Quick Read
How to Get the Timing Right on Disability Insurance
Deciphering who to buy disability insurance from is one thing, and determining how much to buy is another, but figuring out when to buy it is a whole other dilemma! Read here for some nifty tips and tricks regarding the best time to apply based on your needs.
Med School
The main purpose of disability insurance is to protect your income, as you will be entering a high-earning profession. However, in medical school, you aren’t earning any income yet. Sure, you might have a part-time gig that you’re working to make ends meet, but that’s not the kind of income we’re worried about insuring. If you buy disability insurance at this point, you’re probably going to be spending money you don’t have, in order to insure money that you don’t have either. Doesn’t make much sense, does it?
Most do not sign up for disability insurance in medical school. In 2019, it was reported that only 1 in 20 med students had their own disability policy. Most brokers or carriers have limitations on policies for med students. At Pattern, you can’t sign a policy until you’re in your fourth year of med school, largely due to the fact that you don’t have an actual income to protect yet. Not many advisors would recommend buying disability during med school, but there are some reasons as to why it may be the smart way to go.
The younger you are, the healthier you are. Why is this relevant? When you sign up for an individual, true own-occupation policy, the premium you sign with is the rate you’ll get for the rest of your life. For this reason, we recommend doctors apply for disability insurance while they're young because that’s when they’re the healthiest. The healthier you are, the lower the cost of your premium. So, in theory, and in terms of premiums, it could be beneficial to sign up in med school.
Disability doesn’t discriminate. When you’re young, you think you’re invincible. While the odds of becoming disabled in your early twenties aren’t particularly high, they certainly aren’t impossible. There’s always a chance you could become disabled in med school, which means your future income is at risk. To play it on the safest side, this could be another reason to sign up for a policy during your formal education.
You’re still discovering yourself. Pretty much the sole purpose of your twenties is to learn about yourself. You figure out who you are at your core. What brings you joy, what fulfills you, what drains your energy, and so on. Hobbies and habits play a big role in that! You may find that you really love skydiving, or maybe you’ll pick up cigarette smoking. (Hopefully not the latter). Either way, these things will show up as exclusions on your policy if you sign up for disability after you develop these habits, which means you’ll likely have less coverage at a higher cost.
You’re going into a high risk specialty. Of all the reasons to sign up for disability in med school, this is the most logical. Insurance companies associate your specialty with a designated occupation class, commonly referred to as your “occ class.” The lower your occ class, the more risk of disability they associate with your specialty, meaning the more expensive your premium will be. Lower occ classes include more procedural-oriented specialties, such as surgeons or dentists. You never know when a kid might try to bite your finger off! Higher occ classes, which come with less risk, include Pediatricians and Rheumatologists. If you sign up for disability in med school, you get put in a “general occupation class” category. The general occupation class is just middle of the road rates. So, if you’re in med school right now studying to be an anesthesiologist, and you know you’re going to have a lower occ class once you get into residency, then it may prove advantageous for you to get into the general occ class while you’re still in med school, guaranteeing yourself cheaper premiums for the lifetime of your policy. However, if you’re unsure of what you want to specialize in, or you think you might change your specialty, applying in med school would not be the way to go, as your occ class may end up being higher than the general one.
If you’re thinking about applying in your fourth year, one thing to consider is your discounts. If you’ve already been matched with a residency program, you’re eligible for training discounts; however, you won’t be eligible for the general occupation class if you’ve already decided on your specialty (which you likely have if you’re already matched).
The best course of action as a med student is simply to start thinking about disability insurance. Keep it on your radar! As you approach your fourth year, request a quote and see what happens. Our agents will help you look over your options, and together you can determine if it would be most beneficial for you to apply now or to wait until residency.
Residency/Fellowship
This is the ideal time to buy disability insurance. Generally, it’s recommended to sign a policy before you graduate your residency or fellowship. Most of the reasons to apply in med school still ring true for those in residency or fellowship. The main factor here is…DISCOUNTS! Since you’re still in training, you’re eligible for up to 40% off the lifetime of your policy. There are no requirements or strings attached, you just have to be in training!
In training, you aren’t making the big bucks yet, but at least you have an income. If you’re budgeting wisely, you should actually have the money to pay for a policy, unlike when you’re in med school. If you apply just as you’re exiting training, then you know your income is about to increase to an amount that should certainly be insured, and you can raise your benefit amount once that raise kicks in. Furthermore, you’re at the very start of your career, which means you have everything to lose if you become disabled. Say you’re 27 years old when you leave residency, and you get disabled before you turn 28. This means that you could receive benefit payouts for almost 40 years. That’s a lot of money! Essentially, the younger you buy your policy, the more valuable it is.
Attending
If you’re attending and you still haven’t signed up for disability, you need to! This is not the greatest time to sign up, as you missed the window from the largest amount of discounts, but when it comes down to it, you still need your income insured. It’s better late than never, right?
As an attending physician, you’re earning a high-paying salary thanks to your years of hard work, time, and money dedicated to becoming the best in your specialty. Your income relies solely on you and the skills you’ve honed over the years. In the blink of an eye, you could become disabled and lose the ability to put those skills into practice. Think about what your lifestyle would look like if one day you lost all the income that sustained it. With your disability will come financial instability, numerous medical bills that could lead to insurmountable debt, which will only add stress to your marriage or family dynamic. What else could happen when the income that sustains your lifestyle disappears? We don’t want you to have to find out.
Odds are, you’re probably counting down the days until training is over. Time flies when you’re having fun (or working your butt off). Before you know it, it’ll be time for graduation. So what are you waiting for? Request your quotes today at patternlife.com/disability-insurance.