Group and Personal Disability Insurance- Do I need both?

[sealsmith217]

I currently have a personal disability insurance policy with a post-tax benefit of $9000/mo. I got this from Larry Keller (great guy) who has been featured here. I obtained it my first month as an attending and I am almost 9 years post-residency and making more money now as a partner. I am an ED doc and my group is currently reviewing Long Term group disability insurance policies. My democratic group is looking at a policy that will give each of us $7500/mo of post-tax benefit. I am uncertain whether I should sign up for the group plan due to a couple concerns.

1. Isn't the max disability benefit you can get from all policies combined cannot exceed 60% of your income? Same for physicians?

2. I do have the guaranteed insurability insurance from my personal policy up to $2000. Should I just get this instead?

3. My wife is a part-time IM physician so she can help financially in case I get disabled.

Any thoughts appreciated.

 

[sealsmith217]

Correction to #2: Guaranteed insurability rider (ie. Future purchase option)

[Scott at MD Financial Services]

1:  You can get more than 60%, that is not a rule but rather a guideline.

2:  Call Larry he is a friend of mine and a good guy, he can help you with that FPO for sure.

3:  As for the benefit needed and your wife's ability to help out you need to look at the amount of income you need coming into your household to determine benefit level on what bills you want paid then take out what you have in benefit, what your wife can bring in and then you will know your number.

[TheGipper]

Does your group have a voluntary, mandatory, or tiered group policy?

I ask out of interest because our group is looking into transitioning away from a mandatory policy, but but our current carrier is quoting almost twice the premiums to allow opt-outs.

Larry or Scott, might you have a recommendation here for a large group in which maybe 25% would want to opt out or elect a minimal tier. The group that will drop out will be heterogeneous (some close to 65, some FI, some younger docs but have enough personal portable DI already)

[Scott at MD Financial Services]

Most carriers can do what your asking but the reason they charge more per dollar of coverage is due to the fact some of the health people will leave the policy and they will be stuck with a higher portion of unhealthy than a normal group mix.  My go to carriers today for that would be MGIS, Hartford, and Standard in a group setting but you could look at a Guaranteed Standard Issue Individual policy grouping, sometimes you can get unisex and 35% discount that rivals the group plan cost but with better benefits.  In addition there are also a few things you can design into a policy that lowers the cost.  As an example why have 66% or 70% of pay not to exceed $10k on a policy when the ratio could be 50% of pay and everyone still exceeds the $10k max benefit....that is typically worth about 5-10% of premium savings.  Make sure your rep really knows the disability space, far to often we see a health insurance agent doing it and they have no idea what the differences are in the definition of disability, ways to not have SS offsets, benefit/cost ratios and the such come into play.

Most people never read these policies so at claim time it is like your birthday, a total surprise with what is in that policy.

[sealsmith217]

TheGipper wrote:

Does your group have a voluntary, mandatory, or tiered group policy?

I ask out of interest because our group is looking into transitioning away from a mandatory policy, but but our current carrier is quoting almost twice the premiums to allow opt-outs.

Larry or Scott, might you have a recommendation here for a large group in which maybe 25% would want to opt out or elect a minimal tier. The group that will drop out will be heterogeneous (some close to 65, some FI, some younger docs but have enough personal portable DI already)

Click to expand...

We have a voluntary group policy but the rates change if <75% of the group do not sign up.

[Scott at MD Financial Services]

I don't doubt that at all.  At 100% enrollment then there is no anti-selection going on thus the carrier will give a lower rate but at 75% then I would expect a cost per dollar of coverage to be 25-75% more depending on the make up of the group census.

[sealsmith217]

Also I was told to make sure and review the group insurance policy definition of "Total Disability" in order to determine whether it is truly an "Own occupation policy". Apparently the definition-

You are disabled when company determines that:

- you are limited from performing the material and substantial duties of your regular occupation due to your sickness or injury; and

- you have a 20% or more loss in your indexed monthly earnings due to the same sickness or injury.

is NOT truly an "own occupation" policy since while it protects your income, it does not protect you as  "x" specialist in the event you are disabled and choose to work in another occupation or medical specialty.

 

Anyone else have experienced that your personal disability policy differs in the definition of total disability from your group policy?