A Personal Look at Disability Insurance

[Editor's Note: I came across a physician actually living off the proceeds of his disability insurance.  He was initially hesitant to share his story with you, but after promising a reasonable level of anonymity, he relented.  As you know, I have no financial relationship with Berkshire, but the guest writer obviously gets a paycheck from them each month.  Be kind in your comments and realize that requests for more details may be denied to preserve anonymity.]

In November of 2010, I fell and sustained a closed head injury.  Acutely, I had a severe headache, disorientation and complete amnesia for three days prior and two days after the fall.  No focal injury was identified.  For six months after the injury, I had debilitating headaches, irritability, and noticeable difficulty with spatial orientation and mechanical tasks, like parking the car.  Neuropsychiatric testing revealed I was depressed, intellectually intact, but with cognitive impairment in 3 dimensions.

For these reasons, I was never able to return to the fast pace and high acuity of ED practice.

My First Disability


I had purchased two occupation specific long term disability policies through Guardian/Berkshire in my first year of practice.  They weren’t inexpensive–about $1500/year. I would occasionally consider letting them lapse, but at age 40 suffered an acute herniated disc with residual paresis of my left leg. After the 90 day waiting period, I collected partial disability for 3 months while I worked part-time.

My first experience with claiming and collecting was uneventful.  There was a fair amount of initial paperwork for both me and my neurosurgeon, but that was easy to complete.  Payments were retroactive to the 90 day start and tax-free.

My Second Disability

As it became clear I would not return to the ED after the head injury, I applied again for disability.  In discussion with my physicians, we elected to use major depression and anxiety as a diagnosis rather than closed head injury.  I was 6 months out from the fall and my symptoms were improving, but for other reasons I did not think I could return to the ED.  My psychiatrist agreed, so once again I applied for disability.

I was assigned a very competent case worker who took me through the paperwork process.  It was not onerous for doctor or patient.  Medical Records had to be pushed a little, but the doctors’ offices were prompt in supplying the information. The only difficulty I had was the billing company at my last job refusing to release my CPT codes and RVU data.  I should have kept better track of my billing on my own, so that I had copies of the information the company required, although in the end it didn’t matter as the case worker managed to get me my full policy limits anyway.

My Life Now

The policy doesn’t pay me a lot of money compared to my salary, just 2800 tax-free dollars/month. There has been an impact on our daily life, but I don’t consider that to be a hardship.  I wish I had more coverage, of course; three to four times what I have would be necessary if I was single or a parent.  The premiums would have been a hardship early on in my career, but I could have done it and still continued to save for retirement (contributed from the start and have > $500,000 still in diversified assets.)

Current Requirements

Now I fill out a very brief form monthly, and my doctor does an even shorter form every three months.  There has never been a question about returning to the ED or to any type of medical employment.  My case worker is available and seems to have my best interest at heart.  Overall, I would recommend as much coverage as you can get with a good disability insurance company. If you need them, they are there, hassle-free and low-maintenance.

What do you think?  Have you ever had to use your disability policy?  What was your experience?  Comment below!

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Comments

A Personal Look at Disability Insurance — 23 Comments

  1. Thank you for sharing your story. My questions is with regards to the tax response. How were you able to receive the monthly payments without paying taxes? I know this relates to how you treat the monthly premiums prior to receiving benefits. But I’ve heard different things. And do things change in terms of tax obligations after the first year of receiving benefits.

    Also, out of curiosity, why did you elect to file under a psychiatric diagnosis rather than TBI (some insurance companies place a 2-year limit on benefits)?

    Once again, thanks for sharing this story.

  2. This is something that the WCI has hit on pretty hard and I definitely see the appeal, but at the same time I question the value and expense for someone like myself.

    I am a family doctor. Outside of a major head injury or major terminal disease I can’t see many policies seeing that I would be unfit to work as a a family doctor at least in a part time capacity.

    I am insured for nearly 2 million so I am not very concerned about the later event but the prior could concern me.

    Currently I have disability only through work as I haven’t been able to find a way to afford it otherwise. Short Term disability is covered from my group (1-6 months) and Long Term disability is through a policy supplied from work (I think Metlife) that covers me for 60% (I could increase to 70% for about $30 a month) of my current pay starting at 6 months. When I asked about it, it was implied that if a doc were disabled and unable to work as a doc but could still do some work that my group would also try to find a way to move that person into the administrative side to help make up some of the lost pay if they were capable.

    I don’t live above my means but I do have a mortgage, a car payment, and still about 40K in school loans. The question is do I pull from my 401k funding (probably my only source of extra income right now with a baby on the way) for an individual non-employer based policy or is the current coverage sufficient? I can’t guarantee I will work for them forever but right now have no plans to leave.

