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As a physician, there are seemingly endless demands on your time. From training to continuing education to your family… not to mention seeing patients, you feel like you’ll never get it all done. And you know you need disability insurance, but is it worth it to take the time for medical underwriting and add yet another thing to your list?

In this episode, Billy discusses the benefits of medical underwriting compared to a group policy, and how to slash the amount of time medical underwriting takes, so you get the coverage you need.

Highlights from this episode include:

  • Why your guaranteed-issue policy is robbing you of benefits and how to fix it (2:10)
  • The smart doctor’s secret to streamlining the underwriting process and not wasting time (2:38)
  • Why group coverage policies cost you far more when you actually have to use them (3:37)
  • How to dominate the medical underwriting process and get a policy that won’t destroy your savings (4:42)
  • Why coverage offered to everyone… might not pay anyone (7:19)
Read Full Transcript

Hi, I'm Billy Gwaltney and this is the CYA podcast. This show is for the physician who understands the importance of protecting everything you've worked so hard to achieve. Each week I'll bring you tips and advice to help you cut through the clutter and misinformation and show you exactly what you need to preserve your income and way of life. If you're ready to achieve the peace of mind that only financial security can bring. Let's get started.

Welcome to episode number four. Today's topic. We are covering medical underwriting and is it necessary for specialty occupation disability coverage? Great question. The answer is usually yes. Medical underwriting of some kind is needed for the best definitions. The reason is because of adverse selection. In order for insurance companies to be able to pay their bills and pay their employees and meet future claim obligations, they have to make sure that their pool of policy holders is healthy to begin with.

01:03 This most comprehensive coverage. There's very little wiggle room for insurance companies to not pay a claim, and so they pretty much know that if, if someone is genuinely interested, excuse me, injured or sick, that these benefits can be paid for a long period of time. You can pay the premium on a disability policy for 20 plus years and be disabled for less than a year and you win financially as the policy holder. Now of course, no one wants to be disabled, but at least from an economic perspective, the pool of policy holders for the best, most comprehensive coverage has to be a healthy pool in order for these policies to be viable for all the policy holders. So yes, generally speaking, medical underwriting is a necessary evil and necessary step in the purchase of disability coverage. There can certainly be exceptions to this. Certain employers might offer what's called a guaranteed issue policy.

02:01 Oftentimes the benefits or the definitions associated with those policies are not quite as comprehensive as if you go through medical underwriting. So you would definitely want to be sure that the terms that are being communicated in those situations really are in fact this true specialty definitions, but generally speaking as a, as I mentioned, medical underwriting is needed. Now if you purchase amounts of 5,000 per month or less or if you purchase as a resident or fellow, this underwriting process can be significantly streamlined. You do need to answer medical questions, sign a HIPAA, authorize them to to check your medical background. However, the physical part, the urinalysis, the blood profile, the lab draw with a nurse is often waived and with the top carriers, this can be much quicker process because you don't have to do the physical part and that is usually good news to pur to folks that are purchasing this coverage in an employer setting when the hospital or healthcare system is offering a physician, a group, long term disability insurance or a policy this available to all employees regardless of their health.

03:12 Again, because of adverse selection, their pool, the insurance company's pool of policy holders and those kinds of situations is obviously less favorable. And as a result, insurance companies typically make the definitions less favorable as well and so it's just harder to collect from those kinds of policies. And so when you're looking at purchasing specialty coverage as a physician that follows you through your career, you would definitely want to make sure you're with the top handful of companies. Again, there aren't many that do this well and you also want to, if you can, if you're getting it, if you're healthy, you would want to go through the medical underwriting process because that helps ensure that the definitions are the best available. And again, the reason medical underwriting is required is because of this concept of adverse selection. The insurance companies need to be sure that the pool of policyholders that they're insuring are healthy to begin with.

04:07 Again, the statistics disability, the chances of being disabled even if you're healthy and a professional are much higher than most people think or would assume. And so this is just a necessary part of the process. Working with a disability specialist in these kinds of situations is important. These details matter. The definition details matter, but also having an advocate when it comes to the medical underwriting process. If you don't have a perfect medical history, if you have had situations in the past that concern you, the more specialized your broker is, that generally means that he or she has written a significant amount of business with that particular company and is known well by that underwriter and that broker can advocate for you in order to hopefully get something done that might ordinarily not be able to be improved. And so again, a specialist isn't very helpful in terms of making sure the definitions are what you need them to be and what you're expecting them to be.

05:09 So then policy benefits are paid if and when a disability does occur. But the other benefit to having a specialist is the sway that they can carry with an underwriter and during the medical underwriting process to be sure that the best offer is made on your behalf. Sometimes that can mean shopping with multiple companies and there aren't many companies that do this well, just a handful. So there's not an overwhelming process for a broker that's set up to do that all day every day. They would certainly be able to facilitate that. So just some food for thought as you consider your options. Again, as a disability specialist in doing this at this level for so long, I've just seen a lot. I've seen a lot of clients who have done the right thing and the right kind of coverage and a good number of them never need the coverage, which is good because this being disabled is never fun, but we do have clients on claim and getting this part of your financial life right is hugely important.

06:13 The reason is because as I mentioned about the employer policies is very common for someone to have a private specialty policy and if they become disabled and if the policy is structured correctly that they receive benefits as they expect, you know, the elimination period passes and then benefits become payable because that person is ill or sick or injured. However, is very possible to have a group, a long term disability policy regardless of who the employer is. This is nothing against a particular employer, but it's possible to have a policy like that that never pays a benefit. We've had clients collect from their private coverage and never see a nickel from their group policy. The reason is again, because the definition of disability, the definition for residual benefit, they're just so watered down compared to this private coverage. And again, the reason for that, it's nothing against the the hospital or an employer, it's just the nature of the beast when an insurance company is offering coverage to everyone regardless of their health.

07:11 And so those are details that you would want to make sure are covered is rarely advisable to rely solely on an employer's policy in employer coverages for long term disability. Again, because of the definition gaps, even if they call it specialty specific, even if they call it their own occupation, the group marketplace defines those terms differently than the private individual disability marketplace. And so again, a word to the wise for those who are considering this, hopefully you found this helpful. If you would like to discuss your particular situation or have questions for me, I would be happy to help. Anyway, I can. You can reach me by texting me at (704) 270-2376 and again, that's (704) 270-2376 and again, I'd be glad to discuss your situation anytime. Until next time. Again, this is Billy Gwaltney and I look forward to speaking with you or chatting with you again soon.

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