While many physicians earn a low enough income for which
traditional insurance carriers can independently offer adequate
disability insurance, highly specialized physicians and surgeons earning
higher incomes may encounter restrictions. This article provides higher
earning physicians and surgeons with a basic understanding of how
disability benefit levels are determined and how to optimize the amount
of coverage that can be purchased on an individual basis.
Disability insurance carriers develop and adhere to Issue & Participation Limitation charts that list the amounts of monthly disability benefit offered for any given income level. The amount of monthly disability benefit a physician can purchase will primarily depend on his/her income and will likely vary amongst different carriers since each one adheres to its own Issue & Participation limitations. A physician earning $200,000 will have no problem securing the maximum benefit available for his/her income through one single traditional insurance company; however physicians and surgeons earning in excess of $400,000-$450,000 annually will experience restrictions.
In order for physicians with earnings in excess of $400,000 to obtain the proportionate and adequate amount of individual disability insurance for their income, two policies must be purchased from two separate insurance companies. Issue & Participation Limitation charts are used to establish a limitation on how much monthly benefit an insurance company is willing to offer both independently and jointly with another company. Rather than independently taking on excessive risk with any solo physician policy holder, this method allows for two companies to share in the risk which in turn allows for physicians to purchase as much as $25,000 - 30,000 of individual monthly disability benefit - the available benefit for physicians earning $900,000 - $1,250,000. Since every company adheres to their own Issue & Participation Limitations, some companies will allow for greater individual and joint benefits than others.
Prior to actually applying for disability income insurance, higher paid physicians and surgeons should carefully review their options and discuss the Issue & Participation Limitations with an experienced insurance agent or financial professional. Since some insurance carriers have higher limitations than others, certain strategies may be beneficial in order to maximize the amount of coverage that can be purchased. Although every Life/Health insurance agent is licensed to sell disability insurance, very few are specialized and even less concentrate on working with physicians. When considering applying for this coverage, it is recommended that you work with a financial professional who is experienced in working with physicians and equally represents multiple disability insurance carriers.
Disability insurance carriers develop and adhere to Issue & Participation Limitation charts that list the amounts of monthly disability benefit offered for any given income level. The amount of monthly disability benefit a physician can purchase will primarily depend on his/her income and will likely vary amongst different carriers since each one adheres to its own Issue & Participation limitations. A physician earning $200,000 will have no problem securing the maximum benefit available for his/her income through one single traditional insurance company; however physicians and surgeons earning in excess of $400,000-$450,000 annually will experience restrictions.
In order for physicians with earnings in excess of $400,000 to obtain the proportionate and adequate amount of individual disability insurance for their income, two policies must be purchased from two separate insurance companies. Issue & Participation Limitation charts are used to establish a limitation on how much monthly benefit an insurance company is willing to offer both independently and jointly with another company. Rather than independently taking on excessive risk with any solo physician policy holder, this method allows for two companies to share in the risk which in turn allows for physicians to purchase as much as $25,000 - 30,000 of individual monthly disability benefit - the available benefit for physicians earning $900,000 - $1,250,000. Since every company adheres to their own Issue & Participation Limitations, some companies will allow for greater individual and joint benefits than others.
Prior to actually applying for disability income insurance, higher paid physicians and surgeons should carefully review their options and discuss the Issue & Participation Limitations with an experienced insurance agent or financial professional. Since some insurance carriers have higher limitations than others, certain strategies may be beneficial in order to maximize the amount of coverage that can be purchased. Although every Life/Health insurance agent is licensed to sell disability insurance, very few are specialized and even less concentrate on working with physicians. When considering applying for this coverage, it is recommended that you work with a financial professional who is experienced in working with physicians and equally represents multiple disability insurance carriers.
Michael L. Relvas, CFP© is the owner of MR Insurance Consultants, a financial services firm specializing in disability insurance for physicians, surgeons and other professionals nationwide. For additional consumer information, visit the Buyer's Guide on Physician Disability Insurance or call Michael at 800-817-4522.
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