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Disability Insurance for Medical Residents and Fellows

written by guest writer Tyler L. Rivetti

Protecting your income is one of the smartest financial decisions a person can make.  Residency is the best time to obtain quality disability income insurance.  There are discounts available at most teaching hospitals during your residency.  In addition, your GME program may be offering a special Guarantee Standard Issue (GSI) program, which allows you to obtain quality disability coverage with no medical underwriting.

“3 in 10 workers entering the workforce today will become disabled before retiring”[1]

The normal medical underwriting process consists of a physical exam, blood and HIV tests, prescription drug checks, and a review of past medical records.  It may also include a request for financial information, such as tax returns or a copy of an employment contract, as proof of any income that may be promised to you. Through this process, it is common for residents to have modified policies issued with exclusions and ratings.  This can be due to something as insignificant as taking medication for stress during medical school.  Where available to you, the GSI program allows you to obtain the same policy that everyone else must qualify medically for.  It also offers substantial discounts that cannot be obtained elsewhere.  Savings for female physicians can be as much as 50% from the normal premium.

Assume a 38-year-old physician became disabled with $12,500 of monthly disability benefits.  The cumulative benefit received through at 67 would be up to $6,745,328, completely income tax free![2]

The younger you are, the less expensive disability insurance will be.  As with most types of insurance, the older we get, the more expensive it becomes.  If we compared a 30 and 40-year-old physician, the 40-year-old would pay more in premium over the duration of their policy than their younger counterpart.  Even though the 40-year-old waited an extra 10 years before obtaining a policy, the higher premium at their age will result in a higher amount of total premiums to be paid.  Waiting will not save you money!

Would you rather have disability insurance and not need it, or not have disability insurance and NEED it?

As a physician, your disability income policy should protect you within your specific medical specialty.  As an example, if a cardiologist can no longer perform the duties of a cardiologist, they may continue collecting disability income benefits, even if they continue working in another occupation, i.e. as a consultant or in another specialty such as pathology.  Other important policy options are:

•Noncancelable – Premiums are guaranteed.

•Future Purchase Option – Allows you to increase coverage in the future, irrespective of any health changes.

•Partial/Residual Disability Benefits – Allows you to collect benefits if you are working part-time and suffer a loss of income.

•Cost Of Living Adjustment (COLA) – Increases monthly benefits to keep pace with inflation.

Remember the first rule of insurance:  Insure what you least can afford to lose.  In this case, it is your ability to earn an income.


Tyler L. Rivetti is an advisor at Rivetti, Clark & Associates who specializes in insurance planning for physicians and medical practices. Rivetti, Clark & Associates has provided comprehensive financial services for the exclusive benefit of physicians, residents, and fellows since 1979. Contact Tyler at tyler@rivetticlark.com or on the web at http://www.docplanning.com for a complimentary consultation.

[1] Social Security Administration, Fact Sheet 2007

[2] $12,500 of monthly benefit increasing on a compounding 3% basis each year for inflation.