Building a Foundation with Disability insurance

One of the most important programs in your entire portfolio is your income protection insurance. Yet too many people do not know where their policies are, let alone review them periodically. Many professionals have the misconception that the "True Own Occ Specialty Disability Programs" (programs that protect you for your exact duties and specialties) are no longer available. This is far from the truth. Many top insurance companies now have these programs with even stronger provisions that were not available just a few years ago.

A few months ago, I was working with a large cardiology group in the state of PA. Most of the physicians had some disability programs, many of which were purchased years ago. After closely reviewing each individual situation, it was determined that most (19 out of 22) of the partners were  under-insured and had programs that would cover a very limited portion of their income. The programs they had were fine programs; it is that their monthly benefits would cover only 30% of their living expenses. 

Some of the insurance carriers of today have policies that contain a provision called the "Recovery Benefit". The Recovery Benefit protects your sweat equity by protecting your income when you have returned to work, but your earnings have not recovered. For example, a Pharmacist was making $225,000 a year; the gentleman suffered a stroke and was out on total disability for 18 months. After 18 months, he had fully recovered (physically) and returned to his business operation. This was over 8 years ago, and his income still hasn't "recovered". However, since his policy had a full recovery provision, he is currently collecting a large benefit today even though he has been fully functional and back to work for 8 years. Most of the group association programs have no such provision. 

Do not assume because you have a group program or an association program that you are fully covered. While many of those programs seem cost effective, the comprehensiveness of those programs is extremely limited. The bottom line is you worked extremely hard and invested thousands of hours in your profession. If you cannot execute your duties, you must make sure you have an income protection program that maintains your standard of living. Do not sell yourself short. Have your Disability Insurance programs reviewed by a Disability Insurance expert, not just an insurance person. It would be like seeing an orthopedic surgeon for trouble with your heart. Set up your review. 

Article Published in the Pinellas Medical Journal

Written by Brian Maser