Key Takeaways:
Disability insurance is not just about the amount of coverage you purchase today. For physicians whose income, responsibilities, and financial needs are likely to change significantly throughout their careers, the details inside the contract can determine how well that coverage keeps pace with their life.
In this episode of The Responsible Resident, Amber Stitt and disability insurance attorney Ethan Abramowitz take a closer look at two provisions designed to address that evolution: Cost of Living Adjustment (COLA) riders and Future Purchase Options (FPOs). They discuss how COLA can help a disability benefit grow during a long-term claim, why compounding and partial-disability provisions matter, and how FPOs can give physicians the ability to increase coverage as their income grows without returning to medical underwriting.
The bigger takeaway is that there is no single rider or policy design that is right for every physician. True own-occupation coverage and a strong residual disability definition form the foundation, while increase options, COLA, benefit amounts, budget, specialty, income trajectory, and carrier-specific contract language all need to be considered together. Sometimes the better decision may even be to prioritize a stronger base benefit over adding COLA immediately, with a strategy for expanding coverage later.
Ultimately, the goal is not to add every available rider. It is to understand what each provision is designed to do, what tradeoffs you are making, and how your disability insurance can evolve alongside your medical career.
Why COLA Riders & FIOs Matter in Disability Insurance
A Cost of Living Adjustment rider is designed to help disability insurance benefits maintain purchasing power over time.
Without a COLA rider:
- Monthly disability benefits remain stagnant
- Inflation reduces purchasing power
- Long-term claimants may experience financial strain
With a COLA rider:
- Monthly benefits increase during a disability claim
- Benefits may compound annually
- Income replacement keeps pace with rising costs
For physicians facing a long-term disability, this can have a significant impact.
As Abramowitz explains, he has worked with claimants whose monthly disability benefits increased substantially over time because of compounding COLA adjustments. In one example, a physician’s benefit grew from $15,000 per month to more than $21,000 per month over several years.
Fixed COLA vs CPI-Based COLA
Not all COLA riders function the same way.
Common structures include:
Fixed COLA Riders
- Often 3% annual increases
- Predictable growth
- Easier financial planning
CPI-Based COLA Riders
- Linked to inflation indexes such as CPI-U
- Growth varies annually
- Can provide larger increases during inflationary periods
Some disability insurance carriers also offer simple-interest or compound-interest COLA calculations.
Understanding how the rider functions inside a policy is important when comparing disability insurance contracts.
Future Purchase Options Protect Future Insurability
Future Purchase Options are another critical component of physician disability insurance planning.
FPOs allow physicians to:
- Increase disability insurance coverage as income grows
- Avoid future medical underwriting
- Protect future earning potential
- Preserve insurability despite future health changes
This feature is especially important for residents and fellows.
A physician may purchase a disability insurance policy while earning $60,000 during training but eventually earn several hundred thousand dollars annually as an attending physician.
Without an FPO rider, obtaining additional disability insurance later may require new medical underwriting.
Health conditions that develop after the original policy is issued could lead to exclusions, premium increases, or even coverage denials.
The Foundation of Physician Disability Insurance
Throughout the discussion, Amber and Ethan emphasize that riders should be considered after securing the core components of a disability insurance policy.
The priority order often includes:
- True Own-Occupation Disability Insurance
- Residual Disability Benefits
- Future Purchase Options
- Cost of Living Adjustment Riders
- Catastrophic Disability Riders
This approach helps physicians build a strong foundation before adding supplemental features.
Why Younger Physicians Have an Advantage
Residents, fellows, and early-career physicians often have a unique opportunity.
Purchasing disability insurance early may provide:
- Lower premiums
- Better underwriting outcomes
- More Future Purchase Option flexibility
- Greater protection before medical issues arise
This can be particularly valuable as life circumstances evolve and income increases throughout a physician’s career.
Bringing It All Together
Disability insurance is not just about protecting today’s income. It is about protecting future earning power.
COLA riders help preserve purchasing power during a long-term disability claim. Future Purchase Options help physicians expand coverage as their careers grow. Together, these features can create a more flexible and resilient disability insurance strategy.
The key is understanding how these provisions work and incorporating them into a policy design that aligns with your long-term goals.
🔗 To connect with Ethan Abramowitz:
📲 LinkedIn: https://www.linkedin.com/in/ethanfabramowitz
📲 Website: https://www.seltzerlegal.com/attorneys/ethan-abramowitz
📲 Phone: (215) 735-4222
📲 Email: ethan@seltzerlegal.com
#theresponsibleresidentpodcast, #amberstitt, #ethanabramowitz, #disabilityinsurance, #disabilityinsurancelaw
From Scott & Amber’s Desk
Every article in the MD Disability Quotes Knowledge Center is written with one purpose: to help physicians understand insurance contracts before they ever need to rely on them.
About MD Disability Quotes
MD Disability Quotes is a nationwide disability insurance advisory firm specializing in income protection for physicians, dentists, business owners, and other high-income professionals.
Founded by Scott Nelson-Archer and Amber Stitt, the firm brings nearly 40 years of combined experience helping clients evaluate disability insurance contracts, navigate underwriting, and design income protection strategies tailored to specialized careers.
Scott and Amber are the longest-tenured disability insurance experts featured by White Coat Investor. Their education-first approach has helped thousands of physicians better understand disability insurance throughout medical school, residency, fellowship, and practice.
Whether you’re reviewing an existing policy or exploring coverage for the first time, MD Disability Quotes is committed to helping you make informed decisions that protect your ability to earn an income.
If you would like to schedule a disability insurance strategy session, click here.
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You can email us: info@mddisabilityquotes.com
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