The benefit period in a disability insurance policy is the duration for which you'll receive benefits after a disability and you stop working, beginning after the elimination period. Learn the implications
Benefit Period: Disability Insurance For Doctors Explained
How Long Do You Get Paid on Disability?
The term 'Benefit Period' is an essential component of disability insurance policies, particularly for doctors. It refers to the length of time during which a policyholder, who has become disabled and is unable to work, will receive disability benefits from their insurance provider. This period can significantly impact the financial stability and future of the insured, hence understanding its intricacies is crucial.
Disability insurance is a type of coverage that provides income protection to individuals who are unable to work due to a disability. For doctors, who often invest significant time and resources into their education and training, disability insurance is particularly important. The benefit period, therefore, is a key factor in determining the extent of this protection.
Understanding the Benefit Period
The benefit period in a disability insurance policy is the duration for which the insured will receive benefits after a disability prevents them from working. It begins after the elimination period (the waiting period before benefits begin) and lasts until the end of the specified term in the policy. Benefit periods can vary greatly, ranging from a few months to until the policyholder reaches retirement age.
It's important to note that the length of the benefit period can significantly impact the premium of the policy. Typically, longer benefit periods come with higher premiums. However, they also provide longer protection, which can be crucial for doctors who have high earning potential and significant financial obligations.
Choosing the Right Benefit Period
Choosing the right benefit period is a critical decision when purchasing disability insurance. This choice should be based on several factors, including the policyholder's financial needs, age, health status, and career plans. For doctors, who often have substantial student loan debt and high earning potential, a longer benefit period may be advisable.
However, it's also important to consider the cost of the policy. Longer benefit periods typically come with higher premiums. Therefore, it's essential to balance the need for long-term protection with the affordability of the policy. Consulting with a financial advisor or insurance professional can be helpful in making this decision.
Impact of the Benefit Period on Disability Benefits
The benefit period has a direct impact on the amount of disability benefits a policyholder can receive. If a doctor becomes disabled and is unable to work, the insurance company will provide benefits for the duration of the benefit period. Once the benefit period ends, the benefits will stop, even if the policyholder is still unable to work.
Therefore, it's crucial to choose a benefit period that provides adequate protection. If the benefit period is too short, the policyholder may run out of benefits before they are able to return to work. On the other hand, a benefit period that is too long may result in unnecessarily high premiums.
Types of Benefit Periods
There are several types of benefit periods available in disability insurance policies. These include short-term benefit periods, long-term benefit periods, and to-age-65 benefit periods. Each type has its own advantages and disadvantages, and the best choice depends on the individual's specific needs and circumstances.
Short-term benefit periods typically last for two years or less. These policies are less expensive but offer limited protection. Long-term benefit periods, on the other hand, can last for several years or until a specific age, such as 65. These policies provide more extensive protection but come with higher premiums. To-age-65 benefit periods provide benefits until the policyholder reaches the age of 65, offering long-term protection for those who plan to work until retirement age.
Short-Term Benefit Periods
Short-term benefit periods are typically chosen by individuals who need coverage for a brief period of time. This could be due to a temporary job situation, a short-term financial obligation, or a health condition that is expected to improve within a short time frame. While these policies are less expensive, they provide limited protection and may not be suitable for doctors who have long-term financial obligations.
It's also important to note that with short-term benefit periods, the policyholder may need to prove their disability more frequently. This can be a burden for those who are dealing with a serious health condition. Therefore, while short-term benefit periods may be appealing due to their lower cost, they may not provide adequate protection for many doctors.
Long-Term Benefit Periods
Long-term benefit periods are typically chosen by individuals who need coverage for an extended period of time. This could be due to a chronic health condition, a long-term financial obligation, or a desire for long-term income protection. These policies provide more extensive protection but come with higher premiums.
For doctors, who often have high earning potential and significant financial obligations, long-term benefit periods can provide valuable protection. However, it's important to consider the cost of these policies. While they provide more extensive coverage, they also come with higher premiums. Therefore, it's crucial to balance the need for long-term protection with the affordability of the policy.
To-Age-65 Benefit Periods
To-age-65 benefit periods provide benefits until the policyholder reaches the age of 65. This type of benefit period offers long-term protection and is often chosen by individuals who plan to work until retirement age. It can be particularly beneficial for doctors, who often have long careers and high earning potential.
However, to-age-65 benefit periods also come with higher premiums. Therefore, it's important to consider the cost of the policy and the need for long-term protection. For many doctors, the peace of mind that comes with knowing they will be protected until retirement age may be worth the higher cost.
