Nobody wants to become disabled, but you need a plan in case you suffer a life-altering, practice-ending injury or illness. One bad day on the ski slopes has disabled more veterinarians than you think. It’s best to start thinking now about how your practice could be affected by an accident in the future so that you can take steps to protect yourself from that possibility.
Buying the right disability income insurance early provides security for you — and just as importantly, those who depend on you. However, you need to choose your policy carefully for the best chance of collecting all the benefits you deserve. Below, I’ll explain why disability insurance is essential for both practice owners and associates and give you the information you need to start searching for a policy that provides real peace of mind.
Where Disability Insurance Fits Into the Mix
The purpose of disability insurance is to pay benefits to those who can no longer perform their job due to sickness or injury. It is often the only financial lifeline available to practice owners and associates who find themselves in dire straits.
As a veterinarian, especially if you own a practice, you have high income earning potential worth protecting. If you could not practice, it would be challenging to earn comparable income in a new occupation. Disability income can help fill in the gap.
Group Coverage vs. Individually Owned Policies
You have two main options for buying disability insurance: group coverage or an individual policy. Group coverage is shared between members of either an organization or a workplace, while individual policies are individually owned.
Group coverage is often not guaranteed renewable and non-cancellable, which means that premiums and policy language can change without your consent. Only individually-owned disability insurance policies let you stay in control and ensure that neither premiums nor the contract language in your base policy will change.
Some corporate veterinarian clinics offer group disability income coverage to their employees. These group policies often differ widely from one another, so ask for a copy of the group certificate and have a professional review it with you if you are considering this type of coverage. You will often find significant shortfalls in policy language. Additionally, this coverage usually ends the minute you leave the practice in question, so you will still need to secure your own policy afterward.
Many people assume that group coverage will be cheaper than individual policies. However, critical differences between these two options regarding how they pay benefits at the time of your claim can offset any initial savings they appear to offer. In many situations, having the right individual policy actually provides better coverage.
The point is, it doesn’t matter how much money you save on your premiums if the policy doesn’t protect you the way you thought it would. For that reason, it’s always best to learn as much as you can about your options before choosing one.
The Most Important Things Veterinary Professionals Need to Know About Disability Insurance
It might feel overwhelming to sort through the differences between various policies, but don’t worry. The sheer volume of information can be intimidating — but trust me, you’re smart enough to handle it. You made it through veterinary school, remember?
The problem most veterinarians have with choosing disability insurance isn’t about intelligence — it’s about knowing what information matters most. With that in mind, here’s what you really need to know about buying disability insurance as a veterinarian:
Language Matters
I can’t overstate the importance of carefully reading each policy you consider. Specific definitions (such as what constitutes total disability) have a massive impact on how benefits are paid. Even simple conjunctions can make the difference between a policy that provides meaningful financial security and one that doesn’t.
Take the word “and,” for instance. Many group insurance policies contain language stating that they will pay out after an accident or illness, as long as you can no longer perform your occupation and you aren’t working anywhere else.
In other words, get a different job of any kind, and your benefits could be dramatically reduced — or, in a worst-case-scenario, vanish altogether. These things could happen even if you chose to work in a completely different field!
Imagine two different veterinary practice owners — we’ll call them Vet A and Vet B. Vet A has the kind of group policy mentioned above. In contrast, Vet B has an individual policy that specifies their own occupation within its definition of total disability. Vet B’s policy means that if their claim is approved and they cannot perform their own occupation (i.e., the job they trained for, which is being a veterinarian), they can still earn income from a different occupation and recieve benefits at the same time.
In this example, both vets could experience identical injuries that prevent them from continuing to work as veterinarians, but what happens to each of them when they try to use their disability policies could be quite different. Vet B could go on claim, receive tax-free benefits, and reinvent themselves by teaching biology at a local high school and inspiring the next generation to become veterinarians.
Meanwhile, Vet A couldn’t get another job of any kind without impacting their benefits. They (and their family) would have to live on whatever benefits they were entitled to, which would only be a portion of the income they once made.
Obviously, the hope is that neither Vet A nor Vet B experiences a severe injury preventing them from practicing veterinary medicine. But ask yourself: which one of them would you rather be if something like that did happen?
My point is that policy language matters, so it pays to understand what you’re buying. Remember also that with group disability income coverage, premiums and language can and do change. When you buy individually owned coverage, the policy you get today will be the same one that protects you in the future.
Who Owns the Policy?
Buying coverage doesn’t necessarily mean you own your policy. When you buy into group coverage, the association still owns the policy — it’s like you’re just purchasing a membership.
Why does it matter who owns the policy? Simple: because the owner of the policy can change the language it uses. In fact, many group associations do this regularly.
For example, a group association might initially offer what looks like inexpensive coverage on the surface. However, they could then change the policy language at a later date — disqualifying you from receiving benefits for which you might have previously been eligible.
