Hello, I wanted to seek the advice from everyone here on this website regarding disablity insurance policies for surgeons. I received an illustartion from an agent regarding DI. Initially he stated I could purchase a $1,000/mo benefit (policy) to secure the rate and age (with respect to cost of premium so that the rates wouldn't increase). In addition, I would have the right to purchase additional benefits at a later time but keep the same rates. A few weeks had passed and recently he came back and said that if I started at $1000 and then "exercised my future purchase option" of $5000, the maximum coverage I could get is $6000. If I later wanted to increase to the maximum possible coverage I would have to purchase an additonal policy (at a different rate) of $4000.

Do I have to pay an additional monthly fee to "exercise" my future purchase option of $5000?

Does it seem more reasonable to start low while I am still finishing up my training (currently in a residency / fellowship program) and then increase as needed or should I max out my coverage since I have already been approved and lock in at my current rate?

The other interesting thing I noticed was that the agent wanted me to start paying him right away without really going over the contract; he only provided the "Protector Disabilty Income Insurance Illustration," is this normal? To accept payment and then say "sign here?"

Thank you for your time....

Policy info:
Female, nearest age 33, class 3A, Non tobacco, gender neutral, total benefit $5000, waiting period 90 dyas, benefit to age 67, premium payable to 67.

Benefit desc:
$5000 Base policy benefit
Policy Fee

Optional Riders Selected
-Residual disablity rider**
-Future purchase option rider** w/ $5000 option pool amount*
-Noncancelable rider**
-Own occupation rider#
-Indexed cost of living rider**

$5000 total monthly benefit w/ $60000 total annual

* The future purchase option rider premium is payable to the anniversary nearest age 50. The rider ends at that time, and the total premium for the policy is then reduced by the amount of premium for this rider.

** Premiums for these benefits may change as other benefits are added or deleted.

# The own occupation rider is available if the policy includes the noncancelable rider.

I set all this stuff up a couple years ago working with Rene at Insure Your Future. He provided several options and was able to explain them in a way I could understand. He doesn't work for an insurance company so he has no allegiance regarding what carrier you go with. I suggest you give him a shot with these questions.

Do I have to pay an additional monthly fee to "exercise" my future purchase option of $5000?
Of course you'll have to pay the increased premium, but I strongly doubt any fee on top of that.


Does it seem more reasonable to start low while I am still finishing up my training (currently in a residency / fellowship program) and then increase as needed or should I max out my coverage since I have already been approved and lock in at my current rate?
I'm going to sound like an insurance salesman here, but I'm actually just a guy on claim. I think you should get as much disability insurance as they'll sell you at every point along the way, including the FIOs. Given that you're heading into the medical profession, $5,000-$6,000 a month doesn't sound like anywhere near enough over the long term. If it were me, I'd be looking at the FIO rider with an eye toward a lot more insurance over time. You will want to insure about 70%-75% of your employment income, which means that you'll want to estimate what you'll be making in the future and getting an FIO rider that will allow you to buy enough insurance later on.

Standard has a good reputation. This doesn't mean they're your mom or your dad or your guardian angel, and I am not their p.r. agent. But I believe they are near or at the top of the heap in the disability insurance business. I don't blame you one bit for being skeptical and careful, but from what you've written it sounds like they're going by the book. Believe me, it's arcane stuff right now, but if you become disabled you'll be glad you bought this insurance. I sure am. My disability insurance has saved my life.


The other interesting thing I noticed was that the agent wanted me to start paying him right away without really going over the contract; he only provided the "Protector Disabilty Income Insurance Illustration," is this normal? To accept payment and then say "sign here?"
The policy ought to have a "free look" provision that gives you some time to change your mind. If it does, there's no worry about paying right away. It's been quite a while since I bought my individual policy, so the following could be wrong, but I think they'll quickly send you the policy itself, and that it will be written in plain English. My individual policy (not from Standard but from someone else) is a model of simplicity.

ocheath1-

I assume that you are in California as you have applied for The Protector (other states have a new policy series The Protector+).

Although you might not like the way the agent has presented things to you, he has done a good job on your behalf. As a surgeon, in California, you only have two options to purchase a policy with a true "Own-Occupation" definition of disability for the entire benefit period (to age 65 or longer) - Standard or Guardian.

As you have been given an illustration with gender neutral rates, you will save approximately 50-60% off of the normal female rates. Additionally, when you graduate and exercise the FPO Rider, it will also be based on a gender neutral rate with a permanent premium discount (even if you are no longer associated with your training hospital).

Therefore, I would suggest that you purchase the full $5,000 monthly benefit - which is the only way you can reach $10,000 month without purchsing a new policy that will be subject to medical underwriting. This will also save you monies in the future in the event you enter a private practice and there is not an existing discount plan available. This means that your "new" coverage would be based on the more expensive female rates.

If you remain in Californa, and earn enough income, you can then purchase an additional policy from Guardian to reach a maximum of $15,000 month.

Typically, one applies based on the illustration of coverage and submits payment with the application to "bind" their coverage. When your agent has the policy and is ready deliver it to you, he can review things in detail and answer any specific questions you might have.

Hope this helps.

ocheath1 Just to respond on the "fee" question. It is my best estimate that having FIO's in your contract would, on average, increase the overall premium by maybe 5% (depending on how much FIO you've got). When you exercise the increase, you will be paying a premium on the increase that is a function of your age and the amount of benefit. The premium on the base policy will be reduced as FIO's have been removed from it to create the new policy.

Hope this helps. Have a great day!!

