Wednesday, August 5, 2015

When the unexpected happens..

A true story of an OBGYN physician from CA:

It was 6AM and I was driving to work down the same road that I have a hundred times before. I was waiting at a stoplight. The accident happened so quickly.

When I awoke in the hospital, I was the patient being treated not the doctor treating the patient. My neck, back and legs were in deep pain.  It was at that moment I knew my life and the life of my family had changed.  Believe me, I was glad to be alive, but, I wondered what was my life going to be like now. 

The hospital staff told me that a car had rear-ended me at the stoplight. To this day I do not recall any part of the accident. The next several months consisted of countless doctor visits, physical therapy treatments and a rising stack of bills. 

In the beginning my employer was sympathetic. They allowed me to take my time to get healthy and return to work when I was ready. I attempted to go back to work part time, however, some of my injuries were debilitating and working part time was still too much for me.

A few months later I was instructed by my employer to either come back full time or not at all. They said it was my responsibility to continue all my surgical duties as well as my clinical duties. I felt that this was impossible for me to do. My neck, back and leg pain continued to get worse at work especially while performing surgery.

I was devastated that my career I had worked so long and hard for was ending.

"How would I continue to pay for my student loans, home mortgage, car payment, food and gas if I could not work as an OBGYN physician anymore?"  Even if I could work in some capacity in a different position, no job would pay me enough to cover my monthly costs. What was I going to do? 

Then I remembered that I had purchased


As resident I heard about own occupation disability insurance from other physicians as well as from the insurance brokers that came and spoke to the residents at the hospital. During my medical residency my budget was extremely tight and I fought the idea of purchasing a comprehensive disability insurance plan.  I am so grateful now that I followed the advice of my insurance broker who insisted it was in my best interest to purchase a policy then.

Because of this policy purchase, I now receive my tax free disability insurance benefits check every month and have been for the last 10 years. The own occupation benefit feature in my policy also allows me to receive full benefits even when I have earned extra income as a consultant.

What about my employer's long term disability insurance plan?

I was under the impression from my employer's benefits manual that I would receive 60% of my salary or $10,000 per month in benefits from the group long term disability plan. I have not received any monies whatsoever from my employer's policy. The disability policy terms in my employer's plan were extremely ambiguous and I was determined ineligible to receive benefits from it.


My comprehensive individual disability insurance policy that I purchased separately is paying my benefits in full and my employer's plan is paying me nothing.

Thursday, March 18, 2010

Own Occupation Benefit

The most frequently asked question I hear from doctors looking to purchase a disability insurance policy is, "Do companies still offer disability insurance policy's for physicians which protect them in their medical specialities with the own occupation benefit rider?

Yes, this benefit rider is currently available in all states, but only a few insurance companies offer these comprehensive plans to physicians today. The true "own occupation" benefit rider is the most important policy feature for a physician to have in his/her policy. Why? Because it is the definition of total disability which determines whether or not you will be paid a benefit.

What should a physician look for in a comprehensive disability insurance policy?

When you are reviewing a group, hospital, association or individual disability policy, you should immediately go to the section , Total Disability, and carefully read the definition, as this will describe under what terms you would be eligible for benefits in the event of a total disability. A comprehensive plan example should state: "you will be considered totally disabled if , solely due to injury or sickness, you are not able to perform the material and substantial duties of your occupation, even if you are gainfully employed in another occupation." A comprehensive true own occupation policy should be very clear.

What is an example of a disability insurance policy that does not offer own occupation?

The marketing materials and illustrations for disability insurance policy's from many associations, group hospital plans and some individual plans often give the perception of an own occupation benefit policy by using terms like "protecting a physician in their medical speciality or occupation", in the event of a total disability. However, a closer analysis of the underlying terms in the specimen policy will show that it does not offer the true own occupation benefit rider with respect to total disability.

