Stacking Disability Insurance: A Comprehensive Guide for Physicians

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Physicians command a high median wage—given the level of stress, responsibility, and debt required to do the job, this is well deserved.

However, this financial prosperity often becomes a double-edged sword regarding group disability insurance policies, which may only cover up to $10,000 per month in earnings. For physicians earning over $200,000 annually, a significant income gap emerges.

This is where stacking coverage becomes an attractive solution.

Stacking allows physicians to supplement their existing group disability insurance with an individual disability insurance policy or a high-limit policy, ensuring that a more significant portion of their income is protected if a disability occurs.

The Power of Stacked Coverage

Example 1: Individual + Group Coverage

Consider a physician who is either a solo practitioner or has a small practice and earns a million dollars annually. They may have a group disability insurance policy provided by their practice and an individual policy purchased independently.

Through stacking coverage, this physician can receive:

$10,000 per month from their Individual Disability Insurance (IDI)

$5,000 per month from their Group Disability Insurance

An additional $20,000 per month from a high-limit policy

This stacked coverage results in $35,000 per month, or $420,000 per year, of protected income in the event of a disability. This amount is significantly higher than what a standalone policy would typically provide.

Example 2: Group + Guaranteed Standard Issue (GSI) Coverage

Let's consider a physician who is part of a larger practice. They may have access to a Group Disability Insurance policy and can supplement this with a Guaranteed Standard Issue (GSI) policy. The GSI policy is attractive as it requires no underwriting.

In this scenario, the physician can receive:

$10,000 per month from their Group Disability Insurance

An additional $25,000 per month from a Guaranteed Standard Issue policy

Again, the total monthly coverage in this case is $35,000, safeguarding the physician from significant income loss due to disability.

The Benefits

Stacked coverage offers several advantages for physicians:

Comprehensive Coverage: Stacked coverage provides a comprehensive safety net, covering a larger portion of the physician's income than a standalone policy. This comprehensive coverage is important for high-earning physicians who could face significant financial hardship in the event of a disability.

Flexibility: Stacked coverage offers flexibility, allowing physicians to tailor their coverage to specific needs. Depending on their earnings and lifestyle, they can supplement their existing coverage with individual, group, or high-limit policies.

No Underwriting Required: In the case of GSI policies, no underwriting is required. This makes it an attractive option for physicians who may face difficulties getting approved for individual policies due to health concerns.

Choosing the Right Coverage

While stacked coverage provides numerous benefits, it's important for physicians to carefully consider their specific needs and financial situation when choosing their coverage. Factors such as their annual income, lifestyle, and potential health risks should all accounted for.

Physicians should also consider seeking advice from a disability insurance expert. As we mention, time and again in our blog articles, not all disability insurance policies are built equal. For physicians in particular, it’s critical that every part of the disability pyramid is fit for purpose, presents no conflicts - and presents no surprises at claim time.

Unsurprisingly, we always recommend coverage from insurance carriers specializing in physicians' disability throughout the disability pyramid.

Conclusion

Stacking disability insurance offers a comprehensive, flexible, and robust solution that can provide a much-needed safety net for high-earning physicians.

While the concept may seem complex, with the right advice and careful consideration, stacking is an effective tool to protect a physician's income and ensure financial stability in the face of adversity.