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We are completely convinced that every physician should have an individual disability insurance policy. But what if you waited too long, or your medical history prevents you from qualifying for one? In that case, group coverage may be a good option.

In this episode, Billy discusses when you should opt in to your employers disability insurance, what to look out for when it comes to group coverage, and pitfalls that could leave you without insurance, even if you’re part of the policy.

Highlights from this episode include:

  • The only people who should rely on group coverage and why it could bankrupt you if you don’t fall into that category (1:14)
  • Why “adverse selection” can render group disability benefits worthless (2:16)
  • Does your group policy define your occupation this way? If so, it could mean you get paid $0, even if you become disabled (3:00)
  • The devious way coverage on your group policy can change without you even knowing about it (4:55)
  • The spectacularly confusing way definitions vary in group disability policies and how it can destroy your financial plan (6:35)
  • The ONLY way to ensure you actually protect your ability to earn a living with a group policy (7:30)

To ask questions on insurance coverage or to get a quote, please don’t hesitate to call us anytime at 704-270-2376, and I’d be glad to discuss your specific situation with you.

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 six. The title of today's program is, should I count on my employer group long term disability policy? That's an excellent question and something that every physician should factor in to their overall disability protection approach. One of the significant benefits to a group LTD policy and an employer setting is that it provides coverage for people who have significant medical histories or conditions because coverage is made available to everybody regardless of their, of their health, and that's important for those who either would have significant problems getting their own private coverage or in some cases are just not able to get it because of their medical history.

01:12 And so it plays an important role in that regard to at least allow there to be coverage for significant disabilities. Usually benefits are taxable from group LTD policies if you receive them, unless your employer grosses you up through your paycheck to account for the taxable nature of employee benefits if received from an employer who pays for it, but you would need to look at your particular situation. Usually a stackable but not always. When it comes to group LTD policies. What I mentioned earlier is ultimately what makes their benefit limited and it's a concept called adverse selection or I guess that's the result of the fact that these policies are required to ensure healthy people as well as unhealthy people with the same policy and anytime the pool of policyholders is significantly higher from a risk standpoint for an insurance carrier, they typically offset that risk by just making it more difficult for everyone to meet the definitions of disability and so they're just harder to collect from and that's no fault of an employer.

02:17 It doesn't matter really who your employer is, how prestigious they are or how well they care for their employees. It really is just the nature of the beast of the employer group, LTD insurance marketplace. As a result again, the definitions are usually significantly weaker. It's one of the few employee benefits that actually might never actually pay a benefit. It's very possible to have a disability policy and we've had clients where this happened where they become disabled and they never see any money from their group LTD policy because they don't meet the definition of disability or they might collect for a short period of time. Then benefits stop and when it comes to private coverage, the importance of that is that the definitions are much more comprehensive. The reason they can be more comprehensive is because medical underwriting is usually required, which means that the pool of policy holders is much stronger from a risk standpoint for the insurance carrier so they can offer better policies and so again, it's possible to have a disability policy through an employer that never pays.

03:26 I've actually talked to attorney, I talked to an attorney friend of mine several years ago and she was telling me that she had a client that she was currently representing who had become disabled, was collecting from his employers disability policy and all of a sudden kind of out of nowhere, he gets a letter from the insurance carrier saying, Hey, we know that you were denied social security benefits. We are requesting that you file for an appeal and reinitiate that a process for getting social security benefits and in the meantime we're going to go ahead and stop paying you the full amount. We're not going to pay you. We're going to pay you as if you are collecting social security benefits until you complete that. I didn't know that was even legal or possible. Maybe someone's listening this going and there's no way that could ever happen, but it happened that she's, she's a good attorney and she was telling me about it and it was almost like the insurance company in that particular situation was just saying suicide, you know, try to try to fight it.

04:22 That's fine. They seemed willing to fight that battle. And so group disability policies are just a lot less reliable from a claim standpoint. The other thing to factor in as an employee as a physician is that when it comes to a group policy, you have no control. By default, you are a certificate holder of the group policy. And as a result, the controller of the group and your association or the employer or the insurance company can change benefits without notifying you. Without you having any say in it, they can actually stop it at any time. There's a very well known organization in the physician or road that offers a disability policy that they market as essentially individual specialty disability coverage. And it's a, it's essentially a group policy. I don't know how they get away with it. I don't know who their advisors were.

05:14 They said that that was, you know, okay to do, but they do it. And when I have conversations with people about this policy, I'll just I'll take them to the website. It's in, it's in writing. It's a group policy that is subject to change. The discount is not guaranteed. The terms can change, the policy can be discontinued and so you can find yourself counting on a policy that might actually not be in effect in the future. If a group policy is what you're relying on. Again, as I mentioned, because of the the healthy and unhealthy being insured by the same policy, the definitions are usually weaker and that can be problematic because most disabilities are not catastrophic and so meeting the of a D of disability for a group policy is just a lot more complicated in a lot of cases. The other thing to note in the group LTD marketplace is that terms that get thrown around pretty regularly.

06:10 The term own occupation and the term specialty specific and the term specialty occupation do not mean the same thing as they mean in the private specialty disability marketplace. When most physicians that I talk to say their own occupation or specialty on occupation, they believe that that means that they're disabled. If they can't do their specialty and there's no penalty if they go work in a different occupation, that is not what a group disability policy is. A group LTD policy means when their policy says it's on occupation, it's just a different definition. It generally means that you're disabled perhaps if you can't do your own occupation as long as you're never working or earning any income in a different occupation. And also benefits are typically in a group policy offset by other government benefits, social security, workers' compensation in some cases retirement benefits and certainly any private income you would earn if you were able to do teaching or consulting or or other kinds of things.

07:11 And so that would be another downside to the group disability policy. The bottom line, if you, if you have the ability to obtain your own private true specialty occupation disability coverage that has the most comprehensive definitions and there are only a handful of companies that offer that kind of coverage. If you have the ability to get that, please do do it right away. If you haven't already, you would be very glad you had that if you ever needed to file a claim, relying solely on a group LTD policy is a risky approach in my experience with what I've seen. And so as a specialist in doing this with a lot of clients across the country, having your own private coverage is ultimately what people count on if they're ill or injured and can't do their specialty. And if you get the benefits, if you do happen to meet the definition of disability from your group LTD policy, then it's icing on the cake and it, and you definitely want to take it if it's there, but it's very possible for it not to be there. And so please factor that in as you consider your situation and I hope you've found this beneficial. Please feel free to text me anytime to arrange a conversation or to answer any questions. My number is (704) 270-2376 again, that's (704) 270-2376 I'd be glad to discuss your situation anytime. Until next time. This is Billy Gwaltney. Thank you for carving out a few minutes. I am always grateful for that. Take care.

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