Resident Disability Insurance

In this article, I am going to explain what Resident Disability Insurance is, its policies, and why it’s important for individuals or fellows in their medical specialty.

I will also discuss the features of the policy, its benefits, and how to claim them in case of denial or termination.

Additionally, the article will provide answers to most of the frequently asked questions about the policy.

 

Resident Disability Insurance

Resident Disability Insurance

Resident disability insurance caters to medical residents and fellows and provides financial protection if they become disabled.

It replaces a portion of their income to help with expenses like student loan payments, rent or mortgage payments, and living expenses.

Monthly benefits are provided if the resident is unable to work in their medical specialty due to a disability.

The cost of this type of insurance varies depending on the age, health, specialty, coverage level, and additional features included.

Residents should carefully evaluate their options and choose a policy that provides sufficient coverage at a cost that fits their budget.

Some of the benefits of resident disability insurance

  • Protection against financial risks.
  • Flexibility and customization.
  • Peace of mind.
  • Coverage for medical residents.
  • Quotes from the top insurance companies.

Why you need disability insurance as a resident

1.You might get disabled

You should get disability insurance because you could become disabled as a resident physician. Long-term illness or injury may prevent you from working and receiving income.

There is always a risk of this happening.

2.The younger you are, the cheaper the coverage is

Insurance companies consider younger people less likely to get injured or ill for long periods. You can get disability insurance now to have a lower premium.

This can help you establish disability insurance without much expense. Residents in training often receive large discounts.

3.Individual disability insurance is more portable

As an attending physician, you may receive disability coverage or short-term insurance through work. However, it’s wise to get an individual policy too.

Group policies may not offer the same coverage level and may not be portable.

Supplement an individual policy with group coverage for better protection.

Physicians usually change jobs within 5 years, so employer-based group coverage is not enough for full protection.

Larger benefit to income ratio during residency

Disability insurance usually pays 60% of your income monthly. As a resident, you can receive up to $5,000 a month.

This can amount to 100% of your income. Physician disability insurance may offer lower benefits for higher incomes in the future.

What disability insurance covers for doctors

A disability insurance policy can replace a portion of your income if you can’t work due to illness or injury. Your insurance company defines “disability”.

You may qualify for benefits if you can’t perform your job duties due to illness or injury.

Disability insurance has two main types that usually replace up to 60% of your monthly income.

1.Short-term disability 

This type of disability insurance allows you to receive benefits for up to a year. Your employer may provide this coverage as part of a group disability insurance policy.

2.Long-term disability

Consider long-term disability insurance for illnesses or injuries lasting over a year or total disability. This policy pays out until retirement age.

Note that it may or may not cover partial disability. Look into own-occupation coverage and any-occupation coverage for additional insurance options.

Own-occupation coverage

Own-occupation coverage starts when you can’t work in your profession. True own-occupation coverage pays benefits even if you can work another job.

Transitional own-occupation coverage fills salary gaps if you switch jobs due to injury or illness.

As a resident physician, look for policies with true own-occupation own specialty coverage.

Frequently asked questions

1. Are benefits taxable?

Paying premiums with after-tax dollars makes your benefit tax-free but if premiums are deducted or paid by your employer, the benefit becomes taxable upon claim. You should always consult with your accountant for tax advice based on your specific situation.

2. What if policyholder leaves the country?

Policies can cover foreign travel, although some companies may suspend the contract when you are abroad. You should speak to your agent for further discussion.

3. Can my employer pay for my coverage?

  • Your employer can provide disability insurance coverage.
  • It may make the benefit taxable to you when you make a claim.
  • You may have to pay taxes on the benefit.

4. What happens to policy if one changes occupation?

Your policy benefits will remain unchanged as long as you keep paying the premium. The policy is non-cancelable and guaranteed renewable.

5. What are common policy exclusions?

Some common exclusions are;

  • Active Military Duty
  • Foreign Travel (in some policies)
  • Mental/Nervous Disorder (companies may limit benefits to two years)
  • Medical Exclusion
  • Normal Pregnancy
  • War or Act of War

Bottom-line

Resident Disability Insurance provides financial protection for medical residents and fellows if they become disabled, by replacing a portion of their income to cover expenses like student loan payments, rent or mortgage payments, and living expenses.

The cost of insurance varies based on age, health, specialty, coverage level, and additional features included.

Disability insurance policies can be short-term or long-term and may cover partial or total disability. There are two main types of disability insurance policies, Short-term Disability and Long-term Disability, and some policies offer Own-occupation coverage.

Disability insurance is important for residents and fellows because they may become disabled and unable to work.

Insurance companies consider younger people less likely to get injured or ill for long periods, so getting insurance as a resident can lead to lower premiums.

Individual policies are more portable and offer better coverage than employer-based group policies. Disability insurance is not taxable if premiums are paid with after-tax dollars.

There are some common policy exclusions like active military duty and war or act of war.

 

 

 

 

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