I’m a 36-year-old physician. I’ve had my own personal disability insurance policy for about five years now, and I’m paying $500 a month for it. My employer just started offering a policy at $180 a month, which would give me double the monthly payout if I ever become disabled.
I asked someone at my private insurance company to break down the details, but the information they sent me was a bit hard to follow. If anyone could help explain it, I’d really appreciate it!
Here’s what they sent:
Coverage Options: My group plan offers two options, both tax-free. Option 1 covers 50% of income up to $15,000 monthly, and Option 2 covers 60% of income up to $18,000. Many physicians keep both their employer group plan and personal policy for stronger coverage. The group plan gives a basic safety net, while the individual policy adds flexibility and portability.
Definition of Disability: The group policy has a transitional “own occupation” for the first 12 months, allowing earnings up to my usual income along with the payout. After 12 months, earnings offset the group benefit. My individual policy has a true “own occupation” definition, so I could earn from other work without any offset.
Ownership & Guarantees: The group policy is owned by my employer, so terms could change, and it’s harder to convert if I leave the job. My personal policy stays with me wherever I go.
ERISA Protection: Group plans are under ERISA, which makes it harder to challenge claim denials legally. With my personal policy, I’d have more legal protection if a claim is denied.
Locked-in Health & Rates: The personal policy keeps my current health rating and rates, so dropping it might mean higher rates or exclusions if I want it again in the future.
Any help in breaking this down would be amazing! Thanks!
One big thing with employer plans is that they’re under ERISA, which makes them harder to sue over. If you do have to, you’ll need an attorney who specializes in ERISA/disability, and you’d only be able to sue in federal court.
With a personal policy, you could handle it at a local courthouse if something goes wrong. You might want to talk to an attorney who knows ERISA to go over both policies and get a better sense of pros and cons.
We work with a lot of doctors, and it’s common to carry a personal disability policy alongside any employer benefits. Depending on your specialty, you’ll want to pay close attention to the “own occupation” terms.
There’s a good chance you’ll work for another group someday, and the benefits could change if you do. That’s where keeping a portable policy makes sense. If your current advisor only sells one brand of insurance, maybe get a second opinion from an independent wealth advisor or agent.
Also, if you have a high tax burden, some life insurance policies can include disability riders—something to ask your accountant about.
You could probably keep your personal DI policy along with the employer one. Check with a financial advisor to be sure.
I’m not a doctor, but I used to work in finance. Went out on disability in my 40s and I receive employer long-term disability, my individual DI, and SSDI. SSDI is offset from LTD, but the DI pays out fully on top of the others.
If you’re in a very specific specialty, like hand surgery or OB, you’ll really want to keep that personal policy with the full ‘own occupation’ definition. For more general family medicine, the employer policy might be okay.
Keep in mind that after the first 12 months, your group plan may reduce benefits if you switch roles due to an injury. That’s not a big deal if you’re in a clinic, but it could matter if you’re doing surgery. If you can afford both policies, it wouldn’t hurt to have the extra backup locked in place.