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  • Disability insurance for a 2 doctor couple

    Hello all,

    My wife and I will both be graduating fellowship this June. We are both looking to purchase long term disability insurance prior to leaving fellowship.
    My question is, if we both need to purchase the maximum amount of disability insurance on the policy or is it reasonable to have a lower policy for both?

    We are both 32 years old and will both make $280K each upon starting our new attending jobs.
    Thanks you your help!

  • #2
    I think you don't need to get the max as there has to be SOME benefit for being in a 2 doctor couple compared to a stay at home parent and lots of dependents.

    My favorite approach (and assuming you're on this forum and are likely a financially literate aggressive saver) is to look into reasonably high amounts of coverage but with a graded plan. I got one through Guardian but basically it's WAY cheaper and gets progressively more expensive each year. For me the graded was cheaper than the fixed for 12 years with net out of pocket break even around 20 years, plus time value of money likely even beyond 20 years. I think you can make a clear plan to not need DI, perhaps beyond a cheap and basic group plan after 12-20 years making graded the way to go while still giving you a nice early career cushion.

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    • #3
      I would purchase about as much as they'll let you if there's talk of one of you being stay at home in the future. There is a non-zero chance that you could both become disabled, i.e. car crash.

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      • #4
        Buy as much as you need, not as much as you qualify for.

        Keep in mind divorce rates increase after one partner develops a significant disability. You might think this would never happen to you but at least consider it.

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        • #5
          There was a recent blog post reviewing this.

          I do not think you need both get maximum policies. Get enough that you can live reasonably on and still enjoy life in the small chance you have to use it.

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          • #6
            The key is figuring out what the income needed if one gets disabled. One substantial income will remain (both are not wiped out), a safety net. For certain, the change from a dual income physician couple to a single earner will be a drop. It will come down to how much you are willing to pay for. Different math for two incomes than one. Protecting both partially is probably a better purchase now than later. The second income is a safety net to an extent.

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            • #7
              This is all great information to consider, thank you all for you insights!

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              • #8
                Originally posted by NeuroDoc88 View Post
                Hello all,

                My wife and I will both be graduating fellowship this June. We are both looking to purchase long term disability insurance prior to leaving fellowship.
                My question is, if we both need to purchase the maximum amount of disability insurance on the policy or is it reasonable to have a lower policy for both?

                We are both 32 years old and will both make $280K each upon starting our new attending jobs.
                Thanks you your help!
                Buy what you need now, have options for what you might want in the future. Most of our clients in that same situation acquire about $7500 each and then see how the first few years of being an attending shake out to then re-address the situation.
                Scott Nelson-Archer, CLU, ChFC
                281-770-8080 Direct / [email protected]

                Comment


                • #9
                  When evaluating how much you need, I believe you also should re-evaluate your budget in light of one spouse being disabled. Extra medical care, time off for non-disabled spouse, potential need to move, nanny for for children, etc. When calculating the amount, we add an extra $20k/yr as a guesstimate and increase per client’s estimates.
                  Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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                  • #10
                    Originally posted by Hoopoe View Post
                    I think you don't need to get the max as there has to be SOME benefit for being in a 2 doctor couple compared to a stay at home parent and lots of dependents.

                    My favorite approach (and assuming you're on this forum and are likely a financially literate aggressive saver) is to look into reasonably high amounts of coverage but with a graded plan. I got one through Guardian but basically it's WAY cheaper and gets progressively more expensive each year. For me the graded was cheaper than the fixed for 12 years with net out of pocket break even around 20 years, plus time value of money likely even beyond 20 years. I think you can make a clear plan to not need DI, perhaps beyond a cheap and basic group plan after 12-20 years making graded the way to go while still giving you a nice early career cushion.
                    This is exactly what we did. Guardian graded plan for me but didn't make as much sense for the wife when we ran the numbers.

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                    • #11
                      You should buy as much as you can now, because your incomes will very likely increase significantly in the future, so the most you can buy now will end up becoming closer to just right as you make more money.

                      I guess there are plans with options to increase later, so if you can get a better deal doing it that way, you can consider it. You've just got to run the numbers.

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                      • #12
                        My wife and I went with no disability coverage. About 10 years out of residency and nearing FI we are happy with the decision.

                        Ignorance is bliss. If we did it over again we would probably just get a plan to cover living expenses for each in the event of disability for one person with the other one working.

                        [we might have saved $50,000 in premiums over the last decade with no disability insurance].

                        A caveat: we are super savers with low cost of living, so your mileage may vary.

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                        • #13
                          I am a neurologist and wifie is anesthesia. we got disability policies for each of us but only maxed out what I could get, but only got half of what she could get as she was not planning on working forever as part of our financial plan, having the option to FIRE in 10 years. based on that, if she got disabled we weren't going to compromise financial goals, lifestyle, etc. also, women are more expensive as well. because you and wifie are both docs, you really don't have to have full benefit if both of you are planning for long career, maybe half of the needed benefit. again, have to calculate if doing that meets your financial goals

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                          • #14
                            Originally posted by jfoxcpacfp View Post
                            When evaluating how much you need, I believe you also should re-evaluate your budget in light of one spouse being disabled. Extra medical care, time off for non-disabled spouse, potential need to move, nanny for for children, etc. When calculating the amount, we add an extra $20k/yr as a guesstimate and increase per client’s estimates.
                            Permanent disability comes in many flavors. An additional issue is you might be saving for two retirements. No recommendations, but a formerly dual income couple is now dealing with that now they are one one physician income. The benefits will end in 25 years. Consider retirement savings as a need.

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                            • #15
                              The reality is it is better to have it and not need it than to need it and not have it. I have never had a client at claim time say they had to much disability benefit coming in. Buy the coverage and when you don’t need it then get rid of it. You can even decrease the benefit as you accumulate wealth and your needs diminish.
                              Scott Nelson-Archer, CLU, ChFC
                              281-770-8080 Direct / [email protected]

                              Comment

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