Income Protection For Doctors

“An ounce of prevention, is worth a pound of cure.”
– Benjamin Franklin, 1736

What is Income Protection Insurance?

Each year, over four million people miss work due to an injury or illness. The longer they are out of work, the longer they go without the income they expect, thus disrupting their lives and their families. 

And if you’re a practitioner, the chances of it happening to you are even greater. You have strenuous schedules, and work that is often more physically and mentally taxing than most occupations. Your current income is not the only thing affected by a disability. While recovering (hopefully) from a disabling event, your patients continue to need care and likely seek other providers if your return date is unknown. Student loans and other personal expenses mount up. If you own a practice, business loans, lease payments, and insurance premiums also loom large. Your employees get concerned for their own future, and soon begin looking for jobs elsewhere, making the likelihood of your practice surviving your injury or illness extremely unlikely. 

These are just a few of the many reasons that all doctors should obtain income protection, also known as individual disability insurance (IDI). What is income protection and how does it work? Keep reading to find out!

Why is Income Protection Important to Your Financial Plan?

Most of the Doctors we encounter are either uninsured or underinsured when it comes to protecting their income. Income is an integral part of any financial plan. Without adequate income protection, you are putting your future, and everything you’ve worked so hard to achieve at risk. And if you own a practice, the future of your practice is at risk as well.

Owning an individual long-term disability policy tailored to protect you, in your specialty, is critical to properly transferring your risk of illness or injury to an insurance company.

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How Does Income Protection Insurance Work? 

Income protection insurance is designed to provide monthly payments to help make up for lost income while you are out of work. And it will continue to pay a benefit until you can return to work, or, once you reach the end of your benefit period. 

Unfortunately, the benefits of income protection insurance don’t provide full income replacement. Your monthly payments may be as low as 50%-60% of your normal income. Still, this is better than getting nothing while you are unable to work, and unlike most long-term disability group benefits (if your employer even offers them), the income benefit of an individual disability policy is tax-free, because you paid the premiums with after-tax dollars! 

You can claim a benefit multiple times during the lifetime of your policy if the same, or different, injuries or illnesses arise. And it not only protects you from long-term work absences. If the policy is crafted properly, you can protect yourself from the more common disabling events which affect your ability to work a full day, also known as residual disabilities. Furthermore, a good policy will include other riders which allows the benefit to increase along with inflation in the event of an extended claim. There are also a few other key riders which ensure that you’re protected in the event that you are unable to perform the duties of the occupational specialty you worked so hard to achieve. Working with an experienced insurance professional is key to obtaining a policy that can protect you now, while growing with your income as it increases throughout your career.

Is Income Protection as important as Life Insurance? 

Most financial advisors and wealth managers will agree that income protection is much more important than life insurance. Income is the foundation of any financial plan. It is designed to protect your most valuable asset … YOU, and your ability to earn a living! Without proper income protection, everything you have worked so hard to achieve is at risk. Life insurance is designed to protect the people that depend on you, if your life (and your income) ends, paying your beneficiaries after you die. Statistically speaking, the chances of dying before retirement age is less than 4%. However, the chance of a practitioner experiencing a disabling event during their career is currently at 24%, and that number is climbing. Think about that staggering statistic … a lengthy disability will affect one in four! Clearly income protection is extremely necessary, but at the end of the day, both insurances can play an important role in one’s planning. 

If you’re ready to begin the process of obtaining quotes to protect your income, click here now.

Is It Worth Obtaining an Income Protection Insurance Policy? 

Although you’re now more aware of the many benefits to owning a disability insurance policy, whether you’re a dentist or physician in training, or one who is currently practicing, most still may have concerns. After all, if the risks are so much higher for your profession, that means the premiums must cost more than the average person. Is it actually worth it to obtain income protection? 

In a word, yes. Income protection, like all forms of insurance, is designed to protect against what could happen, while providing you peace of mind. When there is even the slightest possibility that you might miss work, especially for a long period of time, it’s better to have this coverage and not need it, than to need it and not have it. Recent statistics show that at least 1 in 4 practitioners will experience a lengthy disabling event during their career.

Most doctors would be in a very bad place if they lost income for even a few months, let alone years. And when you think of the big picture … your goals, your student loans, your lifestyle now and throughout your career, your hopes and dreams of life after your career ends … you can’t afford NOT to have adequate income protection. 

