Why Resident Physicians Need Disability Insurance

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As a resident physician, we know that you have invested significant time, effort, and resources into your education and training.

It is also unlikely that this is the first time that someone has raised the importance of income protection insurance to you.

In 2024, the average resident physician is predicted to have more than $250k in debt from training and tuition.

Surveys find, 60% of physicians are aware of their colleagues who are disabled by injuries that keep them out of work for an extended period.

Our advice: If you haven’t secured protection yet, get started while your payment rates are still low.

Familiarize yourself with some basic concepts highlighting what you need to know before securing coverage.

3 Reasons to Secure Income Protection NOW

1. Protect Your Investment

According to the Education Data Initiative, the average medical school graduate owes around $241,600 in student loan debt. If a disability prevents you from earning the expected income as a physician, repaying this debt could become a significant burden. Disability insurance can provide a safety net to ease this financial stress.

2. Dependency on Your Paycheck

The average annual stipend for residents in their first program year is $59,279, as per the 2021 AAMC Survey of Resident/Fellow Stipends and Benefits. This stipend increases each year, and residents depend on this income. Therefore, it is crucial to protect it with paycheck protection insurance.

3. Untapped Earning Potential

As you progress in your career, your earning power will increase substantially. According to the 2021 Physician Compensation Report from Doximity, the average doctor's salary, depending on the specialty, starts at a little over $210,000 a year. A disability that interrupts this income stream can have devastating financial repercussions. Hence, it's essential to protect this future earning potential with disability insurance.

Let’s break down disability insurance policies

No disability insurance policy is the same. Resident physicians have specific coverage needs, and it’s important to understand key policy features.

Benefits Increased Rider

This rider allows policyholders to increase their monthly benefit amount. Enabling increases in line with future income hikes. Note: this is without the need for new medical underwriting.

‘Own-Occupation’

This is the most important policy provision as it dictates the circumstances in which you will receive your benefit. As a physician, you want to receive benefits if you cannot do the job you have trained so hard to perform. With some policies, you will not receive benefits if you could potentially do other medical jobs instead. Look out for this.

Portability

A fully ‘portable’ policy lets you take the disability insurance policy with you if you move to a different facility or start your own practice. This is not a standard provision but useful if you are moving to a role where there are no established group plans in place. It provides you with baseline coverage even if your income has increased.

Guaranteed Issue

A policy that offers guaranteed issuance allows the insured to secure coverage without undergoing medical underwriting. While the risk of disability associated with resident physicians is much lower compared to those more advanced in their careers, an individually underwritten disability insurance policy still requires medical underwriting. This is where guaranteed issue policies prove valuable, making getting coverage quick and easy.

Non-Cancelable and Guaranteed

Ensure that policyholders can maintain their coverage throughout their careers. Premiums and benefits can't be changed by the insurer.

Student Loan Rider

Many residents have substantial medical student loans, so they might be interested in this added benefit. It will help with student loan payments in the case of a disability.

Securing Disability Insurance Through Residency Plans

Some residency programs offer group disability insurance plans to their members, these can be a good option for you at an affordable price. These plans can have limitations, that’s why you should be aware of the policy specifics before committing.

This contrasts with an individual disability insurance policy purchased by a resident. It offers flexibility to meet the changing needs after residency completion and offers significant financial advantages.

Protect your Future

Disability insurance for resident physicians is not just a policy; it's a safety net that protects their future careers and incomes.

As a resident physician, investing in a comprehensive disability insurance policy can provide peace of mind and financial stability, protecting you from the unexpected and ensuring your career's success.