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.
(00:28): Welcome to today's episode of the cover, your assets podcast. This is Billy Walton, your host, and I'm really happy to be with you today. As always in this episode, we're gonna cover an initial conversation that I would have with a surgeon who is still in training, could be male, could be female, could be anywhere in the country and various surgical specialties and subspecialties they're in training. And they have requested some quotes for the discounted rates or the specialty on occupation, disability coverage that I broker currently work with about 1600 physicians around the country. That's growing by a pretty large number each year. And the, the key focus is at this point, getting a better understanding of what the spreadsheet represents, what the terms are. The, and I generally start the conversation with a physician. Who's looking at this by asking them to share what their, you know, what their top of mind questions are.
(01:34): What questions do you have happy to answer those and talking as much detail as you would like the most common question I get is can you walk me through the spread spreadsheet? And they just a need for better understanding of what the terms mean in particular. And the purpose of this episode is not to replace that conversation, but to give you at least a starting point to begin learning, maybe during some downtime during a night shift, or just some a off the grid time when you're thinking about exploring options and what those mean for your situation. So I'm going to assume that the person I'm sharing this with, if you're listening to this, maybe you have the spreadsheet, maybe you don't, but I'm gonna assume you do because they're the spreadsheets on one page and it, we just go down the spreadsheet, start at the top and walk our way through this generally is a 20 to 30 minute conversation, depending on questions I've learned to do it really quick in kind of spurts over multiple conversations.
(02:33): I've learned to do it, you know, when people have time to start and go all the way through. So I'll try to be brief and keep it concise and obviously would be open and happy to have more conversation with you directly about specific questions you have start with a quick background of who I am. My specialty is brokering true specialty on occupation, disability coverage. I call it my specialty because it's just what I do morning, noon and night. For some reason, I love it. As I mentioned, work with close to 2000 physicians around the country, and we do end up helping most, if not all of our clients with life insurance as well, just because the, the underwriting and so forth, so closely related, but the key focus or trainees who we are working with is this kind of on occupation, disability, coverage.
(03:28): I love what I do. I'm not sure why, but I do really enjoy it. And one reason I think is because I, I enjoy working with physicians. I've mentioned this another podcast I admire at you, ladies and gentlemen, do putting your life on hold to get really good at something is a big deal. And we need more of you, not less obvious. So God bless you. I hope you knock it out of the park from a career standpoint. So that's a quick background who I am. I am an independent broker. And so the spreadsheet shows the top four contract in the specialty on occupation marketplace. These are the only four you would want to pick. If you make the decision, I would love to work with you, but whoever you work with, make sure you stick to these four. There used to be six there, then there were five.
(04:13): And so depending on if, if you've looked at a Google search or a blog post, depending on the date of that, they may may inch and more than these four, but it gets complicated outside of these four in a way that's to the detriment or the, to the downside of the insured. Okay. Which is you. So over the course of your career, and if a claim's ever filed these four are the only four that, that are unambiguous. I think that's a word, but they're the clear definitions and the easiest to deal with, and they're no moving parts. And so we'll talk about what that means. But these four are the best four, the only four and it, it does get muddy quickly outside of these. All of these examples are what's called non cancelable, guaranteed, renewable, which means that the policy can never be canceled by the insurance company.
(05:06): The definitions can never be changed by the insurance company and the rate can never be changed by the insurance company. That's significant. You wanna make sure that, that your coverage has those that what's, what's called non cancelable and guaranteed renewable termin to it. Now we're just gonna kind of start at this top of the spreadsheet and work our way down. The four contracts, there are four columns, again, four separate insurance companies, mass mutual emeritus, guardian and principle, or the four that are on there. They offer trainees 5,000 a month of coverage while they're in trainee. That benefit would be not untaxed. So if you receive $5,000 upon being disabled, you wouldn't know the state or federal government any of that, you're able to spend all of it which is significant. There's no law or rule that says you have to start at 5,000.
