Be Certain of Your Custom-Built Physician Disability Contract – Case study of a doctor’s surprising discovery

Custom Built Physician Disability Policy Review
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Disability insurance reviews are more common and useful than you might think. Even if you have a great policy, there are several factors (increased income, marriage, having a child, etc.) that warrant a quick update to make sure you are receiving the best benefit potential for your specific needs. Unfortunately, it’s far more common to need a disability policy review because you’re not receiving the type of coverage you think you’re paying for. This happens frequently with “custom built” disability insurance policies.

A Recent Situation

Our client thought he had an $8,000/month benefit, but he really had $800/month! Make sure you’re receiving the coverage you think you’re paying for.

I had a doctor call me about his physician disability insurance recently. He had purchased a disability policy 4 years prior and wanted it reviewed to determine whether or not it was time for an upgrade. Here is the information he provided:

Age: He is a 47 year old Physician
Health: He purchased his policy at age 43
Benefit: He had $8,800 in monthly benefits
Disability Definition: His Policy used an Own Occupation Definition
Premium: He was paying $99.00 per month for his policy
Insurance Provider: He purchased his insurance from Ameritas Insurance Company

Believe it or not, this is actually more than enough information to determine whether or not you have purchased a quality doctors disability insurance policy. Here is why:

  1. Knowing the insurance provider alone will give us a good idea of the type of policy you likely have. There are only 6 major disability insurance companies, so this information gives us a quick idea of the type of disability insurance product you can have. While Ameritas Insurance Company does offer extremely high quality, long-term disability insurance, this type of product typically costs more than this particular client was paying, so this was a clear red flag.
  2. The cost alone made this policy questionable because of the “benefits” the physician thought were included. Consider our disability insurance rates page for $10,000 monthly benefit. For a 43 year old male, a healthy 43 year old, you should expect to pay somewhere around $198.00 per month. Given that he was paying half that, it was very likely he was NOT getting the strong Own Occupation Definition of disability he thought he was, not to mention several other essential components that make a great disability contract.

While a physician’s specialty also plays a role in this, it’s usually enough to know the benefit, premium and DI definition to determine if your policy is suspect. I outlined two situations for my client: Either – one – he misunderstood the disability policy and language that the representative actually wrote for him, or – two – the representative had no clue what he was crafting for the physician. Either way we would get to the bottom of the situation.

The Reality
Upon further review it turns out he had a significantly inferior product design than he believed. He had an $800 per month benefit, not $8,000.00! His policy was also NOT the true Own Occupation definition of disability but rather a policy with a Not Engaged clause – hence the very low cost for this product.

It did have an $8,000 per month Catastrophic Disability Benefit attached as a rider. If you have ever heard about the catastrophic disability rider then you know it is there for the most severe disabilities where you need help with bathing, eating, dressing, transferring, etc. In other words, he would be covered for the most uncommon disability scenarios, but not for the disabilities most physicians have to deal with. Common scenarios like chronic back pain or hand tremors would not fall under the Catastrophic Disability Benefit.

In addition he had a Social Insurance Substitute Rider (SIS) on his policy. Under this rider, if he were to become disabled and receive a disability benefit from Social Security, then his $800 per month benefit from Ameritas would go down to $600 per month, and he would not qualify for the other $8,000 (unless he has one of those aforementioned “Catastrophic Disabilities”).

Bottom Line: He was not receiving the coverage he thought he was paying for.

Taking Action
Over the last 4 years this physician thought he had $8,800 in monthly benefits to take care of himself and his family if he were unable to perform the duties required of his specialty. What he really had was $800 per month and even less if Social Security was paying as well.

We immediately re-wrote the case with Ameritas, since that was the best option based on his age, gender, medical specialty and state of residency. Even if he did have the stronger disability policy he thought he had, it was still time for an upgrade as he now qualified for a benefit to $15,000 per month of coverage. Furthermore, we applied for the true Own Occupation definition of disability so that he will receive his benefits if he can’t perform his specialty. Even if he decides he wants to pursue a different career (assuming his disability prevent him from doing his own specialty), there would be no offsets, no funny business and a FULL Benefit payment with no residual reductions.

The Moral of the Story
When you have a highly customized disability contract, like many carriers offer today, you really need to be able to trust that the representative you are working with knows how to correctly “build the contract for you”. There is more to a disability plan than just ordering a #1 lunch combo at a fast food restaurant. Always work with someone that really knows these contracts and builds at least 50+ per year. Otherwise you might just end up confused and holding the bag at claim time!

The good news is that it’s quick, easy and free to do a policy review, both for you and for us. As you’ve seen, it doesn’t take much information to know whether or not you’re getting the coverage you think you’re paying for. We’ve been helping physicians for over 20 years. Contact us anytime for a free policy review or quote.

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