Consider a physician in the early years of practice. After more than a decade of education and training, income is finally rising, student loans are declining and the pieces of a comfortable financial life are beginning to come together. There may be a new home, a growing family, retirement contributions, and perhaps plans to buy into a practice.
Then an injury or illness makes it impossible to continue practicing in the same specialty.
The physician may still own the house and retirement accounts, but the income supporting nearly every part of the financial plan has changed. The largest asset was never the portfolio. It was the ability to practice medicine and earn an income over the next 20 or 30 years.
Physicians are trained to identify risks before they become emergencies. They review family history, evaluate symptoms and order tests before recommending treatment. Yet many approach their own income protection with surprisingly little diagnosis, often assuming the disability coverage provided through an employer will be enough.
That assumption deserves a closer examination.
A surgeon who develops a tremor may still be capable of teaching or working in an administrative role. A proceduralist with a serious back injury may still be employable, even if standing through a long procedure is no longer possible. Whether the physician receives disability benefits may depend on how the policy defines the ability to work.
Some policies evaluate whether a person can perform another occupation, while certain individual policies may protect the ability to practice a particular medical specialty. That difference can be far more important than the size of the premium. A policy that does not adequately recognize the physician’s specialty may protect employment in a general sense without fully protecting the income the physician spent years preparing to earn.
Hospital provided coverage can still be valuable, but it may have limitations. Benefits may be capped, the coverage may not follow the physician to a new hospital or practice and the definition of disability may change after a certain period. As income grows, the difference between what the employer plan provides and what the family actually depends upon may grow as well.
Timing also matters. Disability insurance is generally priced and underwritten based on age, health and other individual factors when a physician applies. This is why residency or fellowship may be an important time to evaluate coverage, even though adding another expense on a trainee’s salary is hardly appealing. Waiting may lead to higher costs, exclusions or fewer choices if a health issue develops.
For some physicians, an individual policy structured around their specialty may provide a foundation that can remain in place as they change employers or practices. Certain policies may also provide options to increase coverage later as income rises, subject to the contract’s terms. The appropriate structure depends on the physician’s specialty, income, employer benefits, debts, family obligations and career plans.
The process should begin with those facts, not with an insurance product. Physicians would not prescribe treatment before understanding the patient, and financial professionals should not recommend coverage before understanding the client.
At Stonewater Financial, we view income protection as part of the larger financial diagnosis. We consider how disability coverage fits with cash flow, investments, debt, taxes, practice ownership, estate planning and the family’s long term goals. We also coordinate with the appropriate insurance, tax and legal professionals so that one decision supports the rest of the financial plan.
Physicians spend their careers protecting the health and futures of others. Their own financial future deserves the same level of attention.
If you are a physician or currently in training, schedule a complimentary 15 minute introductory call with Stonewater Financial. We can help determine whether your income protection is properly connected to the financial life you have worked so hard to build.
This material is for general informational purposes only and is not intended as personalized insurance, investment, tax or legal advice. Disability insurance definitions, benefits, exclusions, costs and availability vary by policy, carrier and individual circumstances. Consult a licensed insurance professional and your other financial professionals before purchasing or changing coverage.