    I plan to be debt free in 4.5 years minus the mortgage so I was looking at beefing up my 401K and maybe getting individual disability then…

    • I was a radiologist for the VA up till 2.5 years. I was with them for 10 years and also had prior service in the USAF(4 years payback from a HPSP scholarship). I became disabled( severe underlying depression- on top of life long Asperger’s). I am now on FERS disability thru the VA and would not have been able to servive without it. Disability insurance is incredibly important not just for you but the people who depend on you. By the way, I am 51 and am covered till I die. I get $8000(post tax) till age 62 and then $6000(post tax) till I am gone. Family is cared for with survivor benefits. I would have loved to still be working, but sometimes you just have to accept what you are dealt.

    • Well, the longer you go without disability, the less you need it and the more expensive it gets. At a certain point, no, you won’t need it at all because you’ll be financially independent.

      You’re not paying that much for your group policy because it is less likely to pay in the event of disability. We all have to decide what risks we’re comfortable running.

  3. I am a 41 year old cardiac surgeon with 3 kids. I’m very healthy. I have been maxing out my disability coverage. I am at around $20,000 per month tax-free. My question is if I should keep increasing it if possible. Every now and then I get a notice that I can increase it. The latest letter says for an additional $63.00 per month I can get $1000 per month additional disability income. Should I keep maxing it?

    • My opinion is that you should purchase as much disability insurance as you need to pay your anticipated expenses. To do this you must calculate your anticipated expenses. If you have other sources of anticipated income such as social security, spouse’s income, or withdrawal from savings, you may choose to reduces your anticipated expenses by your anticipated income.

      • Personally, $20K a month is far more than I need, so I don’t carry that much disability. If you’re spending that much, then fine, get that much. $63 a month for $1000 doesn’t seem like a particularly good rate though, even for a 41 year old. I’m not surprised they’re offering it to you.

        • Thanks — that is what I have trouble determining — if $63 per $1000 back is reasonable or not. How do you determine if that is cost-effective or not? I’m not sure. Anyways, I think I will decline. Probably have enough coverage at this point. Nice to get some free advice! Appreciated. Keep up the good work.

          • I divide cost by benefit. So $63/1000 equals 6.3%. A resident at age 28 can probably buy disability insurance at around 3%. A new attending at 32 perhaps 4-5%. 6.3% is definitely on the expensive end. It gets more expensive as you get older, despite the fact that you need it less. At a certain point, it isn’t worth buying more.

          • Just to throw out some numbers for comparison. I am 28 and 2 weeks from graduating from IM residency and I purchased a policy (with all the important must haves as recommended on WCI) for 1533.00 annual premium through The Standard. It is for 5000 monthly which equates to 2.6%. 1533/12= 128/month. 128/5000= 2.6%. However, I recognize that I am still relatively young and the policy was certainly discounted as it was sold by an agent that works with all of the HOs at a very large academic center.

  4. I wonder what the author’s experience would have been like with a group disability policy with a poorer definition of disability. I don’t think there is any way of knowing. In this case, the disability is quite clear and I hope that any insurance company would pay. Did this get paid under a “presumptive definition of total disability” and give you the max or did they figure based upon your previous salary and then offset for SSD and work comp payments?

  5. WCI,

    I have been unsure of how much personal disability insurance to obtain. I am a 26 y/o male who will begin an orthopaedic surgery residency this Monday. I will have a group policy provided at no cost (I think it is 125% of my salary). How much would you suggest current interns take out in personal disability insurance? Thanks!

    Great blog. I am trying to learn as much as I can, and I stumbled across your site. I could not be happier.

      • Make sure to get own occ, non-cancellable policy. I know the money is tight as a resident but well worth it. I had a back surgery during my third year of ortho residency and it’s now forever excluded from my disability insurance. Get it while you’re young and you can buy more coverage later

  6. Just for further comparison I’m 34 healthy finishing anesthesia residency in 7 days $6500 coverage from principal all the bells/whistles $248/month.

  7. I guess this question is for the disability specialists. How important is it as a family practice doctor to have true own occ clause for disability insurance? I see patients full time, no academics or urgent care.

    • While one can certainly argue that for specialties such as Family Practice, Pediatrics, Internal Medicine and some others may not “need” a policy with a true “Own-Occupation”, the cost for that rider alone is not all that significant.

      The most important thing is to make sure that you pay careful attention to the rest of the policy’s provisions and which occupational classification the particular insurance company or companies you are considering assign to your specialty.

      For example, MetLife, upgraded some of those mentioned above, as well as, a few others to their top classification recently further reducing their premium rates.

      • I agree that non-procedural specialists may not benefit much from an own-occ policy. I just find it interesting that among docs that know a little about disability insurance that this is the first piece of advice out of their mouths “make sure it’s specialty specific.” I’m not convinced that’s the most important aspect of a policy.

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