Most physicians know that disability insurance is an important risk management strategy that can help protect income, their family and their practice in the event of an unexpected accident or injury. However, the type of coverage needed can vary widely from one physician to another. Many standard policies don’t provide the specialty coverage certain physicians need. Fortunately, insurance riders can be an effective way to customize your policy and help ensure your specific risks are covered.
Following are several common insurance riders you may want to add to your disability insurance policy.
#1 – Own-occupation
Own-occupation coverage provides protection should you become unable to perform the specific duties of your medical specialty, even if you’re still able to work in a different occupation. In contrast, any-occupation coverage only pays out benefits if you cannot perform any job for which you are qualified, based on your education, training and experience.
#2 – Future increase option (FIO)
An FIO rider gives you the option to increase your benefit in the future. Typically, you select the additional benefit amount you wish to access, then you can decide each year whether you want to increase your benefit. If you decide to increase your benefit at some point in the future, your premium will also increase accordingly.
This type of rider often makes sense for anyone who expects their income to drastically increase in the future.
#3 – Catastrophic disability
A catastrophic disability rider pays additional benefits if the policyholder is unable to perform two or more activities of daily living on his/her own. It also offers protection in the case of a severe cognitive impairment or irrevocable disability.
#4 – Residual disability benefit with recovery
A residual disability benefit provides protection should you become partially disabled but still able to work in your primary occupation. This type of rider offers financial support as you gradually transition back to the workforce following a temporary disability because it pays benefits to make up for your lost income, as long as you have a 15% to 20% drop in earnings.
#5 – Cost of living adjustment (COLA)
A COLA rider can help protect the spending power of your disability benefit from the rising cost of living. This type of rider goes into effect after you become disabled for a certain period of time. The benefit amount you receive is typically tied to increases in the Consumer Price Index (CPI). COLA riders are especially beneficial for doctors who become disabled at a young age, as they can help protect your benefits from being eroded by rising inflation.
#6 – Presumptive total disability
Typical disability policies begin paying out after a waiting or elimination period, which may range from 90 days to two years. A presumptive total disability rider allows you to receive benefits immediately after experiencing a presumptive disability, which includes the loss of sight in both eyes, loss of hearing in both ears, the loss of both legs or both hands, or the loss of one hand and one leg. This should be included in the base definition.
As a physician, it’s vital that you have adequate disability insurance in place to protect yourself, your family and your practice. Disability insurance riders offer a great opportunity to customize your disability insurance policy to meet your specific needs.
At Scureman and Associates, we specialize in helping physicians identify, implement and maintain disability policies and riders to help protect against the specific risks they face. If you’d like help getting started, send us a message or call us at 724-591-5399
