Disability Insurance Advice for Mid Career Emergency Medicine Physician

[srscutmonkey]

Dear WCI, LBK, et al,

I would very much appreciate some objective advice regarding disability insurance.

I am a mid-career Emergency Physician.  I currently have three policies, each with a $5k/mo benefit, which together sum to less than 66% of my income:

1. a group policy from my medical group, written by The Hartford, costs $100/mo for $5k/mo coverage, 60d elimination period, and pays benefits to age 65.  The premium does not increase with age, and the benefits do not change, so long as the group continues the policy.  I don't know the specifics of own occupation/mental&substance, etc, but I assume it is relatively weak, given the price.  I do know other partners who have used it successfully, though, and it provided coverage, as stated, when needed.

2. a group policy from the state medical society, written by New York Life, costs $93/mo for $5k/mo coverage to age 65.  The premium increases every 5 years, plus, they can choose to increase the premium for all insureds annually.

3. an individual policy written by The Principal, cost $137/mo for $5k/mo coverage for 5 years only and own occupation for 5 years.  This included a residual disability rider and transitional occupation rider and limitation for mental/substance.  When I applied for this policy, about 5y ago, I recently had a few doctors visits for symptoms which turned out to be nothing, and had also attended reintegration counseling at the VA after recent military service.  These made it so, according to the broker, I couldn't get an individual policy which covered me to age 65.

 

Now, 5 years later, I am definitely looking to replace policy #3 and maybe policy #2.  The same broker has quoted me the following:

All are for $10k/mo benefit to age 65, own occupation, and guaranteed renewable/non-cancelable included.

A. Guardian ProVider Plus $644/mo, no catastrophic benefit.  limited mental/substance.  with partial disability benefit.

B. MetLife IncomeGuard CA $651/mo, with catastrophic benefit $7.5k/mo.  with partial disability benefit.  quote doesn't mention mental/substance limitation.

C. The Standard $631/mo, with catastrophic $10k/mo, unlimited mental/substance.  with partial disability.

D. Principal  $577/mo, with catastrophic $8k/mo, limited mental/substance.  with residual disability.

--I have taken the COLA rider out of all of these, as I don't think I need it- the major expenses I would need covered by this policy, mortgage and property taxes, are essentially fixed, and would not increase with the cost of living.

Here is a little more about my situation- male, currently age 40.  My wife is also a relatively well-compensated physician.  We have 3 young kids.  We have essentially no debt other than our mortgage.   We are aggressive savers/investors, and I think it is reasonable to assume that we will be essentially self-insured beyond age 55 or so.

My concern is that in paying the relatively high premium on these fixed-rated, individual policies, I will be paying upfront for coverage I won't need later.

Should I purchase option A-D, or none of the above?  I can keep policies 1&2, above, which are much cheaper.  I can't imagine paying for #3, though.

Thanks for any advice.

 

[LBKCLU]

I would need to see copies of your Hartford and State Medical Society polices but the odds are very good they are not true "Own-Occupation" and include several other limitations.

As for your individual policy options:

1. I would look to see if you can extend the benefit period of your existing Principal policy to age 65, as well as, add the Regular Occupation Rider (remove the Transitional Occupation Rider) and have the mental/nervous exclusion rider removed from the policy.

Since you purchased this policy when you were younger it may be less expensive than simply purchasing a new Principal policy (but this depends upon your policy series and if any discounts were on your original policy). Emergency Medicine Physicians were also downgraded recently from 4A-M to 3A-M which will also increase the price of a new policy with Principal.

Also, keep in mind, that if you are in California, the Regular Occupation Rider is not available to your specialty.

2. For Guardian, you can look at the graded (annually increasing premium). This will reduce the initial monthly premium to $387.45. Not including the time value of money, on a year to year basis, the "break even" point is 10 years and 16 years on a cumulative basis. This is likely a good fit for you based upon your situation.

3. Just an FYI, MetLife's policy also has limited mental/nervous coverage in California. Also make sure the policy includes a 10% AMA discount.

4. I can't tell as you didn't mention mention the amount of the CAT Rider but make sure the policy includes a Preferred Producer Multi-Life Discount.

You might also want to increase the waiting period from 90 to 180 days as your wife also works and you are aggressive savers/investors. I will also skip the CAT Rider unless you are purchasing the maximum amount of individual coverage available to you (it seems you qualify for more than a total of $15,000 monthly benefit).

You can also look at Aneritas but as stated earlier Berkshire's policy with a graded premium will likely work very well for you.

Hope this helps.

[srscutmonkey]

Thanks so much, LBK.  Very much appreciated.