Disability insurance advice!

[radrads]

My wife and I just started as attendings. We signed up for disability insurance in residency with NWM (I know, ugh). We have recently looked around for quotes from insurers that offer true own occ. insurance. We maxed out our potential benefit with NWM while we were in training before our group LTD was considered, so the current available private benefit max we are being offered is half of what we are currently covered for with NWM. My question is, should we drop the NWM policies for stronger language on the true own occ or should we hang on to the NWM policy in order to maintain the higher benefit amount?

[Ed_CLU]

If you have the Medical Occupation Definition it could be worth looking at a policy change to the Medical Own Occupation Definition with NM.  This would take you from a modified own occupation to a transitional own occupation.  In my opinion a higher benefit amount of transitional own occupation would be more valuable than a lower amount of true own occupation.  The chances of you truly benefiting from true own occupation (i.e. double dipping, or earning a new salary while also being paid a full benefit) are miniscule compared to the chance of having a "normal" disability where you are not working at all.

[DK Unger]

Ed_CLU wrote:

In my opinion a higher benefit amount of transitional own occupation would be more valuable than a lower amount of true own occupation.  The chances of you truly benefiting from true own occupation (i.e. double dipping, or earning a new salary while also being paid a full benefit) are miniscule compared to the chance of having a “normal” disability where you are not working at all.

I've seen cases where it's possible to purchase the same or higher benefit amount of true own occupation coverage with one of the Big 6 carriers for the same or lesser amount of premium for a Medical Own Occupation (transitional own occ) policy with NML.

[RosieQ]

I think you can apply for a new DI policy listing the current policy that it will replace, and that your new policy will be contingent on dropping the old one? Pretty sure I did that when I adjusted coverage midway through residency.

[Ed_CLU]

The issue at hand is that they probably qualified with NM at new professional limits with no financial underwriting. Now that they are attendings, with group coverage in force, they would qualify for LESS individual coverage than what they placed during residency. Many companies do have higher participation limits than NM, so it could be worth looking into, but may be tough to replicate the amount.

Based on your comment "I know, ugh" it might help you rest better at night to know NM sells more policies in the medical market than any of the "Big 6", so you are in good hands.

[Scott at MD Financial Services]

It all comes back to the I/P (issue and Participation) limits of each carrier.  Depending on your income the carrier may or may not issue as much coverage as you currently have with NWM due to you now having the group policy in place. Find an agent that knows what they are doing in the DI space, share with them your income, the % of income your group policy will cover, what the max issue is of the group plan and then the software systems will produce the amount of coverage that the carrier is willing to put on the line.  Every carrier has a slightly different benefit they would put on the line based on income so have the agent check with all of them to see who best fits your needs.

Let me know if we can be of further help.