Disabilty Insurance Now Available to Cover Student Loan Payments for Physicians and Dentists
Feb 1, 2010
Jamie Fleischner

Jamie Fleischner

1 Feb, 2010

Did you know that most student loans must be repaid in the event you become disabled? Most loans do not need to be repaid if you die. 

According to the American Medical Association, student loans are on the rise.

Student debt statistics

  • $156,456 – According to the Association of American Medical Colleges (AAMC), the average educational debt of indebted graduates of the class of 2009.
  • 79 percent of graduates have debt of at least $100,000.
  • 58 precent of graduates have debt of at least $150,000.
  • 87 percent of graduating medical students carry outstanding loans.

Source: AAMC 2009 Graduation Questionnaire

These extra payments can be burdensome to pay back as you start to earn an income. What would happen to you if you became sick or injured and couldn’t work? How would you repay these loans?

Disability income insurance policies are now available to cover student loans. This can be a much more cost effective way to insure that extra $1-2000/month you are paying for your loans. This policy is only available for dental and medical school loans.

A loan policy works to protect the duration of the loan. For example, if you have $100,000 of student loans and are expected to be paid off in 10 years, the policy would pay the monthly benefit (debt payment amount) to pay off the loan. If you became disabled in the third year, the policy would pay off the remaining 7 years.


To insure $2000/month benefit, 10 year total disability policy for a 30 year old female surgeon, the premium would be $67/month.  To insure $2000/month to cover a 10 year loan, the premium would be $28/month. Keep in mind the first policy would cover for 10 years regardless of when the disability occurred whereas the ladder would only cover the duration of the policy. However, it significantly reduces the premium needed to cover the monthly loan repayment expense.

Why medical education debt has increased

Medical education debt is driven by rising tuition. AAMC data show that median private medical school tuition and fees increased by 50 percent (in real dollars) in the 20 years between 1984 and 2004. Median public medical school tuition and fees increased by 133 percent over the same time period. Other recent 20-year periods show similar trends.

Tuition is just one source of increasing debt burdens. Other causes include:

  • Interest accrued on loans over time significantly adds to the total cost of student debt.
  • Students are now entering medical school with more education debt from undergraduate education.
  • Increasing numbers of “non-traditional” students who have children to support.

For more information on insuring your student loan payments, please contact the Set for Life Insurance office today.

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