Disability Insurance 201 - with Kelly
A few years back, I recorded an episode about disability insurance that truly opened my eyes around the topic and showed me the need to advise my clients about it as well. If you haven’t listened to it, I highly encourage you to listen to it before you hear this episode. I remember at the end of recording the disability episode with Jen Fitzgerald from Policy Genius there was more we could talk about around the subject. Fast forward over two years and I get an email from a listener asking me to cover more about the topic, so I asked her to join me and share her story about disability insurance and how it has essentially saved her life. Kelly is a podcast listener here to tell you more about her journey.
What are we drinking?
Kelly — F Stephen Miller Pinot Grigio
Shannon — Black Box Rosé
Podcast Notes
Shannon did a podcast in 2015 that she considers Disability Insurance 101, and she considers this one Disability Insurance 201. She recommends listening to that one first.
Kelly is a pediatrician and went to school at the University of Colorado. Her program had a graduate medical education disability insurance, in case a resident became disabled and was unable to work. In this program students were employed through the university at the children’s hospital. Kelly has since found that a lot of doctors have not ever been offered disability insurance as part of their benefits package.
Disability insurance for physicians is different than other jobs, because of the training they have. They cannot just stop being a doctor and work a different job.
When she left the program, she could transfer the disability into an individual policy. If transferred before graduation, there were no limitations and the cost was less than doing it later. This is very common for physician policies. Kelly had some health issues during her residency, and took this more seriously and transferred her policy so she could take it with her when she finished her program.
Kelly worked for a clinic in Nevada for six months, practicing on her own, when she got sick in January 2017. She had 13 hospitalizations that year, and was off work about a week every time. Her income dropped, because she was paid a base salary as well as more based on the number of patients she saw. In September 2017, her illness worsened. In December 2017, she had to stop working.
She started the disability application and then applied for and accepted a part-time job reviewing charts for Social Security Disability. Her disability coverage was occupation-specific and this part-time job would not affect her benefits, since she is a pediatrician. As time went on, she wasn’t able maintain the part-time hours.
Kelly joined the Financial Gym and worked with Joy. She found that Kelly didn’t need to work, because of her disability policy.
Her policy had a 90-day waiting period and they pay at the end of the month.
Kelly paid $253 per month for a benefit of $7,820 per month. When her salary went up, her premium went up. Her premium was based on 2% of her income.
Disability insurance is expensive, but there are so many different ways that you can become disabled. You can see how the cost changes by using a calculator on Policygenius. Disability income is not taxed, so you will need a policy for less than what you make now.
Kelly will be paid through her disability policy until age 67. At that point, she will be Social Security eligible. Kelly had a three-month emergency fund that she used during the 90-day waiting period.
If you have a policy through your work, check the limitations: how much it pays, how long it pays, etc.
If you are a high income earner and are supporting yourself or a family, you are a likely candidate for disability insurance. It is income replacement.
The earlier you sign up, the cost will be lower. Guaranteed issue means no medical review or exam. This is often offered if you convert your group policy through your employer to your own plan when you leave employment.
“Own occupation” and “specialty specific” are two types of riders that allow you to work another position and still receive disability pay, if you are not able to perform a job in your specific occupation or specialty.
You can only apply for, and receive, Social Security Disability if you are making less than Substantial Gainful Activity (SGA), which is approximately $1,000 to $1,400 per month. If you can do anything where you make more than this per month, you will not qualify. Your disability is subject to regular reviews.
If you are looking for a personal disability policy, a rider lets you tailor the policy to you. The more riders, the higher the cost.
The cost of living: allows your income to grow as you get older. This is important for those who are younger.
Future purchase option: means as your salary increases, you have the option to increase your benefit.
Non-cancellable or guaranteed renewable: if the insurance company doesn’t offer your policy anymore or no longer offers your profession, you can continue to have the policy and not have to start the process over.
Having a disability policy is peace of mind.
Your student loans do not go away if you become disabled. It is difficult to qualify for Total and Permanent Disability (TPD) Discharge.
Kelly wants to be a warning example for other people.
https://www.pearsonravitz.com - this website was started by a doctor who became disabled from an injury at work and was not as well covered as she thought. Education, her story, and the ability to obtain insurance is available on this site.
https://www.whitecoatinvestor.com/tag/physician-disability-insurance/ is a list of articles on IDI for doctors from a reputable physician finance blog.
TAKEAWAY: My biggest takeaway is that we all wish nothing bad would happen to us or those we love, but the reality is that bad things can happen to anyone, and it’s important for us to take the time and assess those risks and how they would impact our lives if they were to happen. Disability insurance is not for everyone, but it can be life saving for many.
Random Three Questions
What do you think will be your next career move?
What is a show that you like to binge watch?
If you won a million dollars, what would you do with it?
If you need someone to chat about your finances, to see if disability insurance or other types of insurance make sense for you, I hope you’ll reach out to my team at the Financial Gym. One of the best roles my trainers play in their clients’ lives is being the sounding board you need for life’s tough money choices. You can schedule a free call here to find out more. No matter where you are in your financial journey, my financial trainers can help you get where you want to go. So head over to or send friends to financialgym.com/friends to sign up today!