There could be several reasons why physicians may choose not to purchase disability insurance. Here are a few possible factors:
- Cost: Disability insurance premiums can be quite expensive, especially for high-income professionals like physicians. Physicians often have to pay higher premiums due to their higher earning potential and the nature of their work. Some physicians may find it challenging to justify the cost of disability insurance in relation to their income and other financial obligations. There are ways to defray costs such as discounts, increasing the elimination period, shortening the benefit period and reducing the monthly benefit.
- Belief in Job Security: Physicians may perceive their profession as relatively secure, assuming that their skills and demand for their services will always be in high demand. This belief can lead some physicians to underestimate the risk of becoming disabled and needing to rely on disability insurance.
- Employer Coverage: Some physicians may rely on employer-provided disability insurance as part of their benefits package. While this coverage can be helpful, it’s important to note that employer plans may have limitations, such as coverage duration or benefit amounts, that may not adequately protect physicians in the event of a long-term disability. Furthermore, employer paid coverage will be taxable if the employer pays the premium. Oftentimes employer coverage requires physicians to be totally disabled and not working.
- Misunderstanding of Coverage: The details and complexities of disability insurance policies can be confusing, and some physicians may not fully understand the terms, conditions, and benefits of the policies available to them. This lack of understanding might deter them from purchasing disability insurance or make them hesitant to navigate the process.
- Optimism Bias: Some physicians may have an optimistic outlook on their health and abilities, leading them to believe that they are less likely to become disabled compared to others. This cognitive bias can cause individuals to underestimate their own vulnerability and overlook the need for disability insurance.
- Procrastination: Physicians may be overwhelmed with their work and family life and never get around to purchasing an individual disability policy. They may choose to purchase on at a later date. As long as they are still healthy and are insurable, they should be able to acquire coverage albeit at a higher cost. If they have a significant adverse change in health, this could preclude them from obtaining coverage.
It’s important to note that these reasons may not apply to all physicians, and individual circumstances and priorities can vary. Considering the financial implications of a potential disability and consulting with a financial advisor or insurance professional can help physicians make an informed decision about disability insurance.