(05:57): So we put usually with one or two of the companies, we'll put a $2,500 option at the bottom, just so you can see the linear relationship between the cost and the benefit. And, you know, if you have a number of years left in training, and you're saying, Hey, I don't wanna, I don't feel like my budget can absorb the cost for 5,000 will. Don't it's not all or nothing. Start at something lower lock in your good health and remove the medical screening from a risk that you're, you know, an uncertainty that you're carrying make that certain lock in the discount, make that certain lock in the definitions make that certain. And then once you get to situation, you can bump up and still end up at the highest coverage amount over the course of your attending career. So we put that there, just so for 2,500, just so people can see if that's appealing to them the elimination period of 90 days, your spreadsheet may show 180 days as well.
(06:55): That's the length of time that you self and your, from the date of a disability until the first check shows up. Okay. So if someone is disabled on January 1st and they have a 90 day elimination period, they get their first benefit check in April. Okay. And if they have 180 day elimination, they get their first check in July, the longer you're willing to wait the lower the cost. And so you pick which one you want generally for our clients that are say 35 and older we'll show, both 90 and 180 days. Most of our younger clients do tend to gravitate to the 90 day, but that's flexible. That's your call benefit period to age 65 is pretty customary. You could get a benefit period to 8 67 or 70, if you wanted it. It does cost more for that. Most of our clients seem to default to 65.
(07:47): So that's why we put that there, the definition of disability, this is what starts to separate these four contracts from everybody else, true specialty on occupation. That definition means two things. A and this is important for surgeons. First thing it means is that if an illness or injury prevents you from performing the material duties of your specific job as a surgeon, then you are totally disabled. And two, there's no penalty for income. You later earn doing something different. Okay? So if you are surgeon, it could be general surgeon, vascular surgeon, orthopedic, surgeon, neurosurgeon, whatever it is, could be op surgical ophthalmologist could be a proceduralist, you know, gastroenterology. If you can't do those procedures, if you can't do surgery and that's, what's driving your practice as confirmed through the, the codes, the, it are filed C P T codes by with for patients that see you.
(08:44): If you can't do that, those duties, then you're totally disabled. You could then go teach or consult or write a book or do something in medicine do outpatient clinic. You could do something outside of medicine, invest in real estate, whatever you want to do, make an unlimited income doing that. And there's no penalty to your benefit. And so that is the best definition available. It's important to have both of those elements in your coverage and all four of these do that really strong highly advisable to secure that definition while you're healthy. And I'll talk about the streamline medical screening at the end. The next on the spreadsheet is what's called the total future insurability. That's what allows you to increase coverage. Once you become an attending as your income increases, most of our clients want their coverage to keep pace with where their income is as their career grows.
(09:38): And so the, the policy would have the ability to increase up to a maximum cap of say, 20,000 a month. In some cases it could be 30,000 a month depending on your specialty and depending on the company there's a formula that companies use to calculate how much coverage you can purchase based on your income. So they won't give somebody 20,000 a month just because they're willing to pay for it. They really don't want you over-insured, if they can help it, believe it or not. And so once you graduate, we would kind of run the numbers, do the formula based on your new salary. And you can increase up to that cap and whatever is left over. So let's say you're, you're in training. You're at 5,000. When you start as an attending, you can bump up to 15,000, then you can do that right away.
(10:28): And then if you still have, let's say your policy has a cap of 20,000 a month. That 5,000 that you haven't used yet would remain available to you to act success down the road, as your career continues to grow. We do have some surgical specialty clients who have two policies. So that, that is a possibility. If you, if your policy has 20,000 a month cap and you maximize or use all that, and you, your income continues to go up and you want more, then we would just add a policy on top to accommodate that. So you have an idea that again, this benefits non-tax, so the numbers can look a little odd at first to qualify for 20,000 a month of private specialty coverage. Again, non-taxed requires a pre-tax income in the range of 600,000 to who maximize up to 30,000 takes about a million or so.
