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Own Occupation Disability Insurance for Physicians

Long-Term Physician Disability Insurance


Long-term disability insurance typically covers severe injuries or illnesses that thwart or prevent your ability to work for many months or years, or even for life.

Waiting Period

If you endure a disability, you won’t be able to receive benefits as soon as tomorrow. You may be able to start receiving benefits in just a few weeks, or as long as two years. The length of time you have to wait depends on the elimination period that you designated when you signed on for benefits.

Length of Benefits Receipt

Your long-term disability benefits may last anywhere from five to ten years, or in certain cases up to age 65.

How Insurance Is Provided

Long-term disability insurance is typically offered through a group plan, although it is likely in your best interest to purchase an individual policy.

Read on for more details about the information above.

What is Physician Disability Insurance and Why Do I Need it?

If you’re a physician, you’ve probably already considered your life insurance needs, but that’s not the only type of insurance you should think about. Statistically, you have a higher probability of enduring a disability that impacts your work than you do of dying.

While some physicians may have the capital to handle the financial burden of a disability, most require disability income insurance to help with the mounting costs associated with a disability.

Over the last 10 years, disability insurance planning has transformed into what it is today. The insurance industry provides several opportunities to help you secure your most profitable resource—your skills in earning money.

Disability Insurance for Physicians

While an increase in disability insurance options for physicians provides you with more choices than ever, it also makes shopping for the right insurance policy more of a challenge.

You may purchase disability insurance on an individual or group basis.

It’s common for individual plans to be purchased with a local agent, but in some cases, you may also buy a plan over the phone or online using the insurance company’s website.

You’ll most likely be issued disability insurance coverage that equates to about 60% of the income you earn.

In addition, your employer may provide group insurance, or you can purchase it individually using a sponsoring professional association. If your employer provides you with group long-term disability (LTD) insurance, or if you’re switching employers, you may be able to supplement individual disability insurance. Your individual policy won’t be impacted by accepting a group LTD policy. Although, if your individual policy hasn’t already reached its maximum, doing this may prevent you from being able to increase your individual plan.

Disability Insurance Expenses

The following personal elements will be taken into consideration when your premium rates are developed:

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

The industry standard is to charge lower insurance premiums for younger policyholders. In addition, your occupational classification and policy provisions will impact your premium rates.

How Much Physician Disability Insurance Coverage Do I Need?

The Amount of Coverage You Require Depends on Your Needs

If you’re a doctor, you’ve invested quite a bit into your career and the income you’ll earn because of it. In the event you become disabled, you’ll need to ask yourself the following question:

“How much of my income would I like to protect?”

It’s common for insurance companies to offer 60% of earned income in insurance coverage. While this may seem like enough, it might not be.

Consider this analogy: Think about homeowner’s insurance. If your entire house is devastated in a flood, how much of it would you want to replace? Just 60%, or the whole thing? Most likely, you’d hope to replace it all.

Disability insurance coverage is very similar. In the event you become disabled, you’ll probably want enough coverage to supplement as much of your income as you can.

Recovery Benefits

Recovery benefits are particularly important if you’re self-employed and only rely on the number of patients you see for your income. Some policies provide an unlimited recovery benefit in the residual disability rider, but others provide it as its own rider.

If you become ill or are injured, but you’re still able to work because you are not fully disabled, you’ll be able to rely on your policy’s residual disability rider to help supplement your lost income.

Retirement Plan Contributions

Your group or individual disability insurance plan is typically only responsible for covering a portion of your current income, but won’t replace any monthly contributions you make into your retirement plan. However, some disability insurers have designed policies particularly to cover retirement savings that you miss out on when you’re disabled.

If you become disabled, retirement protection disability insurance will help you continue saving for retirement. In the event you are disabled, this plan provides the amount you contribute monthly toward your retirement plan and places it into a trust for you. You may invest money into the trust at your own will until you turn 65 years of age, at which point it will help supplement your retirement income.

This type of policy tends to provide a benefit of no more than $3,800 and can commonly be included with existing coverage.

Keep in mind that any benefits you receive from the policy and earnings in your trust are subject to taxation. It’s common for trust earnings to be taxable to the insured—the beneficiary of the trust.

