Individual disability insurance can help offset this risk. But when is it ideal to start this process? The answer is the sooner the better.

 Individual disability insurance requires medical underwriting asking you about your medical history. Therefore the ideal time to purchase a policy is when you are healthy and can qualify.

• Purchase a minimum size policy with the maximum amount of increase options available. This will reduce your current cost but will lay the foundation to purchase more in the future without further underwriting. The maximum size policy on an individual policy is $15,000/month.
• If you are considering a fellowship or a subspecialty, purchase your policy earlier rather than later. General specialties such as internal medicine and pediatrics will cost less than surgical subspecialties. However, the policy premiums are based on your specialty at the time of your application. This can provide you with significant savings.
• Don’t be enamored by policies that don’t require underwriting. These policies may have limitations and/or exclusions since they can’t underwrite. Furthermore, they may limit the amount you can increase your policy in the future which will require future underwriting at a later time.

 What to look for in a disability policy:

 When purchasing a disability insurance policy during residency or fellowship, it is important to look for the following:

• Specialty Specific definition of disability. It is important that your policy cover you in your medical specialty without restrictions if you can work in another medical specialty or occupation. This type of definition comes in sever different names: Own occupation, transitional occupation, regular occupation. Each company has slightly different names. It is important to read this part carefully. With a specialty specific definition, it will cover you in whatever specialty you are practicing in just prior to your claim. For instance, if you purchase a policy while training in internal medicine and go on to gastroenterology and later become disabled, it would cover you if you couldn’t practice as a gastroenterologist.
• Non cancelable, guaranteed renewable. With this provision, as long as you pay the premiums, the company can never cancel your policy or raise your premiums.
• Ability to increase the policy in the future.. It is important that your policy has the ability to increase in the future as your income increases without having to go through future medical underwriting. If your health or situation changes, you are safe and able to increase your policy.
• Residual Rider. This allows you to receive a partial benefit if you have a 15-20% (depending on the company) loss of earnings or more.
• Cost of Living COLA Rider. This keeps your benefits up with inflation if you are on claim for more than one year.
• Company Has High 3^rd Party Ratings. It is important to check the company’s 3^rd party ratings to ensure quality. http://www.setforlifeinsurance.com/disability-insurance/companies. Ideally, look for a policy with AM Best Ratings of A+ or better.

 Discount rates for medical residents

Set for Life Insurance has discounts set up at numerous resident programs and hospitals throughout the country. These discounts can save you from 10-40% on your premium, depending on your situation.

Please contact us to find out if a discounted program is already available to you. If not, we can help you put together a discount for your program.

 About group disability benefits

Often, your residency program will already have a group policy in force. These typically offer a $2500/month benefit. Because group policies can’t discriminate regarding who they offer coverage to, they often lack the important provisions of a personal policy. 

• Your group policy may require you to be totally disabled and not able to work in any capacity before you can receive any benefit. 
• The benefit may be taxable income to you if the employer is paying the premiums. 

Affording your premiums

If you are concerned about paying for your disability insurance during residency, there are several things we can do to reduce your premium as much as possible.

• Some companies allow a “graded” or increasing premium. This is initially less expensive and your premium will increase each year. If you wish to lock it in at a later time, you may do so on any policy anniversary.
• You may choose to simply supplement what your group policy already offers and load up your policy with increase options. This will allow you to keep your premium low during residency and still reserve the right to increase it in the future without any medical underwriting. The minimum size policy is $1000/month benefit. If you decide to purchase a $1000/month benefit policy, be sure there are enough increase options available to you to purchase more in the future without undergoing medical underwriting.

 Options for residents finishing training:

 If you are in your last year of training, you have a few different options:

 1. You can take the special resident offer amount of $4000 a month regardless of current income or group benefits.

 2. If you are graduating and already have an employment agreement signed for your first year income outside of residency, we can use that agreement as income verification to issue you a higher amount of coverage now.

 3. First year physicians can automatically purchase $5000-$7000/month benefit (depending on specialty and company) regardless of your new income and without evidence of a contract.

 Benefits:

First-Year physician: $5000-$7000/month coverage

Fellows and residents in their third year or greater: Up to $4,000/month over and above any group coverage

Residents: eligible for up to $4,000/month benefit (regardless of any group benefits)

Considering disability insurance? Consider the facts.