(11:23): And I, and some of that can change based on if you have a group long term disability policy through your employer that factors into the equation. And so you, most people have a general idea what they expect their career to do. We do have some clients that end finding their lane and their sweet spot, and, and they kind of, they do kind of knock it out of the park that I mentioned earlier from a financial standpoint. And so they want more than just the 20. And so that's where we would layer another policy on top. It's essentially a linear relationship between the costs and the benefit. So whatever you're paying for 5,000 a month, if you triple that, you're basically gonna triple the rate. There are some exceptions of Meritas generally in their current contract the at higher coverage amounts, the per unit cost is lower.
(12:09): And so theirs could be lower. So if your at numbers equal across the board for all four contracts, or at least in the same ballpark, emeritus is probably gonna be the least expensive at say, 20,000 a month. That's not always the case, but generally speaking that that's something to factor in, but just from a budgeting standpoint it's important to just say, okay, there's you, you're gonna get the trainee discount on everything you end increase to, which is very important, which is why it's a linear relationship. You don't pay more just because you're an attending for the same amount of coverage. You're paying more from the standpoint that you're buying more coverage, but you're still accessing the trainee discount for the life of the policy. That's, what's so vital about getting it in training for whatever reason these come companies offer their biggest discounts to trainees, and it's not close.
(12:58): I do end up working with attendings that for whatever reason, you know, don't get around to this while they're in training and they generally pay more. I, I wouldn't say always, but a lot of times they do pay more. We are, we're able to access discounts for attendings, but usually they're not quite as robust as for trainees. The other benefit to having this on your policy, this future insurability access is that when you go to increased coverage, you don't have to redo any of the medical screening. Again, I'm gonna talk about what that's like. It is streamlined and easier for trainees, but you go through that once forever. So when you go to bump up coverage down the road, you don't have to be as healthy then as you were, when you started another important point, there are some guidelines around how companies, how often they'll let you do the increase.
(13:41): Some of 'em it's every three years, but there's some triggering events like graduation or job change when your income increases significantly, or you lose employer group coverage. And so you don't always have to wait three years. So don't, don't let that spook you. If you say, Hey, I graduate in a year. I don't wanna wait three years. You don't, you wouldn't have to wait three years. You'd be able to bump up right away, but generally over the course of your career three, currently three of the top four companies would have a, an option where every three years, as you go progress through your career, as I mentioned, you'd be eligible to increase your coverage and they would run those numbers. We'll talk about that in more detail for your specific situation, because they're in that three year rule, you are required to accept at least 50% of what you're eligible for at that time, or they remove the increase option from the policy.
(14:35): So again, just some guidelines you might call 'em guardrails around how they do it. They want you to keep pace with where your income is, to the extent, at least up to 50% of what you're eligible for from an increased standpoint, next on the spreadsheet is what's called an enhanced residual benefit. That's a partial disability benefit that pays if you can do your specific duties and specialty part-time, but not full-time as a result of an illness or injury. And so it's not all or nothing. That's important. There's a percentage loss of, of time or income that is required to activate that benefit. It's either 15% or 20%, 20% is the industry average, but mass mutual emeritus and guardian have, have stepped it up to the next level. So it's 15% lower is better. So that's partial disability benefits important to have the next is a vital benefit called the recovery benefit.
(15:33): This pays if you medically recover from a disability return to work, but when you return to work, your income does not recover to what it used to be. And that happens quite a lot. We have clients that have collected for over a decade from that it's very possible, especially in the days of production driven pay to, to be disabled, come back, medically cleared to go back to work, but just never reach the same level of productivity as you were before you were disabled. And so it is something to factor in and that benefit gets removed from, it's not a present in employer policies or especially group policies, and it would be painful to live without a policy that has a recovery benefit. So I definitely wanna make sure it's probably the most important rider that no one's ever heard of. And so keep that in mind, long term recovery benefit next on the spreadsheet is what's called a psychiatric benefit that pays benefits for disabilities related to psych the illnesses, depression, anxiety, and addiction.