In contrast, many individual policies are non-cancellable and guaranteed renewable. In other words, the insurer is legally obligated to keep providing the coverage you signed up for as long as you keep paying your premiums. You get the peace of mind that comes from knowing your policy will do what it promised when you originally bought it.
You can cancel these individual policies at any time, but your insurer can’t cancel your coverage or change the words around on you. Controlling the language in your policy protects your coverage.
Costs & Premiums
You might be wondering how to budget for disability insurance effectively. Here are a few of my best suggestions:
- Start young. Policies become more expensive as you get older, so it’s best to purchase them as early as possible.
- Look for graded premiums, which allow you to purchase your policy at a lower initial rate than fixed premiums offer. Having a graded premium gives you the option to move to a fixed premium later, at which time you can lock in your rate.
- Look for specific riders that allow you to upgrade your policy in the future with no further medical underwriting. Such riders allow you to purchase a small policy that fits your budget now and increase the coverage later without letting your carrier change the language in your contract to affect your claim eligibility.
What Riders Should You Look For?
The same kind of rider can go by different names, depending on which carrier offers the policy. Some of the most common terms for important riders are listed below, but consulting an experienced insurance broker can help you recognize them even when they have other titles.
- Own occupation riders: as I mentioned earlier, these riders can allow you to work outside of the profession that your injury or illness prevents you from practicing — while still receiving your full claim amount.
- Non-cancellable and guaranteed renewable riders: these riders require your insurer to keep providing your coverage as long as you keep paying your premiums, which prevents them from changing the language in your policy each year. Sometimes, these conditions are built into the policy itself and do not need to be purchased separately.
- Future increase option riders: these riders allow you to expand your coverage over time with no further medical underwriting. The maximum amount by which you can expand your coverage may vary between carriers, so make sure you find out what it is for each carrier you consider.
- Supplemental benefit term riders: these riders can provide extra benefits in addition to your policy’s monthly benefits. They can offer useful income for beneficiaries who are paying down debts or saving for retirement.
- Student loan riders: these newer riders provide coverage for some or all of your student loan payments during a claim. Student loan debt can be one of a new veterinarian’s biggest financial obligations after getting out of school. Student loan riders are relatively inexpensive, and can pay up to $2500 per month in additional benefits to ease the burden of student loan debt.
Remember, most riders come with pros and cons that can be difficult to understand without extensive experience in the insurance industry. I always recommend consulting a qualified insurance broker before choosing a policy, so that you can have confidence in the knowledge of what you’re buying and how it will protect you.
How Much Coverage Do You Need?
The exact level of coverage you need depends on you, your family, and your practice. That’s why it’s always best to seek out personalized advice from a qualified insurance broker. However, it pays (literally) to keep a few things in mind when weighing your options:
First, remember that disability insurance coverage isn’t just about you. It’s also about the people who depend on you for their wellbeing, now and in the future. If you have six kids and plan to send them all to college, you’re going to need more coverage than a person who has none.
It’s also important to remember that purchasing comprehensive coverage isn’t the most expensive option. The most costly option — by far — is to find yourself alive and disabled without financial support. Being disabled creates expenses that you can’t possibly imagine ahead of time, so it’s best to cast a wide net when you buy disability insurance.
If you’re looking for the short answer, it’s this: buy as much coverage as you can afford, at the youngest age possible. Just make sure you have someone on hand who can guide you through the process.
Where to Buy Disability Insurance
Comparison shopping for insurance can be difficult because representatives from each company will usually only talk about their own policies. If you want an objective recommendation, it’s always best to speak with a broker who can give you a panoramic view of your options.
Ideally, you’ll want a broker who works with as many carriers as possible and takes time to discuss them all with you. That way, you can be sure they’re putting your interests first instead of just trying to sell you the policy that gives them the highest commission.
Loyall Group will be releasing an e-book with more detailed information on shopping for disability insurance soon. To be one of the first to receive this e-book, click here. We’re also happy to set up informal consultations with practice owners and associates to help them understand their options. Feel free to contact us and explain your situation so that we can help you find a policy that covers your needs.
Choosing Disability Insurance that Works for You
Disability insurance is one of the best ways for you to keep your financial future safe if something unexpected suddenly prevents you from doing the job you love. However, insurance policies can be as varied and complex as the people who need them, so you should always research a policy carefully before committing to it.
At the end of the day, my advice is this: make sure you have contingencies to address worst-case scenarios. Hopefully, you never experience an injury or illness that impacts your practice. If you do, though, you’ll be infinitely better off with policies that give you the flexibility and autonomy to keep improving your life without penalties or restrictions.
The suggestions above provide a starting point for finding the right coverage, but they only represent the tip of the iceberg. For more guidance, reach out to Loyall Group and let us arm you with the knowledge you need to make informed choices about your disability insurance.
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