June 19, 2025

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Disability Insurance for Medical Residents and Fellows

While disability insurance is crucial for all professionals who rely on their income, medical residents and fellows should focus particularly on disability insurance. Medical trainees invest a decade and significant funds into their careers. Combined with their significant income potential, it’s only sensible to shift some of the risk against chronic illness and injury to someone else’s shoulders. Individual disability insurance policies, unlike employer-provided group plans, offer tailored, stable protection for physicians. This article covers why individual policies are essential, key riders, specialty-specific language, and choosing providers with high claim payout rates.

 

Why Individual Policies Matter

Individual DI policies are portable, customizable, and lock in coverage and premiums, unlike group plans. Employer-provided plans, offered without underwriting, are much more restrictive to claimants, with changeable terms, restrictive disability definitions, and benefit offsets. Individual policies ensure stability, with tax-free benefits if premiums are paid post-tax. You never need to worry about your employer changing the terms on you or adversarial claims processes.

 

Specialty-Specific Language

When you set up disability insurance as a medical trainee, a crucial aspect of the contact to look for is specialty-specific own-occupation insurance. This means your policy would pay you benefits if you’re unable to perform your medical specialty, even if you can work in another medical specialty. For example, an anesthesiologist who develops a seizure disorder now can’t practice her specialty (true case!). Her policy’s specialty-specific language provides her monthly benefits as long as that’s the case, even until she turns 65. She continues to receive benefits even though she opted to retrain as a radiologist and is now working full-time in that specialty. This language gives her the freedom to pursue her professional ambitions as they can integrate with her current medical condition.

Another example: Twenty years into his surgery career, an orthopedic surgeon develops trigger finger, where the tendon sheath becomes inflamed and it feels like his finger locks up repeatedly. Because of this, he can no longer perform the same surgeries he used to. With an enhanced specialty-specific policy (ideal for surgeons), he could even continue to work in a clinical-only orthopedic role in his practice and still qualify for a total disability claim, as long as he couldn’t perform surgeries.

 

Essential Riders

  1. Specialty-Specific Own-Occupation Definition of Disability: Pays you if you can’t perform your specialty, even if working in another specialty.
  2. Residual Disability Rider: Prorates your policy if you experience an income loss due to disability.
  3. Future Increase Option Rider: Reserves your right to increase coverage as your income grows, without new medical underwriting.
  4. Cost of Living Adjustment Rider: Provides set increases in benefits to assist with managing inflation.

Choosing an Insurance Carrier

Work with a broker who can guide you to providers that offer specialty-specific own-occupation policies with high claim payout rates and strong financial stability ratings. Estimate your future earning potential and set up a policy that allows you to eventually increase your benefits accordingly.

Some insurance companies are stock companies, while others are mutual companies. Stock companies have outside shareholders, while the ownership of mutual companies is composed of the insureds. If you think about it, outside shareholders naturally have interests that are less aligned with the interests of claimants. The additional layer of competition for capital can add pressure to save money on claims, which doesn’t exist to the same degree as mutual companies, generally speaking.

 

Individual vs. Group Plans

Group plans have generic terms, lower benefits, and lack portability (can’t bring it with you to your next job). Individual policies, though often cost 2-4% of your gross income, offer specialty-specific protection, fixed terms, and no offsets, ensuring robust coverage. You are protecting most of your earnings until for the rest of your career—I personally call that a good deal.

Securing a policy during residency locks in lower premiums and hospital student discounts. You have the most years ahead of you for potential income loss in the beginning of your career—the time is now!

 

The Cost of Going Uninsured

A disability could cost millions in lost earnings—a $300,000 earner disabled at 30 due to musculoskeletal issues could lose $10.5 million by 65 (not even assuming a raise). Individual disability insurance protects your lifestyle and goals. One in four Americans experience a disability lasting three months or greater, and a quarter of disability claims are permanent. We sometimes take our bodies for granted, but they’re the most valuable assets we own!


Jamie “Elisheva” Kopelman is a disability, life and health insurance broker with National Financial Network, based in New York with her family. Contact her at [email protected].

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