Disability Insurance for Physicians What to Know and Mistakes to Avoid
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Physicians
Financial Literacy
For physicians, the ability to earn an income hinges almost entirely on physical and cognitive function. It’s not just about safeguarding your income, it’s about protecting the years of investment, education, and sacrifice that have built your career. Despite this, disability insurance remains one of the most misunderstood and underutilized components of a physician’s financial strategy.
This article explores what disability insurance is, why it’s essential, how it works, and where physicians commonly go wrong. Understanding these details isn’t just financial housekeeping, it’s a safeguard against the unexpected that could change your life in a moment.
What Is Disability Insurance, and Why Do Physicians Need It?
Disability insurance replaces a portion of your income if you’re unable to work due to illness or injury. Unlike health insurance, which covers your medical expenses, disability insurance covers your income. For physicians with high earning potential and substantial student debt, this protection becomes even more critical.
Physicians are uniquely vulnerable. Long hours, physically demanding procedures, and high burnout rates contribute to risk factors that aren’t always obvious. According to the Council for Disability Awareness, more than 25% of today’s 20-year-olds will become disabled before they retire. And physicians aren’t immune to these odds. One study from MGIS found that 1 in 7 physicians will experience a disability that prevents them from practicing at some point in their careers.
Unlike other professions, your ability to continue working in medicine after an injury isn’t guaranteed. A surgeon with a tremor or an ER doctor with chronic back pain may be forced to step away entirely, even if they’re technically capable of working in a different role.
The Two Main Types of Disability Insurance
Physicians typically consider two types of disability insurance: short-term and long-term.
Short-term disability (STD) covers temporary conditions and usually lasts up to six months and replaces up to 60%-80% of your income. It’s commonly provided by employers but offers limited benefit duration and lower coverage amounts.
Long-term disability (LTD) is a critical safeguard for physicians, designed to protect a portion of your income if a serious illness or injury prevents you from working for an extended period. Unlike short-term coverage, LTD is built for long-haul scenarios—it typically replaces 60% to 80% of your pre-disability income. Benefits begin after a set elimination period—usually between 90 and 180 days—once any short-term coverage has been exhausted. Depending on your policy, benefits may continue for several years, through a designated age (often 65), or even for life.
Short-term disability (STD) covers temporary conditions and usually lasts up to six months and replaces up to 60%-80% of your income. It’s commonly provided by employers but offers limited benefit duration and lower coverage amounts.
Long-term disability (LTD) is a critical safeguard for physicians, designed to protect a portion of your income if a serious illness or injury prevents you from working for an extended period. Unlike short-term coverage, LTD is built for long-haul scenarios—it typically replaces 60% to 80% of your pre-disability income. Benefits begin after a set elimination period—usually between 90 and 180 days—once any short-term coverage has been exhausted. Depending on your policy, benefits may continue for several years, through a designated age (often 65), or even for life.
What the Data Tells Us:
Disability impacts more than 70 million adults in the United States over one in four Americans according to the CDC’s 2024 findings (cdc.gov). Yet despite how common disability is, most individuals are financially unprepared for its consequences. The council for Disability Income and Awareness states at least 51 percent of working adults are without disability insurance. The U.S. Federal Reserve’s 2023 report also revealed that just 54% of adults have enough savings to cover three months of expenses in the event of an emergency (federalreserve.gov). This disconnect between risk and readiness highlights a harsh reality: millions of Americans, including high earners, are just one unexpected illness or injury away from financial instability.
Five Common Mistakes Physicians Make with Disability Insurance
Despite the risks, many physicians either delay or mishandle their disability insurance. Here’s where things commonly go wrong:
#1. Assuming Employer Coverage Is Enough
Many hospitals and large employers offer group disability insurance, but these plans often lack own-occupation coverage and are rarely portable if you change jobs. More importantly, if your employer pays the premium, any benefits you receive may be taxable, reducing your payout. The policies tend to make it harder to qualify for benefits since they tend to have a stricter definition of disability.