What Is the Average Cost of Income Protection Insurance? 

While the cost of income protection insurance varies by insurance carrier, you can always expect your annual income to impact the cost of the insurance. For example, the average cost is typically between two to three percent of your annual income. 

Age is one of the main factors that impacts the cost of your insurance. After all, older people are more likely to get sick or injured. Other factors impacting the premium cost are occupation, health, and the many different important riders (add-on features of a disability policy).

If you factor in 3% of your annual income to provide peace of mind knowing that a large portion of the millions of dollars you’ll earn over your career, having income protection sounds like a wise financial decision for doctors, versus risking it and having nothing if something happens to you. In exchange for a very small monthly payment, you can be certain that your cash flow doesn’t stop, and your lifestyle isn’t severely impacted if you become injured or ill. 

At What Age Does Income Protection Stop? 

Disability policies can be obtained to have a benefit period (how long it pays) to either age 65, age 67, age 70, or, in some cases a policy may have a set number of years a claim can be paid (such as 5 or 10 years). The longer the benefit period, the more costly premium will be, as it protects you for a longer period. 

How Long Is Income Protection Paid For, and Can the Cost Change? 

How long your income protection lasts depends on the policy you obtain. For example, some policies last until someone retires. But that doesn’t mean you have to pay for it that long. A good disability policy will be “non-cancellable” and “guaranteed renewable”. This means the carrier cannot cancel or change it’s features as long as you continue to pay premiums. Furthermore, if you obtain the policy at age 30 (paying premiums as a 30 year old), the policy premiums will stay at the cost of a 30 year old for as long as you keep paying the premium. This could potentially give you many years of protection. 

Other policies may be designed to last only one or two years. This type of income protection is a bit like term life insurance. You are better off getting as much (or as little) coverage as you think you need. 

When Will Income Protection Benefits Be Paid, and How? 

Benefits begin to be paid once your policy’s elimination period is met. An elimination period is the number of days you must be out of work before receiving benefits. Policies can range anywhere from 30 days to 360 days before a benefit is paid, but the average elimination period chosen by doctors for their disability policy is 90 days. The shorter the elimination period, the higher the premium cost will be. Therefore, it is wise to have an emergency fund saved to, at the very least, cover the amount of income lost during your elimination period. For example, if you chose a 90 day elimination period for your income protection policy (3 months), you should have at least 3 months of income saved. 

Once your individual disability policy’s elimination period is met, the tax-free income benefit will pay out immediately after, and it will be paid each month, as long as you are unable to work, up until you either go back to work, or your policy’s benefit period ends.

Protect Your #1 Asset. Obtain Income Protection Today! 

Now you know what income protection insurance is and how it will provide the protection your future needs and deserves. But do you know where you can find the coverage you’ve been looking for? 

Here at Doctor Protectors, we specialize in protecting doctors just like you and we pride ourselves on our unique, concierge approach. After providing a few details about you, we’ll begin shopping and leveraging the carriers for you in order to obtain a few different customized options to choose from that best fit your specific need. 

We’ll do all the heavy lifting, so you can focus on what you do best. Once gathered, we’ll schedule a time to explain and review our findings over a brief (or thorough, if you prefer) phone call or web meeting, so you can choose what is best for you. Afterwards, applying for the policy is simple and quick. 

Ready to start the process and protect your income? All you have to do is contact us today

Who We Serve

We assist Medical & Dental professionals with protection and planning solutions that will help them throughout all stages of their career. We find that most of the doctors we meet have such a limited amount of spare time, patience, or knowledge to handle their own needs, that they often make rushed decisions, or neglect their own financial well-being altogether. We provide a concierge approach with the basic education they crave, along with an introduction to trusted, qualified resources offering solutions for every step of their journey.

How Doctor Protectors Can Help?

We understand medical and dental practitioners face unique challenges, with limited spare time. We are experts at understanding the nuances of the many different disability insurance carriers and their policy options, so you don’t have to!

Doctor Protectors streamlines the process of obtaining personal insurances by leveraging multiple top carriers to provide the best rates and solutions available to protect you and/or your practice. If you’ve yet to obtain income protection, or you just aren’t sure your current disability insurance is sufficient, let us help protect your most valuable asset … YOU!

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