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.
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
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.
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.