(16:37): Guardian would pay potential benefits for that two age 65 for the full benefit period. There are exceptions where they'll limit that to two years like emergency medicine, pain, medicine, anesthesiology specialties, but outside of that, for the most part, they'll, they'll give you the option to have up to age 65. That's what they're known for guardian. If someone's gonna gravitate to guardian, that would be primary reason why Ameritus offers either a two year benefit or a five year benefit, depending on your specialty. Most surgical specialties would be two years. There are some surgical specialties, five years. So just obviously you'll, you'll be able to see that on your spreadsheet mass mutual offers two years per occurrence, and then principle is two years over the life of the policy. Now anecdotally speaking, we've never seen a claim go beyond two years for psychiatric disabilities, but it doesn't mean it couldn't happen, obviously.
(17:33): So that's a personal call as to how important that is. I will say again, I've mentioned the medical screening, which I'll go into more detail in a minute. If someone has been treated in the past or currently being treated for even mild anxiety or depression or ADHD, then generally speaking, they're gonna exclude the psychiatric benefit from the policy as a preexisting condition. So just something to factor in next is what's called a presumptive benefit that pays if certain events happen and you wanted to continue working in your specialty, they're gonna go ahead and pay your full benefit it anyway. And that's a loss of hearing a loss of eyesight, a loss of speech, or a loss of use of both arms or both legs or one arm and one leg. So if you lost your hearing and wanted to continue operating or continue in your specialty, they would presume that you're totally disabled and pay your full benefit.
(18:28): Anyway, each company offers that they define it differently. Like principle requires permanent disability or permanent hearing loss. In that example, the others don't require permanent emeritus would waive the elimination period and pay you right away. So there are differences to how they do it. You would just want to verify that in your particular policy and would be happy to discuss that further because presumptive benefit doesn't mean principle doesn't mean that you have to be permanently unable to hear forever for before they'll pay. If your hearing loss prevents you from doing your occupation, then you're gonna get paid. I mean, that's a, that would be a claimable situation. But if you want to, if the presumptive benefit kicked in, it would need and you wanted to continue working, then they would just require it be permanent. That is a nuanced definition.
(19:20): And so I recognize how that could be confusing. We'd be happy to explain that further Aerus offers a couple of perks that people like that we mention that are available most states one is what's called a non disabling injury benefit. They will pay 50% of the base policy benefit up to a cap of $3,000 towards any medical treatment for minor injuries. Okay? So if you ever hurt yourself, it doesn't have to be work related. It can be working out, hiking on whatever skiing, whatever it is. If you ever go to urgent care or get stitches or x-rays, or even surgery for an injury, they will pay the medical cost of that treatment. Even if your health insurance covers the whole thing. Now, if you're disabled, because the, the injury, the policy kicks in this is if you're not dis stable, you could miss work.
(20:13): You may not miss work. We've had clients get MRIs for sprained ankles. We've had clients get, go to a chiropractor because they tweak their back, working out or get stitches because they fell off their bicycle, whatever it is they're gonna pay the medical cost of that. Even if you don't have any out of pocket, you can make a profit on your injury. That is correct. If you have a $5,000 policy in training, they'll pay up to $2,500 to that. Once your policy goes at 6,000 of coverage and higher than that, that non disabling injury benefit cap will bump up to 3000 and it'll be capped there per occurrence. There's no limit to the number of times you can use it. They can't raise your rate. They can't exclude the injured area. There's really no downside to it. So it's just a perk.