Total Disability

It is important to understand that every physician’s disability insurance policy has its own definition of what “disability” means. Several insurance companies’ definitions tend to be relatively similar, but each is nuanced in its own right.

With that said, total disabilities are debilitating and longer-lasting disabilities. If you suffer a total disability, you are unable to work in your own occupation. Depending on the language of your policy, you may also be unable to work in any occupation—taking your training, education, experience, and financial situation into consideration.

Total Versus Partial Disability

Although you might meet the definition of total disability under the terms of your insurance policy, your insurance company may try to classify you under the partial or residual disability provision in order to reduce the monthly disability payment you get.

What exactly constitutes total disability versus partial disability depends on the facts and circumstances of each claim. But there is a threshold that crosses over from partially disabled to totally disabled, such as when a surgeon stops performing all surgeries or the most significant surgeries that made up their practice.

Many people believe you must completely stop working before you can be considered totally disabled under your insurance policy, but that is not always the case. This is especially true for physicians who have own-occupation disability insurance.

An Individual Policy Versus a Group Policy

The following are characteristics of group long-term disability insurance plans:

  • Benefits are taxable if your employer pays the premium.
  • Benefits are calculated on a percentage of base income.
  • Bonuses and commissions aren’t usually covered.
  • Benefits tend to be reduced during a period of disability if you collect benefits from another source or work in a different occupation.
  • Definitions within the policy are more restrictive.
  • Benefits eligibility may require you to be unable to work in ANY occupation.
  • There are no rate guarantees.
  • Partial disability might not be covered.
  • The policy can be altered or eliminated by the insurance company or your employer at any given moment.
  • The policy is tied to the employer and typically not portable.

The following are characteristics of individual disability insurance plans:

  • If you pay the premium, your benefits are tax-free.
  • A quality plan will cover you in your own occupation or specialty.
  • The definitions within the policy are more liberal, which means you’ll receive more money in more claims scenarios.
  • The monthly benefits are higher.
  • The benefits may increase with inflation.
  • Your rate will be guaranteed until you reach age 65.
  • You own the policy, so you can take it with you to a new job or occupation.

Why Don’t Group or Association Plans Cost as Much as Individual Policies?

Group and association plans are less costly because of the following:

  • They can be altered or terminated by the insurance company.
  • The insurance company may raise the rates in the future.
  • Benefits are offset by other income and coverage sources.
  • Claims are paid in fewer scenarios because of the limited definition of disability.

How Can I Compare Various Disability Policies?

You can compare various disability policies using the following criteria:

  • Contractual definitions
    • The language that determines what constitutes a disability, policy exclusions, renewability provisions, etc.
  • Contract structure
    • The benefit period, elimination period, benefit amount, etc.
  • Policy riders
    • Cost of living, residual benefit, future purchase benefit, etc.
  • Insurance company financial strength ratings

Disability plans can vary widely from company to company, which makes it challenging to compare solely on price.

How Do I Decide on the Right Company for My Needs?

It’s crucial that you find a strong, financially stable insurance company that will have the ability to pay your benefits if you need them. You can use insurance company ratings as a tool to evaluate the financial strength of an insurance company.

Where Can I Find Insurance Company Ratings?

The best way to learn about rating information is to contact the rating service directly. You may also be able to find this information in books and magazines at your local library. If you’d like someone to gather the information for you, request the research from your insurance agent or financial planner. The following are some major rating services and their contact information:

Can I Purchase Coverage Even if I Have Medical Problems?

Gaining coverage will depend on the type and severity of your medical ailments. The insurance company has three choices:

  • Charge a higher premium for the policy.
  • Exclude the condition from the policy.
  • Decline insurance altogether.

What Are Some Typical Policy Exclusions?

Typical policy exclusions include:

  • Mental/nervous disorder
    • Companies will sometimes limit benefits to two years.
  • War or act of war
  • Normal pregnancy
  • Active military duty
  • Foreign travel
    • Only in certain policies.
  • Medical exclusion

Don’t Forget About Taxes

The amount of compensation you’ll receive depends not only on the amount of coverage you carry but also on the type of plan you have. The taxes you’ll owe may differ depending on your policy and who provides it.

If your policy is part of a work benefit, you’ll need to make sure that you purchase enough coverage to bring home the amount you need while accounting for the taxes you’ll owe. However, if you purchase private insurance outside of work, you won’t have to pay taxes on the benefits you receive.