Benefit Period and Policy Renewal
Another important factor to consider when choosing a benefit period is the policy renewal process. Some disability insurance policies offer guaranteed renewability, which means the policyholder has the right to renew the policy without undergoing a new medical examination. However, the terms of the policy, including the benefit period, may change upon renewal.
It's also important to note that the benefit period does not reset upon policy renewal. If a policyholder has received benefits for a certain period of time, those months or years are subtracted from the total benefit period. Therefore, if a doctor has a policy with a 10-year benefit period and has received benefits for 2 years, they will only have 8 years of benefits left, even if they renew the policy.
Guaranteed Renewability and Benefit Period
Guaranteed renewability is a feature that allows the policyholder to renew their policy without undergoing a new medical examination. This can be particularly beneficial for doctors who develop a health condition after purchasing the policy. However, the terms of the policy, including the benefit period, may change upon renewal.
Therefore, it's crucial to understand how the benefit period will be affected by policy renewal. If the benefit period is reduced upon renewal, the policyholder may find themselves with less protection than they originally planned. Consulting with an insurance professional can be helpful in understanding these nuances.
Benefit Period and Policy Expiration
It's also important to understand that the benefit period does not reset upon policy expiration. If a policyholder has received benefits for a certain period of time, those months or years are subtracted from the total benefit period. Therefore, if a doctor has a policy with a 10-year benefit period and has received benefits for 2 years, they will only have 8 years of benefits left, even if they renew the policy.
This is a critical factor to consider when choosing a benefit period. If a doctor anticipates needing benefits for an extended period of time, they may want to choose a longer benefit period to ensure they have adequate protection, even if they need to renew the policy.
Disability Insurance vs. Critical Illness Insurance
Disability Insurance
Critical Illness Insurance
Key Considerations:
It comes down to what you can afford not to lose when you become sick or hurt. If you can't lose your income for the next 5-30 years, then disability insurance is likely the best option. If you're not worried about future income and would prefer a cash lumpsum to help you recover from a major illness, then critical illness is suitable. Keep in mind critical illness will only pay you once and doesn't cover injury or accidents.
Ultimately, your budget will play a factor as well. You can buy an 'unlimited' amount ($2 million) of critical illness but with disability it will depend on what income you can justify and prove (typically for doctors the maximum you can qualify for is about $35,000 a month coverage and more if you get a special approval). Either way both are good options in the event you ever need them.
Benefit Period and Disability Insurance for Doctors: Conclusion
In conclusion, the benefit period is a crucial component of a disability insurance policy, particularly for doctors. It determines the length of time during which the insured will receive benefits if they become disabled and are unable to work. Choosing the right benefit period requires careful consideration of several factors, including the policyholder's financial needs, age, health status, and career plans.
Disability Insurance Advisor Contact
Disability Insurance is Complicated
Here are answers to frequently asked questions...
No, the only thing you will ever pay is a premium to the insurance company that provides the disability insurance policy for you.
Yes, we have access to various discounts based on your income, your affiliation with a specialty association and other factors. These discounts will be determined and applied during your quote request process
Rates are based on your age, health history, smoking status, gender and income. The insurance company also compares and makes assessments based on similar individuals with the same profile like age, gender, smoker status, specialty and province of practice. Unlike association rates which are based on the claims of the whole group i.e. your rate is affected by someone who smokes even if you don't smoke, or if you neve claim and other claim multiple times, for example.
We simplify the process knowing how busy doctors get and need flexibility. The first step is simply to request your quotes and getting a sense of the cost and coverage available. Next, we compare the policy options and other riders like Own Occupation and discuss what makes sense for you and answer your questions. Lastly, you apply and buy risk-free.
Yes you can increase it and that is our recommendation. Anywhere you do residency in Canada for example, you’re automatically enrolled in a health-benefits plan, which includes disability insurance coverage. As a resident you can purchase a private disability policy under the Medical Student Offer for example. The benefit of this is that you don't have to go through a medical examination to qualify.
The more relevant clause is what's called "Future Income Option" which gives you the option in the future to buy more disability insurance if your income increases, without having to worry about your health having changed just in case. The monthly benefit and premium will depend on your new income, age, and province you’ll be practicing. The process is simple and will not require you to undergo medical underwriting.
In most cases, it can take between 1-3 months from beginning to end. A lot of the time may depend on follow up information required by the insurance company. In our experience 1 month is usually a standard timeframe.
As an independent insurance broker we have no affiliation with any one insurance company. We know which insurance company is most suited for the type of disability insurance policy that is most conducive for doctors. As a broker we get a finders fee from these insurance companies and they are all the same, without any financial conflict of interest either.
Underwriting is where the insurance company verifies your information that you submitted on the application your complete with us and gathers additional details such as health history , travel, and personal history to determine the best rate possible.