If you are a typical medical resident, you are in your late 20s or early 30s when you graduate from your residency and start your new position. Most physicians plan to work at least until their 60s.
With this in mind, it is important to match your individual disability insurance policy benefit period with your planned working years. The benefit period is the amount of time the disability policy would pay benefits. For example, if you have a benefit period of age 65, the benefits would pay you until age 65. After age 65, the policy would cease payments.
Until recently, residents would choose a benefit period to age as this corresponded with the projected Social Security benefit age when one could start to draw benefits. However, with the rise in age to collect Social Security, many younger physicians are choosing a benefit period of age 67 or age 70. Some companies still offer lifetime benefits, but they can be as much as 40% more expensive than an age 67 benefit period.
If you start with a longer benefit period, you can reduce the benefit period in the future. For instance, when you are in your 50s and have amassed retirement funds and other assets, you may consider reducing your benefit period to reduce your premium at that time.
It is important to set up your policy properly from the beginning as it can require medical underwriting if you decide later you want a longer benefit period.
For more information about individual disability insurance and benefit periods, contact Set for Life Insurance today!