I think I found a good option for a resident DI policy

[chansen]

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?

[The White Coat Investor]

The price is right. I don't like the 180 day period much. Nor have I been much impressed with stuff that has come from the AMA in the past.

Certainly just buying ANY DI policy gets you 95% of the way there. The main problem with DI is not owning it when you need to own it. Insomuch as this policy is much cheaper, that should help. Is it better to pay a lot more in order to get a little better policy? Hard to say without getting into the nitty gritty.

[chansen]

The White Coat Investor wrote:

The price is right. I don’t like the 180 day period much. Nor have I been much impressed with stuff that has come from the AMA in the past.

Certainly just buying ANY DI policy gets you 95% of the way there. The main problem with DI is not owning it when you need to own it. Insomuch as this policy is much cheaper, that should help. Is it better to pay a lot more in order to get a little better policy? Hard to say without getting into the nitty gritty.

Click to expand...

Thanks for your input!

That was my thought process. Most residents I talk to are just sticking with the employer plan. The one I attached above is limited to a max of $2,000 a month. The AMA plan may not be the best but it beats $2,000 a month.

I quoted the 180 day on this example because she has a short term policy that pays for 25 weeks. No need for a shorter elimination period.

[canadianoutlaw]

Interesting. Will be interested to hear @lbkclu thoughts on this

[conniebird]

my understanding as Jim says is that AMA's products are inferior...if your son (or daughter?) is going to go through the trouble of getting DI, I personally would just do it "right".

[DK Unger]

Chris, the link you posted apparently does not work. The only disability insurance offerings from the AMA that I am aware of are:

• DisabilityPro - the AMA plan that most are aware of


• Student Disability Income Insurance - not the one you are referencing


• Med Plus Advantage - https://www.medplusadvantage.com/assets/Res_Bro_FINAL(WEB)2016.pdf

Subject to full review of the contractual provisions, the premium is attractive and would make the plan a serious consideration until the resident has their post-residency employment agreement secure.

[chansen]

DK Unger wrote:

Chris, the link you posted apparently does not work. The only disability insurance offerings from the AMA that I am aware of are:

• DisabilityPro – the AMA plan that most are aware of


• Student Disability Income Insurance – not the one you are referencing


• Med Plus Advantage – https://www.medplusadvantage.com/assets/Res_Bro_FINAL(WEB)2016.pdf

Subject to full review of the contractual provisions, the premium is attractive and would make the plan a serious consideration until the resident has their post-residency employment agreement secure.

Click to expand...

Sorry, the site is amainsure.com/residentsdisability

[chansen]

I had a long talk with Larry Keller of Physician Financial Services today. He has a copy of the actual contract for this policy (something I have not been able to get my hands on). He has convinced me that his is not a good idea. Aside from the obvious shortcomings, there are many more issues in the actual policy details. I'll update where appropriate when I can. At this point I am not pursing this option further.

Larry went out of his way to call me and point out the issues with this plan. I would like to thank him very much for doing so.

[Scott at MD Financial Services]

If you can get past the sustainability of the premium increases, the 'total and continuous' clause in the waiting period, the issue that it is not a true own occ, the fact they can change your premium and the terminology of the contract anytime they want.....then it is a pretty good deal.  That is my sarcastic answer but just be mindful that the association plans typically all have the same style of terminology which when it is then able to eliminate probably 50% of the claims then you can start to have that aha moment where you go 'that is why it is so cheap".

[Scott at MD Financial Services]

Rex, somewhere I do so I will look it up over the next few days but the other thing in the mean time is to think about how many patients get told to go home an don't go to work for 90 or even 180 days straight where you can work at nothing vs. maybe go home for a period of time but then light duty.  If you are not Totally disabled and continuously then you are not claim eligible.  Guardian and Ameritas have a 15% loss of income to trigger benefits.  Mass, Ohio, Principal, and Standard all have a 20%.  No matter which carrier you use 15-20% is far different threshold than 100%.  I will look it up and get back to this tread in a few days.