6 Pros of Getting Disability Income Insurance as a Medical Resident

Disability income insurance (DI) provides financial protection, replacing a portion of your lost income if you cannot work due to illness or injury. 

For medical residents who face long hours, high stress, and physically demanding work, DI is especially relevant as it safeguards against the financial impact of unexpected health issues that could disrupt their training or career.

Let’s look at six pros of purchasing disability income insurance as a resident.

6 Disability Income Insurance Pros That Benefit Medical Residents

1. Financial Protection in Case of Injury or Illness

As a medical resident, your student loan debt and other financial obligations may be quite high while your income is relatively low. This may put you in a precarious financial position. 

If you’re unable to work due to illness or injury, you will still be responsible for your debt. Disability income insurance (DI) acts as a safety net, paying benefits to cover a portion of your income. (Some DI policies even have additional features, called riders, that can be purchased to cover student loans.)

You may currently have what is commonly referred to as "disability insurance" through your residency program. However, this term can be misleading. Typically, the coverage provided is a group long-term disability (LTD) policy, which often lacks the comprehensive benefits offered by an individual disability income insurance policy designed specifically for residents.

However, we would not recommend opting out of employer-offered LTD without reviewing that policy. Instead, we suggest that you supplement it with an individual DI policy. 

2. Early Career Coverage at Lower Rates

Insurers factor your health and age into your eligibility and the rate you pay for disability income insurance. 

Securing a policy early in your career is typically more affordable, as younger individuals are often in their best health. Since pricing for individual disability income insurance is aged based, the younger you secure the coverage, the lower the cost. In addition, many carriers offer discounts for residents.

To lock in these lower rates, you must ensure your DI policy is non-cancelable and guaranteed renewable. Depending on the carrier, this language may be written into the policy or through optional riders. Make sure you review your policy documents carefully. Ideally, seek guidance from an experienced advisor who understands the needs of medical residents.

3. Safeguarding Future Earning Potential

One thing is certain: your earning potential right now is high. You’re making the investment today for what you’ll be seeing in your bank account in the future.

Protecting your investment is paramount, and the group LTD policy offered by your employer may not offer the robust benefits of independent disability income insurance policies.  

An individual DI policy is portable; it’s yours to keep as long as you pay your premiums up to the contract period. If you change employers, individual DI coverage moves with you whereas group LTD often does not. In addition.  you have much more control over its design, with the ability to customize it with features known as riders, and it can “grow” with you as you progress through your career and your income grows. 

4. Securing Own Occupation Coverage

For highly specialized professions like medicine, career changes due to injury or illness would likely involve a major pay cut. A  disability income insurance policy may mitigate that outcome with an “own occupation” definition of disability.

A disability policy with an “own occupation” definition of total disability may pay benefits, if due to injury or sickness, you are unable to work in the occupation in which you are trained and are currently working. Full benefits may be paid even if you return to work in a new occupation.

Depending on the insurance company, “own occupation” may be included as part of the base contract or may need to be added as a rider. 

5. Financial Peace of Mind During a Demanding Career Stage

Residency is a time of high stress, both on your mind and body. Purchasing individual  disability insurance while in residency can give you financial peace of mind, knowing that the unexpected won’t derail your investment in your future.  

6. Flexible Coverage For Your Career Evolution

When you purchase a DI policy as a resident, you can still have the flexibility to change your coverage as your career evolves. 

During the purchase process, you’ll decide on your coverage limits. Many residents will see a significant increase in their income after transitioning from resident to practicing physician, and it may continue to increase over the course of their careers.

However, what if your health changes?

When you purchase your resident disability income insurance coverage, consider adding a future insurability option rider.  This feature may allow you to increase your coverage as your income increases without regard to changes in your medical history.

Guidance From an Experienced Advisor

You are at the beginning of a career with significant earning potential, which means now is the time to identify strategies to safeguard your future income. Purchasing disability income insurance as a resident lets you take advantage of lower premiums.  

It can be a challenge to understand the ins and outs of DI, the many riders, potential insurance carriers, and many other considerations, and an experienced advisor can provide guidance to help you make the best decision for your unique situation. 

Wherever you are in your residency program, today is the right day to learn more about DI. Contact us today to explore all of your options.

About Treloar & Heisel

Treloar & Heisel, an EPIC Company, is a premier financial services provider to dental and medical professionals across the country. We assist thousands of clients from residency to practice and through retirement with a comprehensive suite of financial services, custom-tailored advice, and a strong national network focused on delivering the highest level of service.

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