These policy's may state:

"you are totally disabled if, because of injury or sickness: you are unable to perform the substantial and material duties of your regular occupation; and you are not at work in another occupation" or,

"you are not engaged in any other gainful occupation in which you could reasonably be expected to perform satisfactorily in light of your education, training experience, and physical and mental capacity.

Monday, July 27, 2009

NEVER cancel your individual disability insurance policy

In the 15 years that I have been in business, I have yet to hear a logical reason from someone who wanted to cancel their individual disability insurance policy. The fact is there isn't any. A comprehensive individual disability insurance policy is the foundation to your whole financial portfolio. Without this policy, you and your family are subject to financial and personal catastrophe.

It really is that simple.

If you have any doubts, I suggest you read some common misconceptions that people have when it comes to disability insurance policy's and the real facts that follow. Additionally, I included a recent case study which happened to a client of mine. After reading his story, I think you will agree with me, "Never cancel your individual disability insurance policy.

Common Misconceptions vs. the Real Facts

"I went to work for a group, hospital or employer that offers long term disability insurance coverage, I do not need my individual plan anymore"

On the surface, this appears to be a very good reason to discontinue an individual disability insurance policy. The real fact is your individual disability insurance policy with own occupation benefit will pay you benefits if you become disabled, even if you are at work in another occupation. This is not the case with most group/hospital/employer long term disability insurance plans. The determining factor of whether you get paid a benefit or not in a disability insurance policy is the policy definition of "total disability." The link below explains this in greater detail.

"I do not feel I need my coverage anymore because it is unlikely that I will get injured, sick or disabled"

Nobody thinks they are going to get injured or sick and unable to return to work. Yet, as a physician, you work in a hospital and/or medical clinic all day treating injured and sick people. The real fact is the likelihood of YOU getting disabled in your lifetime is very high. The link below explains this in greater detail.

"I cannot afford to pay for my coverage anymore, it is too expensive"

Right now is a tough economic time for many people and I would not for one minute diminish this point. However, you must prioritize what is required and what is not when doing a monthly budget. The real fact is disability insurance is not expensive as there is nothing else you can obtain that will replace your income if you cannot work because of an injury or sickness.

"I was told by the human resource department and from fellow workers that my new job benefits cover everything including long term disability insurance. Since all disability insurance plans are the same why should I pay for my own"

When I hear this statement, I just cringe because there is so much misinformation on this topic. The real fact is that not all disability insurance plans are the same, as you found out by reading the link that was posted above a few questions ago. You pay more for a comprehensive individual disability insurance plan because it protects you and does not have the many limitations of group plans.

Do you think an insurance company that underwrites a hospital, association or group disability insurance plan and requires no health examination to obtain coverage is as comprehensive as an individual policy? The insurance company does not know your health and they are going to protect you for several million dollars of future income if you get injured or sick? The insurance companies would go out of business if this is how they operated.

"My parents/family would take care of me if I could not work"

Consider yourself very lucky if this is the case, especially in light of the economy today. Many households have lost considerable assets in their retirement plans and home values. The real fact is you are responsible for your own finances, so why would you unnecessarily place such an overwhelming burden on your family when you can easily protect millions of dollars of your future income with an affordable individual disability policy?


Here is a real life story that happened recently to one of my disability insurance policy owners. His individual disability insurance policy has the comprehensive own occupation, non-cancellable and guaranteed renewable, residual disability and cost of living benefits.


Over the years my client changed employers from time to time, yet he always kept his individual disability insurance policy that he purchased through me. Some employers offered him group disability insurance coverage, but it was not comprehensive like the individual disability insurance plan that he currently had. Although he made a six figure income for many years, there were times when he was financially strapped and thought about discontinuing his coverage. We spoke about this matter on a couple of occasions, and after careful consideration, he always concluded that maintaining his individual disability insurance policy was the right choice.

