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If you’ve ever looked into disability insurance coverage, you know that it can be confusing. There are so many terms and definitions that it can make your head spin. But if you focus on the essentials, it becomes easier to understand.

In this episode, Billy goes over the 4 key elements of a disability insurance policy that you must understand, and explains why they matter to you and your family.

Highlights from this episode include:

  • The 4 key elements of disability insurance and why getting them wrong can end your life as you know it (1:01)
  • The devious way insurance companies can prevent you from earning income outside of medicine (2:08)
  • The benefit you must have in the event of a partial disability (3:06)
  • This mysterious benefit is essential but almost completely unknown by most physicians (3:49)
  • The almost magical trick to saving money on insurance, even as your income rises (5:50)
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 two. The title of today's program is a 10 minute crash course on specialty disability insurance. I'm happy to be here and thought it would be important to add to the podcast lineup early on. The key elements of disability coverage that physicians would want to have in place to make sure that they're fully covered. There are four key elements and all four are very important. The first one and probably the most important is the definition of disability.

01:02 You would want to have what's called a true specialty, own occupation definition of disability, and what that means is two things. First, it means that you're disabled if you cannot perform the material duties of your specialty or subspecialty and second, it means that if you, while your own claim are able to earn income or decide to engage in a different occupation, you can earn an unlimited income doing that occupation and there would be no penalty or impact or offset to your disability benefit. Both elements are important to have in your definition of disability. First, you're disabled if you can't perform your specialty, your subspecialty, but don't stop there. You want to confirm that if you later earned income doing a different job, teaching, consulting, running a medical practice, being an executive, doing something outside of medicine, family business, writing a book, whatever, that you can do that occupation, earn an unlimited income doing that and it would not impact your disability benefit.

02:08 You need to make sure both of those elements that are present in your definition of disability, very important. There are only four companies as the date of this podcast that offer that true specialty definition in a way that that would, you'd be glad you had if you ever had to use it. The second important element of coverage is what's called a residual benefit and this is a partial disability rider that you would want to make sure it's on your policy that pays if you are partially disabled and suffer at least a 15 or 20% loss of income, the percentage is dependent on which company, which insurance company you have or you suffer at least a 20% loss of time so it's income or time, not income and time or not just income. You want it to be income or time. The residual benefit is important to have regardless of your specialty.

03:04 There are certain schools of thought that say surgical specialties are either you can do them or you can't. There's no such thing as a part time surgeon and I understand the thought process behind that, but you would want to make sure your residual benefit is on your policy because there's still a chance you could use it, but also because it's usually tied to the third element that's really important to coverage and that's what's called a recovery benefit. A lot of times a recovery benefit is defined inside the residual benefit rider. It's what's called an enhanced residual benefit, which covers partial disability, but also the recovery benefit. A recovery benefit is probably the most important item that hardly anyone has ever heard of outside unless you're an insurance specialist or an insurance geek. Recovery benefit pays if you medically recover from a disability, which is certainly possible and return to work in your specialty, but when you return to work, your income does not recover to what it used to be before you were disabled and that's very common.

04:06 This is so important to have, especially in the days of production driven pay for physicians where you kind of eat what you kill. Ultimately, if you can't see as many patients, if you can't perform as many procedures or if you're just not as productive as you used to be before you were disabled, a recovery benefit is going to be a lifesaver because whatever that percentage difference is between your, your pre disability income and your, your post disability income, the insurance company would pay that percentage of your policy benefit even though you're no longer medically disabled. And that's just really important. And again, as we sit here today, there are four companies that offer that in a way that would be accessible without any gotcha components to it. It's very important to have that rider on your policy. So the first one is the definition of disability, true specialty.

05:00 The second one's residual or partial disability. The third element is a [inaudible] item is a recovery benefit. And the fourth item is what's called a future insurability option. The future insurability option allows you to increase coverage in the future as your income goes up. This is especially important for trainees who purchase coverage while in residency or fellowship with the idea that once they become an attending and their income goes up, oftentimes significantly right away, but especially over the course of their career, that they have the ability to increase coverage without having to go back through the medical underwriting process. And that is really important because it doesn't take much to cause an exclusion in the medical underwriting for a disability policy. So if you're healthy as a trainee, if you're healthy now, as you're listening to this podcast, get your coverage as soon as you can and get this future rider on your policy because what is going to do is secure your health and lock that away so that in the future when you need to increase coverage, your medical situation at that time will not factor into whether or not you can get coverage and will unexpectedly add exclusions to coverage.

06:16 The other important element to a future insurability option is to make sure that the rider will allow you to not only increase coverage with no medical review, but also increased coverage with the same terms. And at the same discount or premium structure that your base policy has in it. So in other words, when you go to increase coverage in the future, that true specialty own occupation, definition of disability, that residual benefit that we just talked about, the recovery benefit we just talked about, you want to make sure that all of those definitions are guaranteed to be included in the future. Insurability option purchase coverage amount, that is not always the case. There are some top tier companies that don't guarantee the definitions and as a result, they also don't guarantee the premium structure. So in the future, if you buy a policy in five years, you want to increase it.

07:09 If that company has changed their definition of disability, if they've removed the recovery benefit, if they've really increased their rates significantly, then you could be stuck with an inferior additional coverage amount definition and also a much more expensive policy for the additional coverage. And so your future insurability option needs to not only be included, it needs to in essence, fix the definitions and the premium structure so that in the future it will be based on your age at that time. So the rate will be based on your age at the time of the purchase, but the training discount, the premiums, the structure of it, the riders that are included are guaranteed to be the same as they are in the base policy. Those are really important features of blown through this really quick. There are more details to this that future podcasts. We'll cover the next podcast we'll actually cover the, the specialty own occupation definition of disability. So stick around for that or, or check that podcast out here shortly. And thank you for your time. I'm always grateful for that and I hope you found this beneficial. Until next time, this is Billy Gwaltney. Feel free to text me anytime to arrange a conversation. Happy to talk with you. My number is (704) 270-2376 again, (704) 270-2376 and again, I'd be glad to chat about your situation anytime. Thank you. Again,

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