Disability Insurance for Two Residents

[mrm2017]

Hi Everybody,

So I've been reading a lot about disability insurance from this site and elsewhere but I still cant seem to figure out what to do! My wife and I are both incoming residents, her to EM and me to Plastics. We are given an individual disability insurance policy through a company which is set up through the residency program. The GME office then provides funding up to a certain premium, which would give us about 4k in disability each. However, I'm guessing that this policy ends after residency. Therefore I'm wondering if I should take out a separate policy from one of the big 5 for 1k (or if that is even possible) that I can upgrade after residency for a lower premium?

If so, then I have another question. Should my wife and I each get the extra disability policy? We will both be high income earners; she will earn money 3 years earlier, but I will likely make more eventually... I'm thinking in the long run it would be better to just have the higher earner have a policy just in case we both get hurt.

Thanks for the help!

 

[Dreamgiver]

Yes, you both get own occupation disability policies from one of the major companies. Group coverage is usually bottom of the line coverage, pretend you do not have it. I'd get up to the maximum they let you buy (usually $3500-4000/month for a resident).

[DK Unger]

If you PM me the details/certificate of coverage for the individual disability insurance policy offered through your GME office, I can compare it with the comprehensive options available in the marketplace. Even if that policy is convertible/continuable beyond your residency, it will likely not have the robust riders generally recommended to residents (COLA, FIO).

[The White Coat Investor]

I'd probably take everything they'll sell you as a resident, but an argument could be made that you are each other's disability policy.

[Anesthesia84]

As residents, my husband and I had our own occupation coverage with Principal but it was minimal (as in, it would not cover our student loan payments if we couldn't work). We got it because then after residency, we could increase our coverage. We will be each other's policy one day as WCI mentions but until we are in a better place financially we are keeping it around.

I finished residency in 2014 - anesthesia. My husband is finishing this summer - cardiology. Our 401k/403bs are fully funded every year, as well as backdoor roths and HSA but we have not started a taxable account or 529s. We still have >400k in student loans and pay ~7k/month. We are buying a house with a mortgage of ~360k. Oh, and we have 3 kids that we need to pay for childcare and college! So at this point we feel it is safest to keep our policies. Tentatively, once the student loans are paid off and we have a good chunk put into a taxable account (after my husband starts his job, our plan is to put in 4-5k/month to jump start it), we could easily live off of one salary so no more need for the disability policy.

[FutureDoc]

I'm also part of a dual resident couple, and I echo WCI's comment that partially you are each other's disability policy.  That being said I think it's probably most reasonable to get insurance for one of you in residency and then pick up larger policies (or use the increased coverage rider) for both of you when your wife is about to start as an attending.

 

Best of luck, and make sure to get your loan repayment in order before starting residency, you will be getting a lot busier soon!

[Scott at MD Financial Services]

By buying it now you can also lock in a basic but good contract for about $25-$35 per month per $1,000 of monthly benefit.  As you needs go up you can always increase it with you future purchase options.  Then as your assets are built/building and your debt is going down you can start to then extend the waiting period and reduce the benefit amount to give rate relief as your needs dissipate.