He kept himself in great shape by frequenting the gym. Happily married with 2 children, his level of income allowed his wife to stay at home with the kids. One night over dinner, he and his wife decided they should purchase a life insurance policy on him to protect the family. When he took his health exams for his life insurance application, they found out that he had acquired hepatitis and was subsequently denied life insurance coverage. Fortunately, his individual disability insurance coverage remained in effect because he had purchased the policy years before this newly diagnosed medical condition.

For the next several years he continued to work full time.


The faltering economy has effected people in every business sector in so many ways and this includes my client. He has been unemployed for over a year and recently exhausted his COBRA health insurance coverage. By law he was now eligible to get an individual health insurance plan for him and his family. One problem, he ran out of money. He had to go on Medicaid and move in with other family members.

On top of everything else, his hepatitis took a turn for the worse, and he needed to go on medication immediately. He now had to worry about how he was going to survive and provide for his wife and 2 children. Food, shelter, clothing, all the basics we take for granted, were suddenly in danger of being taken away from him.

Still, he had kept his disability insurance policy in force and scraped up enough money each and every month to pay his premium. At my clients last office visit, his physician informed him he was totally disabled and could not work anymore. Totally distraught, he walked out of the doctor's office not knowing what to do. Then he remembered he had a big safety net that was going to protect he and his family from financial ruin...his individual disability insurance policy.

He immediately filed a disability insurance claim. The policy's' tax free monthly benefits will now pay all his bills and allow his family to live in a nice home, eat well, and allow his kids to go to a good school. He told me that without that comprehensive individual disability insurance policy, he and his family would have been in the streets with nowhere to turn.

Thursday, July 2, 2009

How long do you need Life Insurance?

You would think the answer to this question would be straight forward. One might simply conclude, a life insurance policy should be in force at the time of the insured's death, so as to pay a tax free benefit to the beneficiary(s). For many years, this was the forgone conclusion.

However, the manner in which the consumer purchases life insurance coverage today is ever changing. I find that many people simply want to have coverage for a certain period of time. Common responses are, until my children get to college, until my mortgage is paid off, or until I retire. However, this line of reasoning has flaws.

In the link below, I found an insightful article that answers this question no matter what a person's age or situation is.

Monday, May 18, 2009

Completing Medical Residency and working in Academics

I have received several emails regarding disability insurance coverage from residents and fellows, who are completing their medical training and subsequently pursuing an "academic" career in medicine. Many of these physicians were unaware of the restricted disability insurance coverage limits that is offered to physicians who work for the government after their medical training.

Most insurance companies that provide disability insurance to government physician employees offer much lower coverage limits regardless of income. Typical monthly benefits cap out at $2,000-$2,500/month. That is it!

The fact of the matter is that you as a medical resident making $45,000/year can obtain an own occupation disability insurance policy with a monthly benefit of up to $5,000/month tax free, while your attending working for the government earning $200,000/year is eligible for half of what you are.

Who is effected?
Many attending/faculty physicians working for a federal (i.e. VA Medical Centers), state or local (i.e. County Hospitals) medical facility are classified by the insurance companies as employees of the government. A few exceptions to this rule would be medical residents/fellows, physicians who works for a private group that contracts out with one of these hospitals or independent contractors.

You should apply for an individual disability insurance policy with the own occupation benefit while you are still a medical resident or fellow. Insurance companies will offer a starting monthly tax free benefit to you between $3,500 to $5,000/month if you apply during medical training.

These are the general guidelines, however there are exceptions to this rule as noted before. You should always consult with an insurance broker as to how much coverage you may qualify for based on your income and future employment.

Friday, March 6, 2009

Thursday, February 5, 2009

Basics of Term Life Insurance

While there are many decisions you will have to make when assessing your life insurance needs, the most important one is obtaining the right amount of life insurance coverage to protect your family. Whether it is term life insurance, permanent life insurance or a combination of both, your primary focus is being adequately insured.

