Disability insurance

[newinvestor]

I have my own individual disability insurance through MetLife and my new practice is offering group short term and long term disability insurance. Is it worthwhile to buy group disability insurance as additional on top of my individual insurance? Thanks in advance.

[DK Unger]

It depends on the exact details of your employer's LTD policy. Request a copy of the certificate of coverage and review with an experienced broker. Generally speaking, they contain more limitations. You would be better protected by purchasing more individual coverage.

 

Have you already maximized your individual coverage?

 

If not, do you have a future increase/purchase option on your individual policy? I would recommend using that to increase your coverage.

 

If you cannot qualify for more individual coverage, then I would consider enrolling in your employer's LTD policy.

[LBKCLU]

Are you a "new" Attending? If you completed your residency or fellowship in the last 24 months, you automatically qualify to increase your MetLife policy's monthly benefit to $7,500 month under their "Starting Practice" limits regardless of whether you purchase the group LTD or not.

However, if your individual plan is not at the maximum based upon your current income, I would recommend you waive the group LTD plan and exercise the GIO Rider on your individual policy.

Group LTD has many limitations associated with it - both in terms of contractual provisions, as well as, how the claims process is handled.

As for Short Term Disability (STD), it is generally not a good value for the premium and your money is better spent elsewhere and just added to your emergency fund.

Hope this helps.

[newinvestor]

Thank you for the responses. I have been in practice for four years and have already maximized my individual coverage with MetLife to $11,400 monthly benefit. I am debating now whether to add Group LTD to it. Most other physicians in the practice have group LTD but I am not sure if they have their own individual policies too.

[InsureIncome]

Group LTD isn't the same as your individual disability insurance policy.

Group LTD is a promise to pay a percentage (typically 50%, 60%, 66 2/3%) of earned income (salary only; salary and bonus; salary, bonus and commission) to specified maximum (as determined by your employer) MINUS a long list of benefit offsets including: State disability, Social Security Disability, Workers comp, other work earnings for any source, among others.

Group LTD also offers a "minimum benefit" of $100-$300/mo because depending on your plan's benefit cap and your offsets, you may only receive the minimum monthly benefit.

Request a copy of your certificate (you are not the policyholder, your employer is), verify the offsets and do simple math to determine your likely cash benefit payable.

Group LTD provides a significant service benefit even if only the minimum monthly benefit is payable; the insurer has significant skin in this game, if they don't recover the offsets, they pay a cash benefit. Needless to say, LTD insurer are excellent advocates for recovering offsets. Unless you're as effective at recovering the offsets as the LTD insurer, you're well served by paying pennies on the dollar for professional advocacy.

Generally, if your earning exceed the FICA cap ($118,500) expect offsets of at least $5k/mo.