Protect it with Disability Insurance
Don't be Dr. Amy!
We were referred to a physician about 8 years ago for planning. She was making BIG money! During the process, we put her existing disability contract under the microscope. We grabbed a highlighter and went through ALL 45 pages with her. We said, "Amy, did you know that you are covered for this however you are completely exposed when it comes to that? " Each time we did this (about 5 or 6 in total), we could almost hear Dr. Amy's blood start to boil. She had no idea how many gaps there were in her coverage and she was not a happy camper (even cursing the insurance agent's name under her breath).
Turns out:
- She got her policy out of fellowship from an agent who was working with one of her colleagues. Her colleague bought the policy because she was told by the agent that it was the best contract for her and most "cost effective."
- Amy was shown a disability comparison chart depicting that all of these disability contracts were virtually the same and one of them was so much cheaper. We see similar "comparison tools" floating around all the time; they are sales tools in which the agent cherry picks a few benefits (from these 45-50 page contracts) that steer the uneducated physician directly toward the policy that they want the new physician to buy! Whose best interest is at heart here?
Fortunately, Dr. Amy was still healthy enough to do something about it!
The TRUE differences between one disability contract and another could mean the difference of substantial benefits to you and your family. This is one area of financial planning that a physician must do correctly and in a place of truth. Bear with us a little longer and we'll give you the education on what you should be looking for before you decide what's best.
1) Identify the right company to do business with
As with most transactions, the paperwork you sign is only be as strong as the company that printed it. For disability protection, this is huge! You are spending hard earned dollars to transfer the risk of your health to an insurance company. Most consumers would then have an expectation that the company is going to be there for them when it's most needed. We're sure you feel the same, particularly when the topic is your income.
Probably the best place to start is to look at what is referred to as a Comdex score. There are multiple independent ratings agencies (Moody's, AM Best, etc) who rate these insurance companies on a regular basis. They identify areas such as company strength and stability, their financial outlook or forecast, and how much money they have sitting on the sidelines ready to be used to pay claims. A Comdex score is an aggregate of what all the ratings agencies say about a respective company. The highest score possible is 100. For the benefit of our clients at White Coat, if the company doesn't score at least a 95, we generally won't consider them.
2) Understand the contract "language"
What benefits are the most important to you? Be sure the contract you own, or are about to buy, spells those benefits out in black and white. The story about Amy above is a perfect example of what happens on a regular basis. If a doctor asks for 3 quotes from 3 different companies, they are all going to look exactly the same on the summary page.
However, like with many things, the devil is in the details. It's what's in the fine print on page 9, 22 and 44 that make all the difference in the world as to:
- How much you will be paid
- For what length of time
- Most importantly under which circumstances it will pay...or not pay!
With disability insurance (and all insurances), you don't get a 'do-over' after an injury or illness happens. So, if you are in the market for coverage, meet with someone who has deep industry knowledge with no baggage. Someone who is not attached to the outcome and will spend the time dissecting all 45 pages with you, not someone who simply hands you a spreadsheet.
If you already own disability insurance, nice job! Just be sure to get it audited by a professional so that it's actually going to pay you how you would like to be paid. If it doesn't, there is nothing wrong with upgrading your coverage with someone who will, like Dr. Amy did.
Names mentioned herein have been changed. This scenario is presented for illustrative purposes only. Any resemblance to existing situations, persons or fictional characters is coincidental. The information presented should not be used as the basis for any specific financial advice.