If you are in Califonia. I shall make the assumption that you are still in training, resident or fellow. If that is the case, the following applies. There are two companies selling disability in Ca. that have a pure "Own Occ" definition for surgeons, Standard of Or. and Guardian. Due to past problems in the disability market ther are restrictions on the amount of coverage a physician in Ca. can get. Standard and Guardian both max at $10,000 per mo this is the amount you would qualify for if your income were $264,000. Guardian will participate with other companies to $15,000 income$456,000. In disability planning it is usefull to know that about 25% of all applications are declined or parts of ones body excluded due to preexisting conditions. The future insurability option lets you get additional coverages, at the cost such coverage would be at your attained age but if the base policy was clean the future option policys must be clean also. When you are starting out you want as much in force and stacked in future insurability as you can so you need not worry about health issues when you are trying to get more coverage for the next 23 years or so. Typically the cost of $1000 of future insurability costs 10% of what $1000 in force coverage would run. Your current plan $1000 with $5000 future insurability would be sufficiant if you did not make over $132,000. As you will make more then that I would add Guardian coverage, with as much future insurability as you could get on top of the Standard.
From what you have said about what your agent said I would guess he is new to disability, but then you are new to medicine. Put him to work, Standard will be more then happy to give you all the information you want and that way he can learn too. As there are only two companies that meet your needs, for definitions and he has one of them you are halfway set and that's not half bad, and he can get you the rest. As to taking money with the application, this binds the company to protect you while you go through underwriting. In general if you get disabled while the company is underwriting, and they have the app, $, and medical you would be covered if the company would have issued the policy standard. You still have the free look see when the policy is delivered to you and if you don't want it they will refund your deposit.
It is very important to have an agent that you have confidence in you need to consider if this is the one.

Thank you to everyone who has taken the time to write. I am happy to hear from all angles! So, I can assume that the agent is doing everything by the book and is probably wanting to close a deal, which is understandable.

I have one more question....the agent stated I had to purchase the $5000 monthly benefit to have the option of maxing out at $10,000 in the future. Because I am in a fellowship, finances are an issue. I thought about purchasing only $1000 per month with the hope of buying a $10,000 monthly benefit at a later date when I truly could afford it.

Should I sacrifice the extra monies now and get the $5,000 monthly benefit knowing that I will be able to get the $10,000 at a later date or just pay for the $1,000 monthly benefit (which is more affordable to me for now) realizing that I may not be able to get the $10,000 monthly benefit at a later date (or if I am able to purchase up to $10,000 knowing that it is going to cost me more money in the future....maybe in two or three more years).

Again, thank you for your time....ocheath1

P.S. yes, I am in California

Should I sacrifice the extra monies now and get the $5,000 monthly benefit knowing that I will be able to get the $10,000 at a later date
That's impossible for anyone but you to really say. All I will tell you is that I think you should buy as much disability insurance as you can, as soon as you can.

Not to tell you how much coverage you should have now just in case you got disabled but here is a review. Your agent is right that in Ca. in order to lock in $10,000 with Standard You would need to buy $5000 in force as $5000 of future insurability is all you can get, that would give you $10,000. That is a costly way to do it. Get $1000 of Standard with $5000 future insurability na $1000 of Guardian with $5000 of future insurability, use Guardian graded. This lockes in $12,000 of your occ disability and keeps it affordable. This will work if you are in training. My point is that you need the ability to get the coverage and not actually have it in force. Now if you get disabled next week you will wish you had the $5000 in force but then if you ask an insurance agent how much insurance you need you might find you never have enough. If you are not in training a different type of planning would come in but I am working on the basis that you are a resident or fellow.

sinvula and Druce...Thank you!

Druce- My agent said that Guardian wouldn't consider me or if they did, then they would not charge gender neutral rates and the cost would be too much versus sticking with standard. I like the idea of buying down two separate policies for $1000 so that I can buy $5000 from each, for a total of $12,000 monthly benefit in the future max. If my agent is telling me about the high cost of guardian, are there any other options you can think of? If my agent says one thing, is it possible that another agent could come up with different numbers?

Thanks again!

Druce-

How can a resident or fellow purchase a policy from Guardian with a $1,000 base and a $5,000 FIO Rider?

Generally, for residents and fellows, the maximum FIO is 3X base. The only way around this that I know of is if the doctor has Guardian group LTD in force which can be counted toward the FIO.

Am I missing something?

ocheath1-

Your agent is correct. The cost of Guardian's coverage compared to a Standard policy with unisex rates and a discount would be prohibitive.

I like the idea of buying down two separate policies for $1000 so that I can buy $5000 from each, for a total of $12,000 monthly benefit in the future max.

Be aware that, when you apply for an FIO, your premium won't change and there'll be no medical underwriting, but there will be income underwriting. Which means that you'll have to inform each carrier about ALL of your disability insurance in force. If you fail to do so and then file a claim, they could revoke your insurance after the fact and simply return your premiums rather than pay benefits.

So, you need to consider the issue of whether the combined maximums of those two policies, along with whatever group LTD you get from an employer, will exceed the amount of insurance any of the carriers will want to provide to you regardless of the FIO rider. While I say you should be well insured, don't imagine that you will be able to over-insure yourself. Sometimes it happens, but insurance companies try to prevent it.

ocheath1, how much longer will it take to complete your fellowship?

We let you think we have earthquakes too. We don't tell you New Yorkers everything.

Standard is less costly then Guardian and unisex rates would make it less expensive still. The base contract costs less because the Guardian contract is more comprehensive then the Standard contract. Females get disabled far more often then males. If we look at Standard and Guardian contract clause for clause the Guardian will pay you in more disability situations then Standard will thus costs more. Getting a unisex rate is a straight discount on the same Standard contract some other female would get but spend more for. As these two contracts are the only true "Own Occupation" contracts in Ca. You need them both to get up to $15,000 benefit and locking in that amount is a most valuable option.