a different capacity, even if it's less demanding or lower paying, you risk losing your benefits.
Imagine you're a surgeon who can no longer operate but can still teach medical students. If your policy has this "gainfully employed" clause, you might lose your disability benefits if you start teaching, even though you're earning less than you did as a surgeon.
It's a real trap! You want to be productive and contribute, but your insurance policy penalizes you for it.
Let's compare group and individual disability policies.
Group disability insurance, offered through your employer, can seem appealing. It's convenient, and the cost is often lower than individual coverage. But don't let the initial appeal fool you.
Group policies often have hidden limitations and fine print that can leave you stranded when you need them most. They may not cover work-related injuries. They may have restrictive definitions of disability. And they can be changed or canceled by your employer at any time.
Always read the fine print and understand the policy's terms and conditions. Don't assume you're fully covered just because you have a group policy.
Individual disability policies offer more comprehensive and customizable coverage. They're portable, meaning you can take them with you if you change employers or practice settings. They offer guaranteed coverage, and you can tailor the policy to your specific needs.
While individual policies may be more expensive, they offer greater peace of mind and protection. Think of it as an investment in your future.
Okay, time to put on your detective hat and decode the fine print. Here are some key policy features to consider:
We've already hammered this home, but it's worth repeating: Prioritize "true own-occupation" coverage. Make sure you understand how it's defined in the policy.
The benefit period is the length of time you'll receive benefits if you become disabled. Common options include 2 years, 5 years, or to age 65/67. Choose a benefit period that provides long-term financial security. What would truly make you feel secure?
The elimination period is the waiting period before benefits begin. It's like the deductible on your car insurance. A shorter elimination period means you'll receive benefits sooner, but your premiums will be higher. A longer elimination period means you'll wait longer for benefits, but your premiums will be lower.
Portability is crucial, especially for physicians who may change employers or practice settings. Make sure your policy is portable so you can take it with you wherever you go.
There are two main types of renewability: guaranteed renewable and non-cancelable. Guaranteed renewable means the insurance company can't cancel your policy, but they can raise your premiums. Non-cancelable means the insurance company can't cancel your policy or raise your premiums.
Choose a non-cancelable policy for maximum protection.
Understand any exclusions or limitations in your policy. Common exclusions include pre-existing conditions and self-inflicted injuries. Make sure you're aware of any potential gaps in coverage.
Policy riders are like add-ons to your disability insurance policy. They can provide extra benefits, but they also increase the cost. Let's take a look at some common riders and whether they're worth the extra dough.
The COLA rider adjusts your benefits over time to account for inflation. This can be helpful if you're disabled for a long period, as it ensures your benefits keep pace with rising living costs. However, it also increases your premiums.
The FIO rider allows you to increase your coverage as your income grows, without needing to provide additional medical information. This is a great option for young physicians or those with rapidly increasing incomes.
The residual disability rider provides benefits if you can still work but have a reduced income due to your disability. This is helpful if you transition to part-time work or a less demanding role.
The catastrophic benefit rider provides an additional benefit if you become severely disabled and unable to perform activities of daily living, or ADLs. This rider may be beneficial if you have a family history of dementia or are concerned about long-term care costs.
This rider helps repay your student loans if you become disabled. Sounds great, right?
But proceed with caution! Stephanie Pearson believes this rider is predatory. Here's why: It's a term rider, meaning it only lasts for a set number of years (usually 5 or 10). After that, it falls off your policy.
According to actuarial data, the average claim isn't made until someone is more than 5 or 10 years out. So, the rider might expire before you even need it. Proceed with caution!
Let's discuss Guaranteed Standard Issue, or GSI, policies.
A Guaranteed Standard Issue (GSI) policy is a disability insurance policy that doesn't require medical underwriting. This means you don't have to go through a medical exam or answer detailed health questions.
GSI policies are mostly limited to those in training, such as residents and fellows. If you have pre-existing health conditions that make it difficult to qualify for a traditional policy, a GSI policy might be a good option.
Keep in mind that GSI policies aren't perfect. They tend to be more expensive than traditional policies. The maximum benefit for the entire policy is often lower. They may only offer two years of mental health and substance abuse coverage. And sometimes, catastrophic benefits aren't available.
Do you think that only surgeons or other physicians that have physically demanding jobs need disability insurance? Let's bust that myth!
It's easy to assume that disability insurance is only important for physicians who perform physical procedures. But that's just not true. Illnesses, injuries, and cognitive impairments can affect any physician, regardless of their specialty.
Think about it: A psychiatrist could develop a neurological condition that impairs their cognitive abilities. An internist could be diagnosed with a chronic illness that causes fatigue and prevents them from working full-time. A radiologist could suffer a traumatic brain injury in a car accident.
The unexpected can happen to anyone, regardless of their specialty. That's why it's so important to protect your income with disability insurance.
Stephanie shared a story about two psychiatrists who suffered traumatic brain injuries from random events. They could no longer practice. It's a reminder that even those in less physically demanding specialties are vulnerable.
Navigating the world of disability insurance can be overwhelming. That's where an expert comes in.
Disability insurance policies are complex. The fine print can be confusing, and it's easy to make costly mistakes. Working with an experienced agent can help you avoid these pitfalls and ensure you have the right coverage.
It's important to work with an insurance agent who specializes in disability insurance for physicians. They understand the unique needs and challenges you face. They can help you find a policy that fits your specific situation and provides the coverage you need.
Choose an agent who provides ongoing support and guidance, especially during the claims process. Filing a disability claim can be stressful and complicated. Having an expert on your side can make all the difference.
Disability insurance is a crucial part of financial planning for physicians. It protects your income and provides financial security if you can't work due to a disability. Don't wait until it's too late.
Take the time to review your existing policies and seek professional guidance to ensure you have the right coverage. It's an investment in your future and your family's well-being.
Ready to take the next step? Contact PearsonRavitz today to learn more about disability insurance and how they can help you protect your future.
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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Conversations helping graduating medical students to attending physicians build a strong financial foundation
