I think I have found a really good disability insurance option for residents.
I have been looking for a reasonable disability insurance option for my son (first year resident) for most of the last year.
Problem: Resident disability insure is inadequate in many cases. Most resident based plans cap out at a specific amount ($2000/mo) or 66 2/3% to 75% of salary. With the average resident salary for 2016 of $52,200, that works out to $34,800 - 39,150 a year to age 65. That is not adequate.
To buy a “young professionals” $5,000/month policy from Guardian, Principal, most other good names, the cost can be $1,700 to $3,000 a year. Not a bad price for the amount of insurance but that represents 3% to 6% of a first year resident’s income. It is very difficult to convince an invincible 27 year old to spend 3% - 6% of their income on disability. In some cases, their cars aren’t worth that much.
Possible solution: AMA came out with a new resident’s disability policy last year that appears to deal with the cost issue and still provide a quality policy. A $5,000 own occ. policy with a 180 day waiting period costs only $337.32 a year. This appears to be a much better solution than all of the other “specialty” DI policies I looked at. The AAP offering for example was horrible.
I am attaching a spreadsheet I put together for a pediatric/psychiatrist resident. I think the AMA resident disability policy looks like a great solution. You can see some of the details at www.amainsurance.com/residentsdisability. Unfortunately, I have not gotten a contract in hand. I have a couple of people with outstanding applications. As soon as I get a policy in hand, I can post more details.
Questions: Have people had experience with AMAinsurance? Any problems?
I am not a DI insurance expert. I am a CFP and am pretty well versed, but I do not consider myself an expert. Am I missing something?
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