The 5 Disability Insurance Riders for Physicians

If you are a physician, it is likely you already know the importance of carrying your own long-term disability insurance policy to protect your income. But, ensuring you have a disability insurance policy isn’t enough, you need to make sure you have the right definitions and riders to truly protect your medical specialty. In this article, we are going to break down the 5 must-have riders physicians need to include on their long-term disability insurance policy.

Own Occupation

The foundation of a disability insurance policy is the definition of disability. As a physician, you need a broad definition of disability that will not restrict you from receiving a claim if you can no longer perform the duties of your specific medical specialty. This definition is known as “true own-occupation.”

The “true own-occupation” definition of disability is defined by any condition that would prevent you from performing the material and substantial duties of your regular occupation or medical specialty, even if you are gainfully employed in another occupation. For more information and examples on how the true own-occupation definition applies, refer to our blog What is True Own-Occupation?

Non-Cancelable and Guaranteed Renewable

Having this rider on your policy means that the insurance company cannot cancel or change your policy at any time as long as you continue to pay the premiums. Some policies only have a Guaranteed Renewable rider on the policy where the insurance company cannot change the benefits or features of the policy, but they may change the premium of the policy. The Non-Cancelable definition added removes the ability of the insurance carrier to change the premium.

Future Purchase Option

The ability to increase your policy in the future as your income increases can be done through the Future Purchase Option rider. Every insurance carrier has a slightly different name for this rider as you may see it referred to as any of the following: Future Increase Option Rider, Benefit Purchase Rider, Benefit Update Rider. 

While each of these riders are slightly different in their structure, the general idea is that it allows you to increase your policy without any additional medical underwriting. This is a big deal for younger physicians, especially those still in residency as your income will grow substantially. Your medical situation can easily change over your career and if you purchased a small policy when you are young, you may not be able to get additional coverage to sufficiently cover your income without a Future Purchase Option rider. There may be a time in your career where your policy benefit is maxed or your need for disability insurance has decreased to where you no longer need to carry this rider on your policy. 

Residual Rider

A Residual Disability Rider covers partial disabilities that may leave you unable to work full time or that cause a reduction in your duties and income. Believe it or not, most disabilities are not complete disabilities that keep you out of work forever, it is more common to have a partial disability where you can no longer work the same number of hours or you lose the ability to perform all the duties of your medical specialty. 

With this rider, you only need to have a 15 or 20 percent loss of income depending on the insurance carrier before they replace that loss of income to make you whole again. This can also be important as you recover from certain illnesses or accidents as you work your way back to being full time again. This is a must-have rider for all physicians. 

Cost of Living Adjustment

The Cost of Living Adjustment Rider, also known as COLA, is another rider that is most important early in your career. This rider protects your benefit against inflation in the situation where you were disabled early in your career for a lengthy period of time. 

If you lost the ability to work in your medical specialty early in your career, you could be looking at a period of 20 to 30 years of potential disability benefit payouts. As you can imagine, your purchasing power would be greatly reduced by inflation. Younger doctors can avoid this by including the Cost of Living Adjustment Rider on their policy which indexes your benefit to inflation each year. 

Conclusion

There are many riders to consider when structuring your long term disability insurance policy. While many of the riders would be considered optional, or even unnecessary on your policy, these five are the most important to consider as a physician. To learn about pricing of each of these riders, make sure to request your own personalized quotes and we can help you shop around for the best policy and rates for your situation.