Should I purchase my disability policy while a medical student or as a medical resident?
Timing when you should purchase your disability insurance policy can have critical implications later on. It is important to know all of your options and when you should purchase your policy.
Medical students in their last year may purchase up to $2500/month of individual disability benefit. The advantage of purchasing your policy while still a medical student is that most companies will allow you to obtain coverage in the nonsurgical occupational class. This won’t make a difference if you will be pursuing a residency in pediatrics or internal medicine. However, if you think you may pursue a career in surgery, emergency medicine or anesthesiology, you may want to consider locking in your policy at the nonsurgical rate. The difference in cost between a surgical and nonsurgical specialty rate is approximately 20%.
Keep in mind that your base policy will be locked in at this rate. If you have a policy that is adjustable, the future increases will still be at that nonsurgical rate. If you have a policy that has a pool of increase options, only your base policy will be at that rate and the future increases will be at the surgical rates.
The policy is based on where you are at the time of application. An own occupation policy will pay benefits where you are at the time of claim. As such, if you later pursue a surgical specialty such as opthamology, you will be covered as an opthamologist by definition, even if you can work as an internist or other medical specialty.
Another reason to consider purchasing a policy while a medical student is to take advantage of discounted rates. This is especially true for women. If you can lock in your rates with a unisex discount and can increase the policy in the future at those rates, you will save significantly!
On the flip side, if you are graduating from a non discounted hospital but will be doing residency at a discounted hospital, you would be better off waiting to start your policy when you start your residency.
If you are moving to a state that is more expensive, such as California, you ought to consider purchasing your benefits prior to your move. If you are moving from a more expensive state to a less expensive one, wait until you arrive in your new state.
Medical residents can purchase up to $5000/month benefit regardless of income and group benefits in force.
The same principles hold true for medical residents. If you have discounts at your medical residency, take advantage of those!
Whether you are a medical resident or a medical student, you may start with a policy as little as $1000/month benefit. Make sure your policy will allow you to increase it up to $15k/month or more in the future without further medical underwriting. Some companies will limit your increases to $3000/month.
If you will be pursuing a specialty that potentially pays over $350k/year or more, consider purchasing a policy from more than one company. This will allow you to aggregate benefits up to $25k/month or more in the future without further medical underwriting. An example would be to purchase $1000/month each from 2 companies.
It is important that you work with a disability insurance specialist such as Set for Life Insurance to guide you down the correct path and to help you optimize your situation.
For more information about disability insurance for physicians, medical students and medical residents or to find out more about disability insurance discounts, contact Set for Life Insurance today!