In short, if your work provides your benefits, expect them to be taxed and plan accordingly. If you purchase your own benefits, you’ll only need to account for the amount of money you take home after taxes.

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. The costs of physician disability insurance plans can vary depending on coverage.

The Cost

As mentioned above, 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.


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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.

When is the Best Time to Purchase a Policy?

Since premium and policy eligibility are hinged on your age and health status, it’s best to purchase a disability insurance policy when you’re young and healthy. Pre-existing conditions are not usually covered and severe medical ailments may prevent you from obtaining coverage. This means the sooner you apply for coverage, the better off you’ll be.

Physician Disability Insurance Purchasing Process

Request Multiple Quotes

Shop Around

When you’re in the market for a physician’s disability insurance policy, it’s in your best interest to do a little shopping. It’s a good idea to ask for several quotes from various insurance agents. Not all policies and not all agents are created equal, so buyer beware.

After you speak with multiple agents, it’s your responsibility to select the best product for your needs at the best price. It’s wise to request quotes from no less than three insurance agents.

Be Honest About Your History

You’ll want to let them know about your medical history so that they have a clearer picture of the products you’ll need. Tell them the truth so that they’re able to suggest the most appropriate products for your needs.

Ask About Discounts

While insurance agents should present you with all of the available discounts, this isn’t always done right off the bat. Be sure to ask about any available discounts so that you’re sure you’re getting the best price.

Don’t Give Your Money to Just Anyone

Keep in mind that insurance agents earn a commission for selling you their company’s products. That’s the name of the insurance game. If you have to give your money to someone, they might as well be the person who is willing to provide you with the prime product at the lowest cost.

Physician Disability Insurance for General Physicians

Most of the leading doctor disability insurance companies offer coverage at similar rates. Each policy is unique in its own right, so it’s wise to read the fine print before signing on the dotted line.

Most plans for general physicians offer a $5,000 benefit with a 90-day waiting period and will provide benefits until age 65. In addition, most plans will also offer the following benefits:

  • Own-occupation - You’ll collect a disability benefit if you’re unable to work in your true profession, even if you’re physically able to work other jobs.
  • Partial or residual disability - If you can work but not to the degree of your ability before you became disabled, you’ll still be able to collect a partial benefit.
  • Future buying possibility - You’ll be able to buy more coverage later on in life without having to endure the underwriting process again.
  • Non-cancelable - Your rates won’t be eligible to increase.
  • Automatic increase benefit - Automatically elevates the benefit for the first four to five years of the plan.

Of course, the cost of your specific plan will depend on your individual needs, so it’s a good idea to speak with a licensed expert about your situation.

How Disability Insurance Companies Unfairly Contest Long-Term Disability Claims

It is often the case that people submitting claims for long-term disability benefits to disability insurance companies do so naively. The mistaken belief is that insurance companies will appreciate the nature of the medical condition and recognize that the person would much rather lead a happy, productive work-life rather than be disabled from work.

In reality, however, long-term disability claims are difficult to get approved, and lawsuits can be even more difficult to win. The purpose of this article is to bring to light the difficulty in getting a disability claim approved in general, and a disability claim based on ME/CFS in particular.

ME/CFS Claims

Insurance companies are especially antagonistic towards CFS. Although significant medical advancements in diagnosing and treating CFS patients have been made, and though there has been a slow erosion of public misunderstanding of the illness, insurance companies continue to deny perfectly valid CFS disability claims. But denying long-term disability claims creates financial hardship and life stressors that can exacerbate the medical crisis of those suffering from CFS.

The failure of the law to afford legal protection to people with disability claims is perhaps the most significant reason insurance companies deny valid claims for long-term disability benefits. Not only is the law unfavorable, but the law arguably creates incentives for insurance companies to deny claims.


Most long-term disability insurance claims and lawsuits are governed by a federal statute called the Employee Retirement Income Security Act of 1974 (“ERISA). If the claim for disability benefits is made under a group disability insurance policy obtained through employment (as opposed to an individual disability insurance policy purchased directly from an insurance company or broker), then chances are ERISA applies. Conversely, state law governs individual disability insurance.