(20:58): They offer as an incentive to pick them. Another perk they offer is what's called a good health benefit. That's significant. What that means is that every year someone is a policy with emeritus and is not disabled, which is how they define good health. They'll drop the elimination period by two days. So if you have a 90 day elimination period, that's going down to 88, 86, 84, 82, it's going down two days, each year, you have a policy automatically. And so in 15 years you could have a 60 day elimination instead of a 90, an actuary would say that's significant statistically. So something to factor in the next line in the last one before the premium section is what's called the cost of living adjustment or Kohler rider. This is an optional feature that you elect at the time you buy the policy it's designed to offset the impact of inflation.
(21:51): So it kicks in at the time of claim and whatever your benefit is, let's say you had 5,000 a month and, and become disabled. They're gonna pay 5,000 for the first year. So for 12 months you get 5,000. Then in the 13th month, they're gonna bump it up by 3% for example. So they're gonna keep doing that each year. You're on claim for as long as your own claim, each company defines it or, or calculates it a little bit different. Some are compounded interest. Other emeritus is simple interest currently principle has a zero to 3% compounded that's based on the consumer price index, which is the national gauge of inflation. So it's gonna flow the point of these is to help keep pace with inflation, which they've all done. It just depends on how, you know, significant inflation is at the time you're disabled, right?
(22:38): So some clients most of our younger clients tend to opt for this. Some don't it's not required. So we show the rates down at the bottom than without the cost of living included. Each one of these companies sets their own discounts and those discounts for trainees are, are primarily driven by their desire for growth and market share much more about that than it is the quality of their contract. And so if you see one that's more expensive that has to do with either, they have, they, they have a smaller discount and or they classify your occupation, your specialty in a more risky category, which means you'd pay more. And so surgeons pay more than pediatricians. For example, certain surgeons pay more than others. And so you just, it depends on the company. Each company has their own actuary department that decides what these rates are gonna be for a particular specialty or sub-specialty.
(23:39): So currently on the spreadsheet, you'll see the discounted rates, I'll say the discounts currently, but they, they do range. And these could change. Mass mutual is currently, you know, up to 25%. It could be 10%. It could be 20%. It just depends on the situation and where you're in training emeritus is either 20 or 30% depending on your specialty, guardian is 10% and could be some other options depending on your specialty for another 10%, total of 20%. And then principle is 30%. Principle does offer a psychiatric benefit to age 65, very few of our clients pick that. But if you did want that, that would increase the cost by 10% on the spreadsheet that you see. So if you're okay with their two year psychiatric benefit, you get a 30% discount with principal. Typically again, these can change and so insurance companies reserve the right to adjust their discounts.
(24:38): So just check to make sure that you're getting the maximum discount, which if you're looking at a spreadsheet, I sent you, it does maintain the current maximum discount for your specialty. And for each company Ameritus offers two sets of rates, which you'll see for their premiums. The higher rate on the spreadsheet is the non cancelable and guaranteed renewable rate. Okay? So it's the maximum trainee discount. And that rate can never be increased unless you increase coverage, the policy can never be changed and the definitions can never be changed. The other option, the less expensive option is guaranteed renewable only, which means that the policy can never be canceled. The terms can never be changed, but they could increase the rate by occupation call last. Okay. Now in the, I don't know, 57, 58 years, they've been selling disability policies to the public. They have never raised the rate on any, any physician occupation in the past.
(25:38): Okay? So they've got a really perfect track record over a pretty long period of time. It is a small risk. It is a risk, but it's really, really small. So a lot of our clients like that, they like the opportunity to save an extra 15% because it is 15% additional discount. Other clients don't want to give anybody a chance to mess with their rate. And so that discount's not for them. So it's just something you ought to at least know about. I mentioned the medical screening, the streamline medical screening. It is easier for trainees because they waive the insurance physical. So if you're listening to this currently, you would not need to see your doctor, see a nurse or get labs done. They waive that for you. They are still medically screening. You they're just doing it over the phone and electronically. So if you were interested in one of these you pick the one you want, I would email you a DocuSign link to put in your personal information.
