Premiums are the amount you pay to the insurance company to keep your policy active paid monthly or annually. The cost of premiums vary based on several factors
Premiums: Disability Insurance For Doctors Explained
The Cost of Your Disability Insurance
Disability insurance is a crucial financial safety net for doctors, providing income protection in the event of a disabling injury or illness that prevents them from working. The cost of this insurance, known as the premium, is an essential factor to consider when purchasing a policy. This article delves into the intricacies of premiums in the context of disability insurance for doctors, providing a comprehensive understanding of the term and its implications.
The premium is the amount you pay to the insurance company to keep your policy active. It can be paid monthly, quarterly, semi-annually, or annually, depending on the terms of your policy. The cost of premiums varies based on several factors, including the doctor's age, health status, occupation, and the specifics of the policy, such as the benefit period, elimination period, and any additional riders.
Factors Affecting Premiums
The cost of disability insurance premiums for doctors is influenced by a variety of factors. Understanding these factors can help doctors make informed decisions when purchasing a policy, potentially saving them money and ensuring they have the coverage they need.
These factors can be broadly categorized into personal factors, occupational factors, and policy factors. Personal factors include age and health status, occupational factors involve the nature of the doctor's specialty, and policy factors encompass the terms and conditions of the policy.
Personal Factors
Age is a significant determinant of premium costs. Generally, the younger a doctor is when they purchase a policy, the lower their premiums will be. This is because younger individuals are less likely to become disabled and make a claim. Therefore, insurance companies view them as lower risk.
Health status is another personal factor that affects premium costs. Doctors with pre-existing conditions or poor health may face higher premiums or exclusions for certain conditions. Conversely, those in good health may qualify for lower premiums.
Occupational Factors
The nature of a doctor's specialty can significantly impact the cost of premiums. Some specialties are considered higher risk due to the physical demands or the high-stress nature of the work. For example, surgeons may pay higher premiums than family physicians due to the increased risk of a disabling injury or illness.
Furthermore, the income level of the doctor's specialty can also affect the premium. Higher-income specialties may have higher premiums as the potential benefit payout in the event of a disability would be larger.
Policy Factors
The terms and conditions of the disability insurance policy also play a crucial role in determining the premium. Policies with longer benefit periods, shorter elimination periods, and additional riders typically have higher premiums.
The benefit period is the length of time the policy will pay benefits after a disability. A longer benefit period means the insurance company could potentially be paying benefits for a longer time, increasing the risk for the insurer and therefore the cost of the premium.
Types of Premiums
There are different types of premiums associated with disability insurance policies for doctors. These include level premiums, graded premiums, and step-rated premiums. Each type has its own characteristics and implications for the policyholder.
Understanding the differences between these types of premiums can help doctors choose a policy that best fits their financial situation and coverage needs.
Level Premiums
Level premiums are premiums that remain the same for the life of the policy. This means that the amount you pay when you first purchase the policy is the same amount you will continue to pay each year, regardless of changes in your age or health status.
This type of premium can be beneficial for doctors who want predictability in their budgeting. However, level premiums are typically higher initially than other types of premiums, as they are averaged out to remain consistent over the life of the policy.
Graded Premiums
Graded premiums are premiums that increase over time at a predetermined rate. This type of premium starts out lower than a level premium but increases each year.
Graded premiums can be a good option for doctors who are just starting their careers and expect their income to increase over time. However, the cumulative cost of a policy with graded premiums can be higher over the life of the policy compared to a policy with level premiums.
Step-Rated Premiums
Step-rated premiums are premiums that increase as the policyholder ages. These increases are typically based on age bands, such as every five years. Like graded premiums, step-rated premiums start out lower than level premiums but can become significantly higher over the life of the policy.
Step-rated premiums can be a good option for doctors who want lower initial costs and are comfortable with the potential for significant increases in the future. However, it's important to consider the long-term cost implications of this type of premium.
Discounts and Premium Reductions
There are several ways doctors can reduce the cost of their disability insurance premiums. These include discounts for being a non-smoker, maintaining good health, and being part of a professional association. Additionally, some insurance companies offer discounts for purchasing coverage early in one's career.
Understanding these discounts and how to qualify for them can help doctors save money on their disability insurance premiums while still ensuring they have the coverage they need.
Non-Smoker Discount
Many insurance companies offer discounts on premiums for non-smokers. This is because non-smokers are generally considered to be at lower risk for developing health conditions that could lead to disability.
To qualify for this discount, doctors typically need to have not used any tobacco products for a certain period of time, usually at least 12 months. The exact requirements can vary by insurance company.
Good Health Discount
Some insurance companies offer discounts for doctors who maintain good health. This can include meeting certain fitness or wellness criteria, such as maintaining a healthy weight or regularly exercising.
The specifics of what constitutes "good health" can vary by insurer, so it's important for doctors to understand the criteria and how they can meet them to qualify for this discount.
Professional Association Discount
Doctors who are members of certain professional associations may be eligible for discounts on their disability insurance premiums. These discounts are typically negotiated by the association on behalf of its members.
It's important for doctors to check with their professional associations to see if they offer any such discounts and what they need to do to qualify.
Premiums and Disability Insurance for Doctors: Conclusion
Understanding premiums is a critical part of purchasing disability insurance. By understanding the factors that affect premium costs, the different types of premiums, and the discounts available, doctors can make informed decisions about their disability insurance coverage.
While the cost of premiums is an important consideration, it's also crucial for doctors to ensure they have adequate coverage to protect their income in the event of a disability. Therefore, when considering disability insurance, doctors should not only focus on the cost of premiums but also the benefits and terms of the policy.
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.