Many hospitals and large employers offer group disability insurance, but these plans often lack own-occupation coverage and are rarely portable if you change jobs. More importantly, if your employer pays the premium, any benefits you receive may be taxable, reducing your payout. The policies tend to make it harder to qualify for benefits since they tend to have a stricter definition of disability.
#2. Waiting Too Long to Purchase Coverage
Disability insurance is cheapest when you’re young and healthy. Delaying coverage increases your premiums and raises the likelihood of exclusions if you develop any medical conditions. Many new attending physicians mistakenly believe they’re too early in their career to justify the cost, but waiting can lock you out of the most favorable terms.
Disability insurance is cheapest when you’re young and healthy. Delaying coverage increases your premiums and raises the likelihood of exclusions if you develop any medical conditions. Many new attending physicians mistakenly believe they’re too early in their career to justify the cost, but waiting can lock you out of the most favorable terms.
#3. Not Choosing an Own-Occupation Policy
This is arguably the most important feature for physicians, especially those hands-on specialties like surgery, anesthesiology, or emergency medicine. A general “any-occupation” policy could deny your claim if you can still work in a non-clinical or administrative role. An own-occupation policy ensures you’re covered specifically for your inability to perform the duties of your specialty, even if you're still technically employable in a different job. Not all own-occupation disability policies are the same, some can transition into an any-occupation definition and some limit how long your benefits are paid.
This is arguably the most important feature for physicians, especially those hands-on specialties like surgery, anesthesiology, or emergency medicine. A general “any-occupation” policy could deny your claim if you can still work in a non-clinical or administrative role. An own-occupation policy ensures you’re covered specifically for your inability to perform the duties of your specialty, even if you're still technically employable in a different job. Not all own-occupation disability policies are the same, some can transition into an any-occupation definition and some limit how long your benefits are paid.
#4: Overlooking Important Policy Riders
A base disability policy may offer solid protection, but without key riders, physicians often find themselves underinsured as their income or circumstances change. These optional add-ons help tailor your coverage to better fit the realities of a medical career.
A base disability policy may offer solid protection, but without key riders, physicians often find themselves underinsured as their income or circumstances change. These optional add-ons help tailor your coverage to better fit the realities of a medical career.
Key Riders Physicians Should Consider:
- Residual Disability Rider – Pays partial benefits if you can still work but experience a loss of income due to a partial disability. Crucial for hands-on specialists like surgeons.
- Future Purchase Option Rider – Allows you to increase your coverage later as your income grows—without a new medical exam. Ideal for early-career physicians.
- Cost-of-Living Adjustment (COLA) Rider – Increases your benefits annually to keep pace with inflation, protecting long-term purchasing power.
- Catastrophic Disability Rider – Offers additional benefits if you’re unable to perform basic daily tasks due to a severe disability.
Skipping these riders may lower your premium now, but it can cost far more in the long run if your policy doesn’t keep up with your life or career.
#5 Ignoring Future Increase Options
Your income will likely rise over time, but your coverage won’t automatically adjust with it. If you fail to update your policy you could be considered uninsured and unable to process your claim.
Your income will likely rise over time, but your coverage won’t automatically adjust with it. If you fail to update your policy you could be considered uninsured and unable to process your claim.
Protect What You’ve Built
For physicians, the ability to earn a high income is a valuable asset yet it’s one of the least protected. Disability insurance ensures that if an illness or injury disrupts your career, your finances don’t unravel with it. Understanding your policy’s terms, choosing the right coverage, and avoiding common mistakes isn’t just smart, it’s essential. Don’t wait for a wake-up call. Plan and protect the career you’ve worked so hard to build.
For physicians, the ability to earn a high income is a valuable asset yet it’s one of the least protected. Disability insurance ensures that if an illness or injury disrupts your career, your finances don’t unravel with it. Understanding your policy’s terms, choosing the right coverage, and avoiding common mistakes isn’t just smart, it’s essential. Don’t wait for a wake-up call. Plan and protect the career you’ve worked so hard to build.