Disability Insurance

Abstract

A greater risk than dying during your wage-earning years is the risk of becoming disabled or incapacitated during your wage-earning years. Generally speaking, long-term disability insurance pays employees about 60 percent of their salary if they cannot work for an extended period of time due to chronic illness of debilitating injury. It typically kicks into gear when short-term disability insurance expires, which is commonly 90 to 180 days after the short-term coverage began.

Among the most misunderstood aspects of long-term disability coverage are the policy definitions that determine the type of benefits that will payout, and when they will payout. Fortunately, individual plans offer great flexibility that allows the definition of “disabled” to be expanded. Many policies in the industry will also offer something called a “rider.” A rider is an amendment to the terms of the policy, generally with the purpose of adding benefits. The cost of long-term disability insurance is determined by several factors: The company providing the insurance, as well as the insured’s health, age, gender, and occupation. Many healthcare workers do not seek additional coverage beyond the group long-term disability coverage provided by their employer. And this can be a missed opportunity to transfer risk and strengthen that foundation. This chapter will dissect how long-term disability insurance works for physicians, and what you can do to make sure that you take advantage of the best strategies as related to this foundational risk-management coverage.