Your most valuable asset is your ability to earn an income. For medical residents like yourself, future income is the payoff for your years of training, hard work and accumulated debt.

Physicians’ jobs are very physically demanding. Consequently, they are at a much higher risk than other professionals to become disabled in some capacity.

Your student loans do not go away if you become disabled.

There is no better time for a physician to consider purchasing a personal disability policy than during residency. Since policies are based on your situation at the time of application, you have the opportunity to put yourself in the best light and lock in a policy based on your current age, health, and many other benefits.

You will never be younger than you are now so rates will be less expensive.

Qualifying for disability insurance can be difficult, so it is important to apply before you have any medical problems or conditions. Once you have the policy, insurance companies can’t take it away from you as long as you pay your premiums.

 Insurance companies realize that medical residents have great earning potential. Therefore they allow you to purchase over and above what another professional would normally qualify for.

 If you are considering going on to do a fellowship or a riskier specialty, if may make sense to purchase your policy early since you may be in a better occupational class, giving you better rates. Once you have your policy at those rates, you will still be covered in your new specialty, but possibly at a reduced rate.

 By making a responsible decision early on to purchase a policy, you build the platform to have your policy follow you for your career.

However, you may not be aware that your privacy may be compromised. Some websites sell your information to multiple agents. Other websites may not offer the full line of life insurance products available.  Most major insurance companies try to direct you to their products only without a comparison of other company’s products.

Therefore, is important to choose your insurance website carefully.

• Look for a company where you will work with their brokers directly and won’t sell your information.
• Look for a company that works as independent brokers that can guide you to find the best products for your needs.

If you find a website with these qualities, you will not need to shop further!

Here is a brief description of the different types of websites:

1. Life Insurance Lead Generation Website

These lead generation websites are owned and operated by people who are not licensed life insurance agents or brokers. These websites sell your information to multiple insurance agents and even some marketing websites. They try to get you to complete their online life insurance “quote request page” by promising spectacular discounts and offering cheaper and more comprehensive life insurance coverage. Once you complete their quote request form they sell your information to multiple insurance agents in your area. Subsequently you can expect to receive a series of phone calls from these local agents all competing for the sale.

2. Insurance Company Websites

The websites of major insurance companies will collect your information and send it to their local agents. The majority of these agents are captive. This means they are employees of this particular insurance company. This typically does not result in the agent shopping around for the best fit for the client. Typically, agents sell one company and do not shop around. This may result in a non-competitive policy for your situation. The product may or may not be the most suitable for your needs.

 3. Term Life Only Website

These websites are properly licensed to sell life insurance and most handle leads by themselves and do not sell your information. However, depending on your situation, you may or may not be a candidate for term insurance. It is important to work with a professional to determine if term, permanent or some combination is best to fit your needs.

Set for Life Insurance is unique and can guide you to find the best fit for your needs.

• You will work directly with one of our experienced professionals. Our brokers all have at least a Master’s level of education as well as professional designations.
• All of the information you provide us is kept strictly confidential. Your information is never sold or distributed elsewhere. Your information is safe and secure in our hands.
• We work as independent brokers. We work on your behalf to find the most suitable product to fit your needs and budget.

For more information, contact us today at 888-553-3559.

Along with the benefits with being a locum professional comes an opportunity to have the flexibility of your own benefits-insurance benefits that is. As a locum professional, you may not be eligible for the employer sponsored insurance benefits such as health insurance, life insurance, disability insurance and in some instances long term care insurance.  The good news is that obtaining your own insurance has benefits to you as well. Having individual insurance benefits provides you with more control, more flexibility, more comprehensive coverage and more options available to modify your benefits in the future.

Life Insurance: Life insurance pays a sum of money to your beneficiaries at your death. It is intended to replace your human life value, the economic value your survivors were counting on while you are alive. If you were previously working full time, you may have had group life insurance, typically a multiple of your salary. Most group life insurance plans are not portable and cannot come with you if you leave your full time employer.

Individual life insurance can be purchased regardless if you are working full time, part time or are a locum professional. The advantage of carrying your own life insurance is the portability and control you have over your policy throughout your life, without relying on your employment status.

Life insurance rates have come down substantially in the last 3-5 years. Depending on your age, gender and health status, your individual life insurance rates may in fact be less expensive than a group insurance policy.

