How to Score Discounts on Physician Disability Insurance

Today’s topic isn’t the most thought-provoking or exciting, but it is a practical one, and it answers a question that many resident and early-career physicians ask. How can we save money on our disability insurance policies?

It’s a great question — with premiums for a quality true-own-occupation costing hundreds of dollars a month, it’s not unusual to spend more on disability coverage than term life insurance, cell phone, cable, internet, beer, wine, and liquor combined!

Fortunately, there are ways to reduce the cost of coverage. It’s best to start out with a discounted plan, but if you are currently covered and feel you are paying more than you should, and remain in good health, you may be able to switch plans and save some serious dough.

Personally, I don’t know much about disability insurance. I had coverage for about ten years, and gladly dropped it when I realized I was financially independent and no longer had a need for it.

Today’s guest author, Jamie Fleischner of Set For Life insurance, actually condones reducing and dropping coverage as your net worth increases, a fact I respect given the fact that she makes a living insuring physicians. Jamie does advertise here, and I asked her to write this post, but receive no compensation for publishing this piece.

 

How to Score Discounts on Physician Disability Insurance

 

If you are a physician who is in the market for disability insurance or have already purchased a policy, it is important to be aware of all of the available discounts to physicians. It is important to work with an experienced independent broker who specializes in disability insurance who not only has access to available discounts but can help you compare rates to determine which policy is most suitable at the best rate.

 

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Unisex Disability Discounts

 

Women pay approximately twice as much as men for disability insurance. The companies say this is due to the number of claims and the length of the average claim. As a woman physician, you can save significantly if you can obtain a unisex discounted policy.

  • A few companies still offer unisex policies to residents. Some only offer discounts once you are an attending physician. If you are in the last 6 months of your training, it is important to compare the differences before choosing a policy.
  • To obtain a unisex policy, you must work with a broker who already has available discounts for you. Otherwise, you will need to find two other people at the same employer or hospital to purchase a policy.
  • Once you have unisex discounts on the policy, most policies allow future purchases at the discounted rate.
  • Women save between 50-70% on their premiums with unisex rates. For men, depending on the company, they can save 15% or they can be charged more.
  • Companies offering unisex: Principal, MassMutual, Ohio National.

 

Medical Resident Disability Discounts

 

Some companies offer a flat 15% or 20% medical resident discount.

  • Policies must be purchased while in medical school or training; prior to graduation.
  • You must work with a broker who has access to these discounts who already set them up. Otherwise, you need to find at least two other residents who are purchasing a policy at the same time.
  • Some of these discounts are permanent and apply to all future increases. Other policies only allow the discount on the initial policy and future purchases are not at the discounted rate.
  • Companies offering medical resident discounts: Ameritas, Standard, Guardian, Principal.

 

AMA Disability Discount

 

There are a couple companies that offer an AMA discount to members of the American Medical Association. These discounts are typically 10-15% off the non-discounted rate.

Ameritas and Ohio National offer this AMA discount.

 

Life and Disability Combination Discounts

 

Some companies will offer a 10% discount on your disability policy if you also purchase a life insurance policy with the same company. The life insurance must be at least $1,500,000 in death benefit. This can be any type of life insurance, including term.

Ohio National offers this combination discount.

 

GME Resident Disability Discount

 

Graduating medical residents may have access to discounts through a group convertible policy when they complete their residency. These discounts are typically 10-15% off the non-discounted rate. To obtain these discounts, you must purchase the policy through the GME prior to graduation.

  • Ask if this discount will apply to future purchases. This can vary. If they don’t apply to future increases, this can create a situation where future purchases can be much more expensive.
  • These policies may have limitations on pre-existing conditions, especially if they don’t ask medical questions. Read the contract closely. Some contracts won’t cover pre-existing conditions in the first 2 years of the contract. Other contracts may not issue a policy if you have ever been declined or rated from another company.
  • Standard offers a GME Resident Discount

 


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Replacing Your Current Disability Insurance Policy

 

If you already have a policy in force, should you consider replacing your existing policy with a discounted one?

  • Replacing a policy requires new medical and financial underwriting. It is important to take this into consideration before replacing existing coverage. If you have had an adverse change in health, it may not be in your best interest to replace a policy and add a new policy that has exclusions or ratings.
  • If you are currently paying full price for a policy and are still healthy, it is worth considering a replacement if you can save at least 10-15% on your premiums. This savings can be significant over the course of your career. For example, if you are 30 years old and are paying $3600/year for the next 35 years, you will be paying a total of $126,000 in disability premiums. Saving 10% will save you $12,600, 20% will save you $25,200 and at 50% (changing from gender-distinct to unisex), you may save $63,000 in premiums.

 

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For more information about physician disability insurance or disability insurance discounts, please contact Jamie at Set for Life Insurance or view the list of recommended insurance agents. You can also receive online disability quotes from Policygenius.

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7 comments

  • Shane

    To what degree is it possible to stack discounts? Can you get a unisex policy , resident discount, AND discount for buying life and disability together? Thanks.

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  • Hey I have no stake in the game, but wanted to post for those interested that my (physician) wife did a lot of shopping for disability insurance and we ended up going with Larry Keller through a WCI recommendation. He had the best rate on a unisex policy for her and was very patient through a few rounds of questions. We shopped a few other places online and one person who was a local agent that serviced her colleagues.

    In any case, I think he did right by us for what it’s worth.

    Whoever you go with, you should definitely ask a lot of questions. Your agent is being paid to answer them and should be patiently working for you. Don’t feel bad about asking them to explain and explain again.

    Good article, thanks!

  • Lil

    Jamie,
    Thanks for this article. Can you explain the deal with part time work and disability insurance? I am going part time in a few months (hallelujah!) and will lose my employer sponsored coverage. I have been told I must still work 30 hours/week to get private coverage. My goal is 20-25 hours but I still need some modest disability coverage.

    I had no idea women physicians had a double rate. That makes sense in the younger years when pregnancy complications put women at higher risk for disability, but seems like it should even out if you’re not of child bearing status. Is there any way for this to be taken into account?

    Thanks in advance!

    • Hi Lil,
      When you purchase a policy, you need to be working at least 32 hours a week to obtain coverage. Once you have the coverage, you can maintain that coverage even if you work a reduced number of hours.

      Regarding the female rates, it tends to be more than just pregnancy. Women not only have more claims but they tend to stay on claim longer. They also have claims related to autoimmune issues, among other things. Obtaining a unisex rate makes a huge difference in reducing the cost

      Please reach out with any further questions!

    • You can purchase an individual disability insurance policy if you are working less than 30 hours per week. However, only certain carriers make this available and you must meet certain criteria.

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