The difference in law is significant. Whereas most states have insurance laws that provide adequate safeguards and legal recourse to challenge denied disability claims, ERISA falls way short in this regard. A memorandum by an insurance company executive succinctly summarizes the disadvantages of ERISA to the unwary person fighting to get disability benefits approved:

. . . state law is preempted by federal law, there are no jury trials, there are no compensatory or punitive damages, relief is usually limited to the amount of benefit in question, and claims administrators may receive a deferential standard of review.[1]

One federal judge – Judge William Acker, Jr. – has been vocal about this disdain towards the federal statute, remarking that ERISA stands for “Everything Ridiculous Imagined Since Adam”.[2] The irony of ERISA is that one of the stated purposes the United States Congress enacted the statute was to “protect . . . the interests of participants in employee benefit plans and their beneficiaries” by setting out substantive regulatory requirements for employee benefit plans and to “provid[e] for appropriate remedies, sanctions, and ready access to the Federal courts.” 29 U.S.C. § 1001(b).

No Jury Trials

It’s no secret that insurance companies are disliked by most juries, but no jury trials are permitted in ERISA disability cases. Rather, a federal judge will decide who wins and the law may restrict the judge to considering only the documents in the claim file created by the insurance company during its review of the disability claim. Add to that limitation the fact that the judge may also be required to “defer” to the insurance company’s decision, meaning the insurance company loses only if the judge believes its decision to deny benefits was not just wrong, but also completely without a reasonable basis.

There are simply no teeth in the law to hold insurance companies accountable for the consequences to a disabled person when benefits are denied. An insurance company that loses a lawsuit – and they actually win most – will only be required to pay the benefits it should have paid in the first place (and likely your attorney’s fees). As should be obvious, the unintended consequence of ERISA is that it has created an incentive to deny disability claims.

Claims are Regularly Denied

It’s no wonder insurance companies will deny long-term disability insurance claims. CFS disability claims are particularly vulnerable because the illness, and disability because of it, cannot be proven using “traditional” medical testing (such as MRIs, X-rays, CT Scans, or other diagnostic tools). Insurance companies are aware that this sort of medical proof is not available. Yet, they routinely demand “objective” proof of disability in order to approve a CFS disability claim.

Another tactic employed by insurance companies is to hire a physician who either does not believe in the existence of the illness or does not have the medical expertise in CFS to examine the disabled person for the purpose of giving a medical opinion. Insurance companies will also have the person’s medical records reviewed by a physician it knows or should know is hostile towards CFS or just does not have the appropriate medical background.

Demanding “objective” proof of disability where no such proof exist can successfully be argued is unreasonable, particularly if the disability policy does not require such proof. An insurance company’s decision to retain the service of doctor(s) that lacks the appropriate expertise in CFS is also unreasonable.

While many legal arguments can, and should, be made, working closely with the treating doctor(s) to provide a mountain of medical evidence that proves disability will also help immensely. Focus on providing other forms of evidence that can be considered “objective” evidence, such as repeated clinical findings upon physical examination and clinical observations by the treating physicians. Getting under the care of a physician with expertise in CFS further strengthens this type of medical proof.

Medical questionnaires specific to CFS should also be completed by treating physicians and submitted to the insurance company. Also, while no test is perfect, some tests are better-suited for establishing physicals restrictions and limitations for illnesses like CFS. The CPET is one such test and it can be a useful tool for establishing disability since post-exertional malaise – one of the hallmark symptoms of ME/CFS – is factored into the testing.

Finally, it is important to send all available proof of disability as soon as possible. Once the insurance company denies a long-term disability appeal, no additional evidence will be accepted by the insurance company and possibly even by the federal court in any ensuing lawsuit.

Despite the uneven playing field in long-term disability claims, understanding why insurance companies deny perfectly valid claims and what to do about it will increase the likelihood of getting disability benefits paid.

[1] John H. Langbein, Trust Law as Regulatory Law, 101 Nw. U. L. Rev. 1315, 1321 (2007).

[2] This comment was imbedded in Judge Acker’s decision in the case of Florence Nightingale Nursing Service, Inc. v. Blue Cross and Blue Shield, 832 F. Supp. 1456, 1457 (N.D. Ala. 1993), affirmed, 41 F.2d 1476 (11th Cir. 1995).

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