Match Day is one of the most exciting times for a medical student; it’s the day that medical residency programs ranked by the medical students agree to admit students and thereby opens the path to their careers as future attending doctors. This is also the time that medical students are faced with questions about planning for their future. This planning involves tough financial decisions about loan repayment, moving to a new location, housing and more. Among all the decision-making, disability insurance needs can be easily missed. However, without the appropriate insurance protection from unexpected events that can impact one’s career, medical residents and fellows in training are at risk.
Risks that Early-Stage Doctors Face
There are risks that early-stage doctors should work to manage. One key risk involves not getting a return on the investment you’ve put into your career.
According to the American Association of Medical Colleges (AAMC), the median cost for a public medical school as of 2022 is $263,488 for four years and $357,868 for a private school. The substantial costs on top of undergraduate costs often require loans. AAMC also indicates that the median amount of debt for medical school graduates in 2019 was $200,000, and 73% of students had debt at graduation.
263,488
357,868
200,000
73
With such a significant investment financially and in terms of time (usually eight years of school), most medical residents/fellows are seeking to get a return on their investment once residency is over. However, injuries or illness resulting in a disability might lead to the resident/fellow having a substantial amount of debt without the expected return on investment. Adequate insurance planning can prevent this from occurring. In addition, most medical residents/fellows are beginning to earn money during this training period of their careers. Insurance that can protect these earnings is vital to their financial wellbeing.
What Is Disability Insurance?
Disability insurance coverage is a type of insurance that protects the income of a person. This insurance replaces part of a person’s income when the person has a disability and is unable to work. It can be called many names, including income protection, paycheck protection and disability income protection. The concept is the same for all of these: A medical resident or fellow is unable to work due to some change in health status and the insurance replaces a portion of the missed income. Disability insurance can be purchased through an employer (such as the residency or fellowship program) or association (such as the AMA). It may also be purchased by you individually. The plans purchased through different sources usually offer different features, with the individual plans typically offering the most robust and portable options.
Features of Disability Insurance
Being aware of some of the key features of disability insurance can help with understanding these plans and selecting one. The most important feature is how the policy defines disability. For people in the medical profession, this should be defined as “own occupation” or defined with regards to a particular specialty so that the policy protects adequately against disabilities that are relevant to your job. Specialty specific protection can also allow a person to work in another field (for example, analyzing research data) and still receive payment related to the specialty that cannot be practiced anymore.
Another feature is that a policy can increase benefits with an increasing salary. This is very important for medical professionals in training who are likely to earn four or more times their salaries after completing training.
Some policies are guaranteed issue meaning that they are not subject to physical exams and related tests. This feature can decrease the hassle of purchasing a policy.
Another feature common to individual policies is that they are portable – meaning they can be used with different employers as a resident/fellow changes from a training program to a position as an attending doctor.
Should I Get Disability Insurance as a Resident or Fellow?
Medical students are used to delayed gratification. They put off the return on investment from all their hard work in undergrad and professional school for a minimum of eight years on average. However, disability insurance is not something that should be delayed. The simple reason why is that it becomes more expensive over time. Starting disability insurance while a medical resident or fellow results in a lower rate for most people. The disability insurance can then expand in value over time, meaning that the benefit provided can grow if the correct policy is selected.
Another reason not to delay is that disability for doctors is a risk that is greater than some other professions. For example, a major injury to a hand can prevent someone from being able to carry out surgical functions. A concussion can interfere with a doctor’s thinking and inhibit practicing. The lists of factors that can impact the functioning of a doctor is much longer than most professions because of the amount of mental and physical aptitude needed for the job. This increases the risk for doctors and serves as a greater reason to pursue disability insurance.
Next Steps
Be sure to explore the specialty-specific disability insurance options available to residents and fellows. Your career is a journey – and you’re just now getting started. Think of disability insurance as the “seat belt” that can save your earning power if you ever become too sick or disabled to perform your specialty.