When life events occur such as getting married, having children, or buying a home, people assess/reassess their life insurance needs. For many physicians, the first step is typically purchasing a low cost term life insurance policy with a guaranteed level premium for 10, 20 or even 30 year term, that is both renewable and convertible. Let's take a closer look at term life insurance, followed by some commonly asked questions and one case study.


1. Does not accumulate cash value.
2. Is generally less expensive than permanent life insurance.
3. Offers a guaranteed level premium for a specified number of years.
4. Death benefits are generally tax free to the beneficiary(ies).
5. Offers renewable and convertible benefit options.
6. Does not offer a refund of your premium at the end of the policy period, unless you purchase a more expensive return of premium option.


Is there a difference in cost between the guaranteed level premiums for 10, 20 and 30 year term life insurance policy?
Yes, the longer period of time your premiums are guaranteed to be level , the more expensive the policy is. In this case, a 10 year term would be the least expensive and 30 year term the most expensive.

What does renewable mean?
Renewable term life insurance means that the policy can be renewed at the end of the term(i.e. 20 years) at the option of the policyowner and without evidence of insurability, for a limited number of successive terms (usually to age 95). The rates generally increase at each renewal(year) as the age of the insured increases. Caution: Please make sure your policy has the renewable option that does not require evidence of insurability in order to keep your life insurance coverage. Some insurance companies' term policies offer a renewable option, but require evidence of insurability to maintain existing coverage(re-entry) after the initial guaranteed term period ends.

Why is it important to have a renewable policy?
You want to make sure at the end of your term (i.e. 20 years) that you still have option to continue your life insurance policy. Yes, the premiums will go up, however even if your health has deteriorated/changed, you have the ability to keep your current policy or possibly convert it to a permanent life insurance policy.
If you do not have this renewable benefit, you have to apply for a new life insurance policy which will require you to go through medical underwriting again with no guarantee of being approved new coverage.

What does convertible mean?
By having the convertible benefit in your term life insurance policy means that the policyowner (i.e. you) has the option to exchange (convert) an existing term life insurance policy for a permanent life insurance policy without evidence of insurability. Life insurance companies usually limit the age (typically between age 40 and 60) at which you can convert your existing term policy to a permanent one, such as whole life, universal life or variable life.

Why is it important to have a convertible policy?
You may desire to have a permanent life insurance policy in the future, but cannot afford one now. You are also concerned that your health may change as you get older and you do not want to have to worry about being denied life insurance coverage because of deteriorating health. With the convertible benefit of a term life insurance policy, you have the option to convert to a permanent life insurance policy without any evidence of insurability.

Who is the policyowner?
The person who owns a life insurance policy. This is usually the insured person, but it may also be a relative of the insured, a partnership, a trust or a corporation.


In 1998 after one of my seminars, I met an 53 year old internist who was interested in obtaining term life insurance coverage to protect his family in the event of his death. He and his wife had recently had a child and he had began taking high blood pressure medication to control his hypertension. After reviewing his medical history, income, mortgage, and overall budget, we determined that a renewable and convertible term life insurance policy with a guaranteed level premium for 10 years would best meet his needs. Eventually, he was approved as a standard non smoker.

We reviewed his life insurance needs on a few occasions over the years, however, no changes were made until last year. His guaranteed level premium on his 10 year term life insurance policy was about to end and so adjustments were necessary. There was one problem.

A couple years ago, he had open heart surgery and therefore would not qualify for a new life insurance policy now. He was quite distraught, since he still had a big mortgage, wife that did not work and child that was in junior high school. Fortunately, I had advised him years ago to obtain the term life insurance policy which was both renewable and convertible. He was relieved.

We ended up converting his term life insurance policy to a universal life insurance policy with a slightly reduced death benefit, that ended up guaranteeing his premiums to be level for a longer period of time and for less premium than a comparative 10 and 20 year term life insurance policy. No medical evaluation was required.

This is a real life example of how important it is to have a term life insurance policy which is both renewable and convertible.