(26:33): It's like an intake form take you seven or eight minutes. You do that electronically. Then you would, e-sign an application electronically and then do a phone call with an underwriter where they ask you, they have about 20 or 25 medical questions they go through for everybody. And so they would just ask you those over the phone and that's it for you. Your involvement's less than 20 or 30 minutes. And it's all remote. The process from start to finish can take anywhere from one week to eight weeks that it can take a little while, just depending if they need to get medical records to verify details. That's usually where the time lag comes in, everything's delivered electronically. We would get that to you and keep you posted along the way. So it, it is never been this easy to get co the best coverage your broker.
(27:21): Common question I get is okay, Billy, how do you get paid? No one ha ever pays me an extra fee. The broker is compensated from a small percentage of the policy premium over the life of the policy. So it's already included in the rate that you see on the spreadsheet. It, that rate cannot be adjusted. So if you called mass mutual directly, they would send you to someone like me there to be a broker on the application. And so you're gonna pay a broker no matter what. And so it's up to you to make sure that your broker earns it. Okay? Your broker needs to be good. Your broker needs to be somebody. Your broker does matter. It needs to be somebody that's gonna hold your hand through the process. Make sure that you get through underwriting and advocate for you at any point needed.
(28:04): Make sure that the details are, are what you think they are. The devil is in the details for this coverage. It's very possible to have a disability policy that never pays a benefit. It's very possible to have a policy with mass mutual emeritus, guardian, or principle, and not have the key definitions that you need to have. So just because your policies with prince doesn't mean that it has the definitions, it just means you're with a company that offers those definitions. You want to verify in writing what those definitions are, have your broker, lay it out to you in as much detail as you require, okay. Don't ever apologize or, or feel like you, you, there's only so many questions you should ask. If it, if it's not in writing, it does not exist. This comes to the very basic you could be with the best employer on the planet, the most world renowned health clinic or hospital in the world.
(29:02): But at the end of the day, if they're gonna employ you, you're gonna want to writing what generates your paycheck, right? Because if it doesn't exist in writing, then you're not gonna get paid. You want to show me the formula for how I get paid. It needs to be in writing, spell it out where I can understand it. Well, the same is true with disability coverage. Make sure those details are there. Your broker should do that. We do that. We want to make sure that you, you, what you're getting and that you have what you are paying for the other part, where your broker matters and where they're being compensated is making sure your address is updated whenever you're ready to increase coverage, making sure that you understand what that is, what the maximum amount is, what the rate is, where the discount is and that process, and then advocating for you at the time of claim.
(29:49): So when the rubber meets the road and some, we do have clients on claim, they all get paid. Of course, insurance companies for HIPAA reasons deal with you directly, but we can, your broker can be as involved as you want him or her to be E you, our clients sign an extra authorization, allowing me to speak with the claims people. And then we can advocate. We can make sure that things are moving along the way they're supposed to. And that does matter. These companies are excellent at processing claims. Okay? They're, they're really good. There's no wiggle room because the contract language is the best available, but that doesn't mean that there aren't things can't get lost in translation. And so what we help do, we've had clients where they've tried to translate something to a claims person, and it wasn't clear. And we've been able to clarify that and move the needle and make sure that clients get paid.
(30:38): So your broker is the, the reason and a broker, it gets paid. The small piece over the life of the policy is to keep you happy is to make sure that you're cared for. And so wherever our client, we have clients all over the world, Australia, Asia, Europe, and obviously in the states and north and south America. And I love that about you, about the physicians, traveling, living all over the globe. So whenever you UN disabled, you want to make sure that you're cared for no matter where you are. So just a quick overview, hope this was helpful. I would be happy to answer any additional questions for your situation. Please feel free to reach out to me. Text me, call me my number (704) 270-2376 again, 7 0 4 2 7 row 2, 3 76. I'd be happy to chat with you until we meet again. This is Billy Walt me. Thank you as always for your time. I appreciate it.
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