It’s graduation season and medical residents all around the country are being hammered by insurance agents and brokers to buy their disability insurance right before they graduate.
But how do you know you are getting the best advice? Who can you trust and believe?
Here is a primer to help you sift through the information and to see what is truth and what is a myth.
Myth #1: You are required to purchase your policy from your residency program before you graduate. This is untrue. I have seen some very aggressive tactics imposed on medical residents by agents who are graduating. Some residents have shown me materials that state in bold print that they must purchase a policy or they won’t be able to graduate. Others have said they are put in a room with the door locked with an application already filled out with their name and information and are told to fill out the paperwork before leaving. YOU ARE NOT REQUIRED TO TAKE YOUR DISABILITY POLICY FROM YOUR RESIDENCY PROGRAM. These programs are optional. You are the consumer and it is up to you to discern if this is in your best interest.
Myth #2: The GME program is better because it doesn’t ask any medical questions. This is advantageous to people who have medical conditions such as type 1 diabetes or MS. However, if you are healthy, you may be better off applying elsewhere. Because the company has no control over who signs up for coverage in such a plan, there tends to be limitations. Most of the time, you are better off applying elsewhere and to go through the underwriting process. Once you go through it once, (if your policy is set up properly), you will not need to go through the process again. This concept is referred to adverse risk selection, similar to what is happening in Obamacare. Healthy people apply for coverage elsewhere because it is superior and the unhealthy people take the policy where there are no medical questions. As a result, the risk pool of the un-underwritten is higher and the company suffers the loss. There are usually limits on coverage as a result.
Myth #3: If you purchase your policy in your intern year, you can get a better occupational class if you are changing specialties after graduation. Untrue! If you are in medical school or are in your intern year, chances are you have already declared a specialty starting in July. The company will ask you this question and will issue the policy as such. If you are doing a transitional year and know you are going to be doing a surgical residency, they will issue a policy based on the surgical rates. If you ARE able to obtain your initial policy at the non-surgical rates and your policy is not adjustable (ones that have future increase options), the increase options will be issued at your new medical specialty, at the more expensive rates. IF you are able to obtain your initial policy at a nonsurgical rate and later increase your policy with an adjustable policy, you CAN increase at the nonsurgical rates.
Myth #4: Every broker can use the Set for Life Insurance discounted rate if they are available. WRONG! Set for Life Insurance has access to special discounts around the country as they set them up over the last 20+ years. If you work with an agent or broker that did NOT set up the discount, they do NO T have access to the special rates.
Myth #5: One policy is significantly better than the rest. WRONG! If you are working with an agent of one company that tells you their company or policy is significantly better than the rest, chances are they have a financial incentive to work with one company over the rest. While there are subtle differences among the policies, there is not one plan that is higher above the rest. It pays to work with a brokerage such as Set for Life that is objective and works with most of the available companies and can spreadsheet your options to help you discern the best option for your situation.
Myth #6: It is best to purchase as much benefit as possible before you graduate to overinsure yourself while you can. WRONG. It is best to determine the appropriate amount of benefit you will need after graduation and insure yourself accordingly.
For more information about disability insurance for graduating medical residents or to request a quote comparison, contact Set for Life Insurance today!