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Disability insurance in residency

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  • Disability insurance in residency

    I'm a healthy urology intern currently making the typical ~$50k/year. When I started residency, our program pushed for us to (appropriately, in my opinion) sign up for the AMA disability insurance. I've read the very helpful WCI articles about this topic. As far as I can tell, this AMA policy is own-occupation (MD) but not own-specialty, has a 90 day waiting period, no COLA, and thereafter would provide $5k/month for the rest of my life while disabled. The premium I pay now is something like $20/mo, which is deducted from my paycheck pre-tax. Importantly and expectedly, there is no future purchase option for more coverage.

    Without getting bogged down in the details of disability insurance, the situation strikes me like this: if during residency I became totally disabled and couldn't practice medicine, I would receive $50k/year pre-tax for the rest of my life. Even now that's not a lot, but a few decades from now I'd be in real trouble. It essentially feels like I'm not really insuring against the catastrophe that I'm intending to insure against.

    Have any of you purchased own-specialty coverage while in residency, with a future purchase option for more coverage? That's essentially the policy that I'm interested in, right? I don't exactly want to spend my free day/week on this, but I'd be curious to hear in general strokes whether anyone has tried this/done this/found it to be worthwhile.


  • #2
    While I'm not a physician and sell insurance for a living, I can tell you that a very large numbers of my clients purchased their policies during residency or fellowship.

    Ideally, you want a policy that is Non-Cancellable and Guaranteed Renewable with a true "Own-Occupation" definition of total disability to the age of 65 (or longer). Also included should be a Residual Disabiity Rider, a Cost Of Living Adjustment (COLA) Rider and a Future Increase Option Rider.

    Based upon your specialty, you might even want to consider purchasing your coverage from two carriers to allow you to potentially reach a higher limit ($25,000-$30,000 month) than any one carrier will allow in their own ($15,000-$17,000 month).

    The cost for this will not be very different compared to buying coverage from only one carrier (at least for make physicians). You can also consider using a graded premium structure to reduce your initial premium outlay.
    Lawrence B. Keller, CFP, CLU, ChFC, RHU, LUTCF


    • #3
      I have two overlapping policies with Ameritas and Principal, bought during residency, as I am "healthier" and "younger."  Would have never done this unless I found this website, we have very limited education in regards to this in residency.  (Just as we have little to no "business" education in residency).