The risk relying on your employer plan and not carrying your own life insurance is if you experience a change in health or lifestyle.  Applying for life insurance entails medical underwriting asking about your medical history and lifestyle. If during your locum career you experience an adverse change in health or decide to take up a risky avocation such as skydiving, you may find yourself paying a lot more in premiums for life insurance when it comes time to apply.

Having your own individual life insurance policy provides you with a peace of mind and allows you the portability to take your policy with you no matter where you work.  It is recommended that you would need at least 12-14 times your annual income in death benefit to replace your economic value.

Disability Insurance. Disability insurance is intended to replace your monthly earned income if you become too sick or injured to work. Statistically, you have approximately a 33% chance of becoming disabled between ages 30 and 65. If you rely on your income to pay your bills and support your lifestyle, it is imperative your income is properly protected.

The solution to avoid these risks is carrying your own individual disability insurance. The cost varies based on your medical specialty, gender, age and geographic location.  The benefit of carrying your own policy is the portability to take the policy with you and the ability to adjust it as your situation changes.

When purchasing individual disability insurance, make sure your policy has a definition of disability that covers you if you can’t work in your medical specialty. For instance, if you work in a surgical specialty, the policy would pay you a monthly benefit if you couldn’t work in that specialty even if you retrained and worked in another medical specialty or occupation.  If you are in the early stages of your career, it is important that your policy has the ability to increase in the future as your income increases. Disability insurance premiums vary based on age, gender, medical specialty and geographical area.

Long Term Care Insurance. Long term care insurance is designed to pay a daily benefit if you are unable to satisfy a certain number of activities of daily living such as dressing, transferring, and cognitive impairment.  These services are often not covered by Medicare and can wipe out retirement savings if not properly insured. Some employers offer long term care as an employee benefit.

Similar to disability insurance and life insurance, the group policy may not travel with you when/if you leave your job or retire. The ideal time to purchase a long term care policy is while you are relatively young and healthy. Policies become more expensive as you age.  Applying for a policy requires medical underwriting looking at past medical history.  Rates can be locked in for life or paid up after a set period of time. Discounts may be available if you and your wife both purchase a policy simultaneously.

Being a locum professional certainly has its benefits. It provides you new career opportunities and a lot of flexibility. Taking control over your own benefits can provide you with the peace of mind that your hard work and dreams will be fulfilled and protected.

Sometimes less is more:

• No income documentation.
• No medical exams or testing.
• No attending physician statements or medical records.
• No personal history interview.

 What is included?

• Up to $5000/month benefit (depending on company).
• Own occupation definition of disability.
• Increase options in some circumstances.
• Available to ages 18-60.
• Available to most occupational classes.
• All waiting and benefit periods available.

Please contact the Set for Life Insurance office today for more information.

Did you know that most student loans must be repaid in the event you become disabled? Most loans do not need to be repaid if you die. 

According to the American Medical Association, student loans are on the rise.

Student debt statistics

• $156,456 - According to the Association of American Medical Colleges (AAMC), the average educational debt of indebted graduates of the class of 2009.
• 79 percent of graduates have debt of at least $100,000.
• 58 precent of graduates have debt of at least $150,000.
• 87 percent of graduating medical students carry outstanding loans.

Source: AAMC 2009 Graduation Questionnaire

These extra payments can be burdensome to pay back as you start to earn an income. What would happen to you if you became sick or injured and couldn’t work? How would you repay these loans?

Disability income insurance policies are now available to cover student loans. This can be a much more cost effective way to insure that extra $1-2000/month you are paying for your loans. This policy is only available for dental and medical school loans.

A loan policy works to protect the duration of the loan. For example, if you have $100,000 of student loans and are expected to be paid off in 10 years, the policy would pay the monthly benefit (debt payment amount) to pay off the loan. If you became disabled in the third year, the policy would pay off the remaining 7 years.

Cost:

To insure $2000/month benefit, 10 year total disability policy for a 30 year old female surgeon, the premium would be $67/month.  To insure $2000/month to cover a 10 year loan, the premium would be $28/month. Keep in mind the first policy would cover for 10 years regardless of when the disability occurred whereas the ladder would only cover the duration of the policy. However, it significantly reduces the premium needed to cover the monthly loan repayment expense.

