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What Are the Financial Risks of Disability and How Can I Protect Myself?

Financial Progress Notes

The occupation of  a physician can encompass so many facets, specialties, and variations. It would seem quite challenging to properly protect against a possible loss of income. In addition, doctors normally start out their careers deeply in the “red.” The many years of schooling and substantial level of debt already put the profession in a high risk position.

Consider these numbers from 2016.  The median cost of attendance for a 4-year public medical school was $232,800  while the 4-year cost for private schools was $306,200.In fact, during this period 76%  of medical school graduates were carrying medical school debt of $190,000.2

It is not unusual to see this debt carried years into an established practice. The Physician Wealth and Debt Report 2017 found that approximately 67% of those between 28 and 34 were still paying off debt, and by ages 40-44, 45% still have debt. Approximately 26% are still working this debt off well into their late forties.

For all of this hard work, perseverance, and debt, there are significant financial rewards available.  Note some of the top average salaries reported as indicated by the Medscape Physician Compensation Report 2017:

  • Orthopedists:                                       $489,000
  • Plastic surgeons:                                 $440,000
  • Cardiologists:                                      $410,000
  • Urologists:                                           $400,000
  • Otolaryngology specializations:          $308,000

Indeed, the medical profession is among the highest paying income fields today.  These income levels, and the debt that is taken on to get there, highlights the importance of protecting the physician as an income source.

What if you could not perform your normal duties as a physician because of some disability, do you think you could maintain your current lifestyle?  What if you came back to your practice following a disability, and found that some of your patients went and found new doctors? Because of your disability, what if other doctors you had developed referral relationships with are now referring patients to other physicians?  More importantly, what if you were now not able to perform specialized functions in your capacity and you were forced to alter the very nature of your practice?  The risk in all of these situations is the very real possibility of losing  part or all of the earning capacity you have worked so hard to achieve. Since it is so unlikely for medical professionals to be able to amass the resources to self-insure against this risk, we look for disability insurance that caters to the special requirements of the medical profession.

This last point is key to physician income protection.  It is critical that a protection plan be designed with a true own occupation definition.  Because a disability can manifest itself in a number of ways, it is not enough to have protection that defines an inability to perform under any occupation. (a very broad and open interpretation).  Depending on the nature of the practice, the mental and physical requirements to perform could be very specific, and by extension more liberal. For example, one may still function with high mental capacity after an event, but because of physical impairment that doctor may not be able to perform the intricacies of delicate surgery. One can therefore include specialty specific language into the plan.

It is of course important to have some reserves (at least 3-6 months’ income or living expenses), to handle the what ifs in life, and possibly assist with  the very minor short periods of disability. However, it is for the longer periods of disability that we may look to leverage a smaller outlay (premiums), to produce a significant income benefit (60-65% income), tax-free (when paid by the insured)  through the means of disability insurance.  There are also numerous design features that are important for the physician to consider when establishing an income protection plan.  Of course, the disability insurance arena has its own terminology to contend with to describe these features.  Though we won't delve into every detail of what is possible here, the following policy options are essential considerations in forming the completeness of your plan.

  • Non-Cancellable and Guaranteed Renewable: Strongest renewability description that stipulates that after you place a policy in-force that there will be no changes to your premium schedule, your monthly benefits, or your policy benefits to age 65 or a certain age.
  • Specialty Specific Language: Along with the above definition, this detailed description of duties can further distinguish more vulnerable duties to be protected. (ie. the inability of a cardiologist to perform invasive procedures for coverage and benefits, even though that professional may be able to practice in internal medicine and receive an income)
  • Benefits for partial disability claims: Some aspects of the job that are impaired may entitle the insured to remuneration, while the doctor can perform other related duties. Some policies even pay full benefits for partial disability for a length of time.
  • Eligibility for discounts: One physician alone may have coverage. However, insuring multiple lives can lower the per insured cost.  For example, if an office practice was seeking coverage for its members, there could be savings for everyone.


So, who should be reviewing the consideration for income protection?  Those professionals  with an income of $50,000 or more should look at protecting their income. Anyone who has invested time and effort into building earning power needs protection. In the medical industry, this would include all types of doctors, registered nurses, and specialized positions such as sonography or clinical laboratory work. Physician assistants, nurse practitioners and physical therapists  are other positions which  should consider covering the risk of income loss.

This is such an important topic in a profession with so many specialties. Examine your position and do ask questions to stay informed. The medical segment is one that seems to consistently go through underwriting changes and coverage enhancements.



1 James Youngclaus, MS., Analysis in Brief. Association of American Medical Colleges. Volume 17, Number 1  August 2017. p. 2.

2  James Youngclaus, MS., Analysis in Brief. Association of American Medical Colleges. Volume 17, Number 1  August 2017. p. 1.

3  Carol Peckham, Physician Wealth and Debt Report 2017. Medscape.  May 4, 2017, p. 12

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