How Much Does Physician Disability Insurance Cost?

Shopping for physician disability insurance can be a lengthy and tedious process, but it’s very important that you choose the best plan possible for your circumstances. It’s worth it to take the time to read through the different options available to you so that you can make the selection that’s right for you.

The costs of physician disability insurance plans can vary depending on coverage. Keep reading to learn more about how much physician disability insurance coverage costs.

The Cost

Premium rates are determined through the use of the following factors with respect to the insured:

  • Age
  • Sex
  • Monthly benefit
  • Optional riders
  • Occupational classification

Generally, the younger you are, the less you will be charged for insurance premiums. Your profession’s occupational classification designated by the insurance company will impact your premium rates, in addition to the policy provisions that are available to you.

The Coverage You Need

Experts commonly suggest that your physician disability insurance policies cover roughly 60-65% of your post-tax income.

Seems simple enough, right?

Unfortunately not. It’s a bit more complicated than that.

Let’s say you earn $300,000 per year, which means you earn $25,000 per month. You would need disability benefits that total $16,250 per month, which is 65% of your gross income.

Let’s say you purchase a plan with a $6,250 monthly benefit with an employer-group plan with a $10,000 monthly benefit. Logic says the total benefit should amount to $16,250, but that won’t necessarily be the case.

Since your employer covered the premium for your group coverage, your $10,000 benefit will be taxable and would only amount to a net benefit of $6,000 (presuming a 40% tax rate). Thus, your disability plans will only cover $12,250 of monthly income, which is short $4,000.

Consider Your Taxes

It’s important to understand the tax implications of physician disability insurance policies so that you purchase the proper amount of coverage for your situation. As seen in the example above, it is easy to make errors when purchasing coverage if you don’t fully understand how the process works.

If you need assistance applying for physician disability insurance benefits or your claim was denied, our team may be able to help.

We have helped many other people in similar situations, and we may be able to help you, too. Don’t delay—contact our office right away with any questions you may have.

Call Dabdoub Law Firm today at (800) 969-0488 to speak with an attorney about your case.

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