Why medical education debt has increased

Medical education debt is driven by rising tuition. AAMC data show that median private medical school tuition and fees increased by 50 percent (in real dollars) in the 20 years between 1984 and 2004. Median public medical school tuition and fees increased by 133 percent over the same time period. Other recent 20-year periods show similar trends.

Tuition is just one source of increasing debt burdens. Other causes include:

• Interest accrued on loans over time significantly adds to the total cost of student debt.
• Students are now entering medical school with more education debt from undergraduate education.
• Increasing numbers of “non-traditional” students who have children to support.

For more information on insuring your student loan payments, please contact the Set for Life Insurance office today.

First year physician limits are now available to graduating residents. If you are a medical resident in your last 6 months of residency, you can now purchase between $6000/month and $7500/month (depending on your medical specialty).

For more information, please contact the Set for Life Insurance office today!

Dorothy said to her dog in 1939, “Toto, I don’t think we’re in Kansas anymore”.  Things changed for Dorothy   in the Wizard of Oz and change is happening today at an ever increasing pace.  A generation ago, age 45 was considered ‘middle aged’ and today age 65 is the new 50.  Many of the new 50’s are working longer than ever before.  There are a combination of factors: Today’s seniors are healthier than they were a generation ago.  The recession has decimated retirement savings and businesses are no longer using the lucrative pension and retirement plans of our parent’s generation.  Many find more satisfaction in work than in retirement.  As these masses have chosen to return to work,  disability is becoming a greater and greater risk to these aging Americans.

Insurance companies fashion their individual disability products to cover the risk of disability during one’s working years.  Translated to English, this means we are covered up to age 65 and perhaps until age 70 but not longer.  How can the older person insure his or herself against the peril of disability?

There are several options available.

• Group disability. Many employers offer group coverage for their full time staff. Many of these policies will offer coverage to the over 65 population. Often as with group life insurance, they may reduce the amount they will pay. These plans may reduce or place other limitations in their coverage.
• Keep your old individual policy. You may be able to keep it to age 70 so long as you are working on a full time basis. It is likely that that old fixed premium policy will have a premium increase at 65 but it is irreplaceable.
• Indemnity Long Term Care Insurance. A number of long term care policies will pay a fixed amount if one qualifies for a claim regardless of whether they are receiving care. There is no income limit needed to purchase and no physical. The company will issue the policy based upon a phone or face to face interview, cognitive evaluation and letters from attending doctors. These policies can be kept in force for life. They are more expensive than a regular long term care policy but when used in lieu of disability, they are worth it.

Disability is and should be a concern for the over 65

crowd.  It takes some research and good council to find a solution to this serious problem.  Call your broker and have a discussion on this matter.

Bruce Kantor, CLU is an over age 65 insurance broker living in Charlotte, NC.  He has been a full time insurance professional since 1970.

 He can be contacted  at: Bruce@KantorAndAssociates.com

His website is: www.KantorAndAssociates.com

His Blog is: www.KantorAndAssociates.wordpress.com

Disability-insurance benefits from the workplace and the government are getting harder to come by-and that’s putting more pressure on consumers to purchase their own coverage in case a medical condition keeps them from working.

But disability insurance can be confusing. Policies may include conditions that make it tough for people filing claims to actually qualify for the benefits. And some policies may limit payouts for certain diagnoses, particularly mental illness. To protect themselves, consumers considering buying disability coverage need to read the fine print.

The percentage of companies that paid all or part of the cost of workers’ private long-term disability insurance fell to 48% last year, from 59% in 2002, according to LIMRA, an association of financial-services and insurance companies. Many employers are “taking a step back in terms of what they pay and putting the onus on employees” to purchase richer benefits if they choose, says Michael Bailey, a principal at Mercer, a consulting unit of Marsh & McLennan Cos.

Vetting a Policy

If you are thinking about purchasing disability coverage, here are some things to check:

• Details of what it pays: If it’s a percentage of your income, does that include just your base salary, or other things like commissions?
• Portability: If it’s being purchased through your employer, can you keep it if you leave?
• What triggers the benefit: Do you have to be unable to do any job comparable to your own?
• Limits on payouts: For long-term policies, are benefits for certain conditions, like mental illness, capped?

