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Disability Insurance for Resident Physicians

By Louie Perraut

Becoming a physician requires significant sacrifice. The path is grueling: four years of undergraduate classes, four years of medical school, followed by at least another four years of residency depending on the specialty. Resident physicians often leave school with hundreds of thousands of student loans debt while, according to the American Medical Association, they start residency only making around sixty thousand a year.  It’s important for resident physicians to secure enough disability coverage early on to protect their ability to earn an income and is paramount to secure their financial future.

Most physicians are covered by an employer policy when in residency but there are many reasons why they should also consider a personal disability policy. Personal Disability policies pay a benefit that is income tax-free, unlike their group counterparts that are paid for with pre-tax dollars and are normally insufficient to cover expenses, such as student loans. The coverage ends after residency while personal disability policies continue at a locked-in rate that allows you increase your benefit by only providing proof of income (no further underwriting needed).

Personal disability insurance policies also have a key rider available known as “own occupation.” This rider allows a physician to receive a benefit if they can no longer work in their specific specialty, even if they can work in another capacity. Polices can also include coverage for partial disability, which is far more common that becoming fully disabled.

There are many options available to make disability policies more affordable while still providing appropriate protection. Residency is the time to lock in low rates while new doctors are healthy. It can be crucial to their financial plan and residents should consult with a professional to have their financial needs and goals assessed.

About the Author

Louie Perraut is a Financial Advisor at Michigan Financial Companies who specializes in working with medical professionals. With a background in the health care industry, Louie has a unique understanding of the demands the industry places on its employees and the concerns they have when preparing for their own retirement, safeguarding what they have worked so hard to build, and protecting their families through insurance strategies.  Louie is currently accepting new clients and can be reached at 248-663-4718 or lperraut@michiganfinancial.com.

Securities and investment advisory services offered through Royal Alliance Associates, Inc. (RAA), member FINRA/SIPC. RAA is separately owned and other entities and/or marketing names, products or services referenced here are independent of RAA. RAA does not provide tax or legal advice. 28411 Northwestern Hwy., Suite 1300, Southfield, MI 48034. (248) 663-4700.  18285233-20200220

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