7 things to know to protect your future
Excerpted from page 44 of the November/December 2020 edition of AOA Focus.
Protecting your future and your family’s financial security is crucial. Group insurance plans administered by AOAExcel®’s endorsed business partner, A.G.I.A. Inc., offer that security to AOA members.
Group long-term disability insurance with an own occupation benefit has you covered if you are unable to continue practicing as a doctor of optometry due to a covered illness. AOA members also get exclusive benefits, including their choice of three plans with five different waiting periods. A.G.I.A. Inc. offers group term life insurance with economical group rates, exclusive benefits and much more.
Chris Burke, president and CEO of A.G.I.A., shares with AOA Focus the answers to some common questions from doctors.
1. What is disability insurance and how does it work?
Disability insurance replaces a portion of the eligible person’s income when that insured person is unable to work due to a covered accident or sickness. Benefits start after a specified time called a waiting period. During this waiting period, the insured must be disabled, due to a sickness or accident, as defined in their insurance policy. If the insured remains disabled, benefits can continue until age 65 or the insured’s Social Security normal retirement age.
2. Why do all doctors of optometry need disability insurance?
Doctors should consider disability insurance as the chances of becoming disabled before retirement are just over 1 in 4 for today’s 20-year-olds. Accidents are not usually the culprit. Back injuries, cancer, heart disease and other illnesses cause the majority of long-term absences, according to the Council for Disability Awareness. Social Security provides some disability benefits, but the benefits may be low in comparison to a doctor’s income and require that the doctor be severely disabled. Disability insurance is sometimes made available in larger practice groups, but the benefits are not individually tailored to each doctor’s needs.
3. How should doctors of optometry determine how much disability insurance they need?
Doctors should consider that most financial advisers recommend professionals replace at least 60%-67% of their gross pre-disability income. The portion of a disability benefit paid for by a doctor with after-tax income is not considered taxable income when received as a disability income.
4. What types of plans are available, and what are the pros and cons of each plan?
There are many different benefits available, providing a doctor with ample opportunity to tailor coverage to their unique needs and budget. A doctor can choose how much benefit they want to receive, up to a certain percent of their salary depending on the plan, when it starts and how long the benefits continue. There are state benefits available, which may be for limited amounts and periods of time, such as those available in New York and California. There also are Social Security and employer-provided benefits that can provide disability coverage. However, these plans by their nature possibly have the minimum level of benefits and may not have the ability to address the specific needs of doctors.
5. Why is it critical that doctors have the “own occupation” benefit with their disability insurance policy?
A disability insurance policy with an “own occupation” definition of disability essentially means that if a doctor is unable to practice due to a covered sickness or an accident, then they will be eligible to receive a disability benefit. In a policy that does not include an “own occupation” definition of disability, a doctor may not qualify for disability benefits if they are capable of working in another field for which they are adequately trained or educated.
6. What are “waiting periods,” and how can they affect rates?
Waiting periods are the time that a doctor must be disabled before benefits start. The minimum waiting period can be 30 days for long-term benefits but could be up to one year. Most doctors select a waiting period between 90 and 120 days. The longer the waiting period, the lower the cost of the coverage.
7. What’s the most important question a doctor should ask their disability insurance broker?
The most important question to ask is under what circumstances will the insurance company consider me disabled and pay a benefit? The next series of questions to ask is about the broker’s experience in dealing with doctors and what level of support they can provide if there is a claim. Finally, a broker should be asked why they are recommending a particular insurance policy.
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