Here are some online sources of information:

• Social Security Administration: www.socialsecurity.gov/pubs/10029.html
• Council for Disability Awareness: www.disabilitycanhappen.org
• Consumer Federation of America: Go to www.consumerfed.org, click on Publications, then Brochures, and scroll down.

At the same time, disability claims are pouring in to the Social Security Administration, and that’s resulting in bigger backlogs. The agency expects claims to jump to 3.3 million in the current fiscal year, ending Sept. 30, from 2.6 million two years earlier. That’s led to a greater number of cases pending-about 794,000 this month, up from about 557,000 in late 2008.

“With the number of cases rising and the number of claims awaiting a decision,” the waiting time for claims to be processed could tick upward, an agency spokesman said. He attributed the increase in claims largely to out-of-work people scrambling to make up for lost income.

What that means is that consumers should understand what benefits they might currently be able to access, and consider purchasing additional coverage to make up any shortfall.

Government Safety Net

Start by understanding what the government can provide. Social Security is only available to those with a condition that is either expected to leave them unable to work for at least a year, or is terminal. For those who do qualify-around 36% on average on the first application, though more win benefits after appealing-the payout averages just 40% of their predisability income. For high earners, the share will be smaller.

Tom Klett, a consultant with Towers Watson & Co., says qualified applicants should count on waiting three to five months or longer to get Social Security disability benefits. And with the number of applicants growing, “if you’re depending on that [benefit], you’ve got problems,” he says. Consumers should also check if theirs is one of the few states that provide some additional disability benefits.

Buy a Policy at Work

Figure out what your employer provides. If it pays all, or even a share, of the premiums for disability insurance, that’s your best option. If this is the case, make sure you have both short-term coverage, which tends to last for a few months, and long-term, which often only starts paying after a set time period, often 90 to 180 days.

Watch for a possible gap between them, since some employers’ short-term policies may not stretch to when the long-term ones kick in.

Even if your employer makes disability a voluntary benefit, with the premium coming out of your paycheck, it’s likely to be a better deal than purchasing an individual policy on your own. Still, particularly if you are young and healthy, you might want to check with an insurance agent.

Keep in mind that if you are buying a policy through your employer, you might be able to pay the premiums from your paycheck on a pretax basis. But this will mean you will owe taxes on the payouts you receive after filing a claim. You should also check whether you will be able to keep the coverage if you leave that company.

Ilene Sturrock, 46 years old, of Los Angeles bought a short-term disability policy in 1998, through her job as an office manager. She kept paying the $56-a-month premiums, even though she left that employer years ago and is currently out of work. She’s used the benefits several times, including an eight-week break for surgery four years ago, and a three-month gap in 2007 when she broke her foot. “It pays off in the long run,” she says.

If you are buying an individual long-term disability policy, the initial premiums will be set based on factors including your age, health status and occupation, according to insurer Unum Group. You may have the option of a level premium, which won’t change over the life of the policy, or premiums that could rise at a fixed rate. If you’re joining your employer’s group disability policy, the premiums will be adjusted based on the claims history of the entire group.

A growing number of employers offer basic disability coverage and let workers buy more. But you’ll have to figure out how rich a benefit you need. Long-term disability insurance will generally pay a percentage of your predisability income-60% is common-and it may not include extras such as bonuses. Also, be aware that most private disability policies require you to apply for Social Security benefits, and then subtract the government payout from what the insurer pays, a move called an “offset.”

Plan for Health-Care Costs

In figuring out your likely expenses during a period of disability, keep in mind that if you are out of work for an extended period, you may lose your job, and have to start paying for health coverage. Though disabled people who receive Social Security benefits can qualify for Medicare, there is a two-year lag before the federal health coverage kicks in.

Another key thing to check is under what circumstances the disability insurance benefit will pay out. It’s better if the money is triggered when you can’t do your current job, says Andrew Imparato, chief executive of the American Association of People with Disabilities. But some policies say that if you can do any comparable job, you aren’t truly disabled.

-This will be the last Healthy Consumer column, though I will continue writing about some of the same issues for the Journal. The best part has been hearing from readers about their own health-care experiences, and I hope that will continue. Email anna.mathews@wsj.com.

Write to Anna Wilde Mathews at anna.mathews@wsj.com