Disability Insurance in Residency

[midwest_doc]

I am 18 months from finishing a surgical residency and a few years ago I took out an individual disability policy with a $5,000/m benefit.  I recently was mailed an offer to increase my benefit with the same company, Guardian.  Are there any strong opinions on whether I should increase my benefit now or wait until I finish training?

[Peds]

If you can afford it,there might be a discount while in fellowship, so ask! Also look to see if the % increase would change based on your future income vs a fixed rise.

[Scott at MD Financial Services]

You should already have the discount built into your policy that will stay with your policy for the rest of the policy life.  If you need more coverage then get it but keep in mind most of the time while in residency your premium only goes up by about 4% for every year you wait to purchase.  In other words if your cost per month for each $1,000 of monthly benefit is $20 (as an example) today then next year at your then older age it might be $21.  My theory is 'buy what you need and option what you might want or need in the future'.

[WallStreetPhysician]

I am by no means a disability insurance expert (does Larry Keller post on this forum?), but make sure you don't already have an option built into your current DI to increase your benefit without an additional medical exam.  Your ability to increase your benefit is typically associated with having an attending salary, so you might not be able to do this until you graduate residency.

[ProtectionSpecialist]

I assume the letter is to notify you that you're in the "window" to exercise your future increase option (this is the benefit that allows you to increase coverage without a medical exam).  At $5,000/month, you are already insured for the maximum amount of coverage available to a resident.  This makes your decision easy!  You can rest assured knowing you are insured for as much as you can be for now.  Once you are a fellow OR in private practice and earning over ~$100k/year, you will be eligible to increase beyond your $5,000.

NOTE:  One way the company does allow you to surpass the $5,000 mark as a resident is through the Automatic Benefit Increase (ABI).  If your premiums are Level, then you may have this benefit on your policy.  ABI automatically increases your benefit by 3% on the first 5 policy anniversaries, unless you opt out.  Your letter might be in reference to this benefit.  If maximizing your income protection is important to you, I'd take advantage of this offer.