Disability Insurance for plastic surgery residents
Why you need it
By the time you’re done training you will have devoted all of your 20s and most (if not all) of your 30s to training in plastic surgery. You likely have little savings and lots of debt. Even if you don’t, your economic value is tied up in your future ability to perform operations. If you haven’t realized it yet, the practice of surgery is physically demanding. While an accident can derail anyone, the cumulative effects of arthritis, back pain, neck pain, sequelae of prior injuries, etc are more common reasons for surgeons to claim temporary disability.
Individual vs. Group
Group insurance is likely to be offered by your employer, both as a resident and if you work directly for a hospital or large group practice. Group plans are also available from the American Medical Association, American College of Surgeons, and some of the specialty surgical societies.
Group policies are inexpensive, but very limited, and should be considered basic coverage only. All of the benefits you should be looking for in an individual policy (we’re about to cover this) are missing from group policies:
(1) they can be cancelled by the sponsor or the insurance company, (2) rates usually increase, (3) rates change based on the claims experience and (possibly) the underwriting of the insured group (whereas in an individual policy you only need to go through underwriting once), (4) riders are restrictive and contain many exclusions, not to mention coverage ceilings.
How much can you buy?
This depends on your income. The more monthly benefit you purchase, the higher the cost. You can typically protect 60% of your income (some policies go to 80%) and cap at monthly benefits of $12,500 to $15,000.
Cost is determined primarily by age and gender, but monthly benefit and the riders you select can quickly drive up the cost. The relative worth of these riders will be discussed shortly. Disability insurance is one area, unlike auto and life, where women can expect to pay significantly more (~50%) than men. As such, women should look for unisex policies, which can save you significantly. Note: men typically pay MORE for a unisex policy, so caveat emptor. Policies are also cheaper the younger you are when you purchase. We encourage residents to buy a small policy for two reasons: once you’ve gone through underwriting, you’re done, for good. If you develop a health problem during residency (it can happen), it won’t be excluded. The other reason is to lock in a low rate on the amount that you purchase while you’re so young.
What to Look for in a Policy
Renewability provision. You are looking for “non-cancelable” and “guaranteed renewable.” Period. As long as you pay your premiums, this means the insurance company cannot cancel or change any provision of your policy, increase your premiums, or add new restrictions, even if they don’t continue to offer this type of policy in the future.
Residual disability rider. This is a partial disability rider that pays a portion of your benefit for a partial loss of income. Not all disabilities are complete, so this is an important consideration for your policy. This rider is important if you should become seriously ill or injured (and would initially be covered by the “total” disability rider), but then are able to return to work in reduced hours or seeing future patients (the residual disability rider would then kick in).
Own-occupation. Few companies continue to offer this provision, although it’s among the most crucial. Some, such as Guardian, still do. The policy language usually reads like this: the company will pay benefits as long as you are not able to perform the material and substantial duties of your occupation. Defining your occupation as “plastic surgeon” and not simply “physician” is enormously important. It means that you will collect benefits if you can no longer perform hand or microsurgery, if this is what you do, even if you were able to get work in another field, regardless of the income you were producing.
It is becoming more common to find Modified Own-occupation coverage, which typically only pays benefits as long as you are not working. So if you are able to re-train or consult in another field, your benefits will stop. If you are going to put in further effort to retrain in another specialty or find work you can do to capitalize on your years of education and training, then I think you should be able to retain your benefits. Make sure you understand the policy language.
Future increase option rider. MANDATORY for young physicians. Period. This rider provides you with the ability to purchase more coverage as your income rises, without needing to undergo underwriting again (review of your medical record, exam, lab tests, etc). That means that any health problems that come up during residency or our first few years in practice will be covered.
Cost-of-living rider. Some policies offer optional cost-of-living adjustments built in. Talk this over with your broker. This is often a place where you can save cost early on.