The most important questions to ask about disability insurance

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Christopher Burke, president and CEO of AGIA, shared with AOA Focus the questions doctors of optometry should be asking.

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. As long as the insured remains disabled, benefits can continue until age 65 or the insured’s Social Security normal retirement age.

Why should all doctors of optometry consider 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 most 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.

How should doctors determine how much disability insurance they need?

Doctors should consider that most financial professionals recommend that 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.

What types of coverages are available, and what are the pros and cons of each kind?

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 coverage, 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 coverages by their nature possibly have the minimum level of benefits and may not have the ability to address the specific needs of doctors.

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.

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 90-120 days. The longer the waiting period, the lower the cost of the coverage.

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 are 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.