Disability Insurance for Pharmacists: What You Need to Know

As a pharmacist, you’ve invested a significant amount of time, effort, and money into building your career. But what would happen if you were suddenly unable to work due to illness or injury? Would you have enough savings to cover your expenses? Would your student loans disappear? The answer is most likely no. That’s why it’s important to consider disability insurance.

Disability insurance provides you with a safety net in case you are unable to work due to a covered injury or illness. It replaces a portion of your income and helps you cover your living expenses, so you can focus on your recovery without worrying about financial stress.

Group Benefits vs. Individual Policy

If you work for a large firm or company, you may be offered a group policy. While it’s better than nothing, it’s important to understand the limitations of a group policy. Group policies typically offer a limited monthly benefit (60 percent of your income to a maximum amount). If your income exceeds $200k, the percentage of benefits replaced may start to reduce if you have maximum limits on the policy. Your group policy may also require you to be totally disabled and not able to work in any capacity before you can receive any benefit. Additionally, the benefit may be taxable income to you if the employer is paying the premiums, and your employer may cancel your policy at any time.

Even if you have a group policy, it’s still important to consider supplementing with an individual policy. An individual policy is portable, meaning you can take it with you if/when you leave your employer. The policy definitions on an individual policy are usually superior, with own-occupation and inflation protection. If you are only partially disabled, your group policy may not pay you. Having an individual policy protects your insurability by purchasing increase options. If your health changes, you may still purchase more coverage in the future based only on financial underwriting.

Policy Language and Riders

When considering an individual disability policy, it’s important to ensure it has an own-occupation definition, meaning that if you can’t work due to sickness or injury, the policy will pay you a monthly benefit even if you are able to work in another occupation. Without this definition, you are at the discretion for the company to determine if you are able to work. It’s also important to look for a noncancelable, guarantee renewable language. This means once you have your policy, the premiums are fixed and guaranteed for the life of the contract. The company cannot increase your premiums or add exclusions.

Additionally, there are several riders that can be added to your policy for extra features:

• Residual rider: This will pay benefits if you have a loss of income of 15-20% or more in income. The policy would pay you a proportionate benefit. You would not need to be totally disabled to receive benefits.
• Increase options: This allows you to increase your benefits in the future without having to answer any medical questions.
• Cost of Living Rider: This rider will increase your benefits by 3-6% each year you are on claim to keep your benefits up with inflation.

Benefit Limits and Premiums

The amount of benefit you may purchase depends on your income and if you have a group disability policy through your employer. Pharmacists in their first year may purchase up to $4000/month benefit regardless of income.

If you’re concerned about paying for disability insurance while getting established, there are several things you can do to reduce your premium as much as possible. Some companies allow a “graded” or increasing premium. This is initially less expensive, and your premium will increase each year. If you wish to lock it in at a later time, you may do so on any policy anniversary. You should also look for available disocunted rates.

For more information about Disability Insurance for Pharmacists, contact Set for Life Insurance today!