Every time there is talk of individual disability insurance (IDI) policy the focus shifts to the tenure of benefit. Most folks who understand the risk of disability will tell you to invest in a long term IDI policy and they are right because without such a policy, you cannot hope to have adequate income replacement. After all, the purpose of investing in such an insurance policy is to get enough income replacement that allows you to pay all your bills and have a little left over for sundry expenses. Don’t forget that this is the only source of your income while you are disabled. Going deeper into your benefit payout, no one policy including your IDI policy can give you adequate benefits and there will always be a coverage gap unless you invest a little more to close such gaps.
Dealing with coverage gap during elimination period
The gap in coverage that could arise in your long term dentists disability insurance or any other IDI policy can be closed at different levels. You need to begin with the elimination period which begins when your claim is approved and ends when the benefit payout begins. In a long term IDI policy this elimination period can be as long as 3 months.
It will not be easy to pay all your bills for 3 months when you are not earning even a penny. This is where a short term doctors disability insurance policy is helpful in closing that gap for you. The maximum elimination period in a short term disability insurance policy is 2 weeks and it costs very little.
Why disability risk coverage is so important
A healthcare professionals disability insurance is most useful for young doctors who carry the huge burden of student loan which averages $200,000 in the country. If you happen to get disabled in your twenties as an intern or when you have just begun your career, you could be under a lot of pressure to make student loan repayments.
A long term physicians disability insurance policy will provide replacement of 60-70% of your after-tax income, which is sufficient to pay for all your bills and a little more. Doctors earn 4 times more than the national average income and 60-70% of that income is a substantial replacement. The gap in coverage arises later in your career when you earn 7-8 figure income.
Hire the services of a disability broker
Most disability insurance companies apply a cap on the amount of income they will replace in the event of a claim. This cap applies to all forms of insurance that cover against disability including IDI policies. Early in your career that’s not a problem when your income is not as much as it is 10-12 into your career. There are ways to close such coverage gaps even for higher income doctors.
For that, you will need the services of a reliable, capable and experienced disability insurance broker, who is an industry professional and is well-versed with all kinds of policies. S/he will suggest the right riders and stacking of your insurance with additional policies to close the coverage gap on your long term insurance against disability.