Disability insurance is something that all doctors who have not yet reached financial freedom absolutely need. Your ability to generate a high income is your top asset. And you need to protect it. That is not up for debate. The tricky part can arise when doctors don’t get the correct disability insurance. Or even worse, when they get denied disability insurance. This can happen because they went about the process incorrectly either due to lack of knowledge and guidance or poor guidance itself. Here, we will review some disability insurance case studies to help others avoid just these issues.
The issues illuminated in these disability insurance case studies are particularly prevalent for doctors with pre-existing conditions. These are the doctors at risk of applying for and getting denied commercial disability insurance. All along, they would have been better off with a Guaranteed Standard Issue (GSI) disability insurance plan. Unfortunately, the GSI plan ceases to be an option for them after denial from a commercial plan.
Not a good situation.
So, I would like to shine a light on these situations a bit more using some case studies involving disability insurance. So, I asked my friend, key resource, and disability insurance expert, Lawrence B. Keller, CFP®, CLU®, ChFC®, RHU®, LUTCF, to help. He will share some disability insurance case studies from his career. He will also share how doctors could perhaps better handle these situations in the future.
I hope you find them as useful as I did!
A disability insurance do-over?
I remember growing up and playing games with friends. When things did not go as planned, one or more of us often asked for a “do-over.” According to the Merriam-Webster Dictionary, a do-over is a new attempt or opportunity to do something after a previous attempt has been unsuccessful or unsatisfactory. Believe it or not, in some cases, this can happen when buying disability insurance.
The rules of the game
We all know that you must know the rules before asking for a do-over.
In these cases, I refer to the eligibility associated with Guardian’s Guaranteed Standard Issue (GSI) disability insurance plans.
Generally, Guardian’s GSI offer is typically unavailable to insureds who applied to an insurance company other than Guardian. Or anyone who received a modified offer (an exclusion rider, limited benefit period, removal of riders, etc.), were declined outright, or withdrew a pending application. Therefore, if a Guardian GSI plan is available to a resident or fellow at their institution, they should really consider only applying to Guardian. That way, they can keep the GSI option available to them as a “fallback.” Assuming they didn’t want to apply for the GSI plan for one reason or another initially.
8 disability insurance case studies
Let’s look at a few hypothetical case studies where I could have helped physicians purchase disability insurance. We will focus on how they could have potentially had a do-over to achieve the desired results. Unfortunately, there are 3 cases that I could not have helped.
You will see questions from the underwriters based on their medical histories, prescription drug canvass, or medical records review. In some cases, the company completed the fully underwritten process and made a formal offer. In other cases, I would stop the process. And then switch to the Guaranteed Standard Issue (GSI) plan, as the outcome would be unfavorable for the insured. Either way, these disability insurance case studies will give you insight into the medical underwriting process.
1) Female Rheumatology Fellow, Age 29
Medical records document Dry Eye syndrome bilateral, Degenerative myopia w/ maculopathy bilateral, Vitreomacular adhesion bilateral & Ocular hypertension with last visit 3/2025 where a referral to a glaucoma specialist was given. Please advise of the details to this history, if they pursued a referral, details of visit, all testing, results, diagnosis, treatment, date of full recovery, if any residuals, current status, contact info for treatment providers, etc.
Due to the client’s multiple eye conditions, at best, a permanent bilateral eye exclusion will apply.
The EKG from 11/2022 showing SR with short PR. Plus a 2023 ECHO showing the right ventricle mildly dilated, trace mitral valve regurgitation & trace tricuspid valve regurgitation.
If we review a current favorable EKG performed at the client’s own risk & expense, we can make a substandard offer.
She could move to a GSI plan with full coverage for her eyes, benefits to age 65, and the ability to increase her monthly benefit to $15,000.
2) Male Urology Resident, Age 29
The answers to the medical questions state that doctors ordered a follow-up sleep study. Please advise scheduling of study and what the results are. We will need to order the records to review this testing as well.
Major medical claims data documents 8/2022 prediabetes & 12/2023-3/2025 adjustment disorder w/ anxiety & depression treated with psychotherapy 12/2023-3/2025
Due to the client’s 3/2025 diagnosis of obstructive sleep apnea, at best, a 25% rating will apply.
Based on the client’s history of treatment for adjustment disorder with anxiety/depression, at best, a mental/nervous exclusion will apply.
He would be able to move to a GSI plan with no rating (additional 25% sub-standard premium charge). He would also receive 24 months of benefits for claims resulting from mental/nervous and/or substance abuse disorders (no exclusion rider for these types of claims), and benefits to age 65. Further, he would have the ability to increase his monthly benefit to $15,000.
3) Female General Surgery Resident, Age 28
Recurrent UTIs with last 3/2025, please advise if cause determined, if any underlying urinary tract abnormality known or suspected, date of full recovery, if any residuals, etc.
Physical Therapy due to injury 2/2023-5/2024, please advise of the details of this history, what the injury was, how the injury occurred & if any other injuries sustained, including testing, results, diagnosis, all treatment, date of full recovery, and if any residual problems.
5/2024 skin biopsy due to rash & 10/2024 dermatological product prescribed, please advise of frequency & severity of symptoms, all testing, results, diagnosis, treatment, date of full recovery, if any residual problems.
Major medical claims data documents 10/2023 Thalassemia minor, Beta thalassemia & Anemia, 4/2022 chronic pain & fatigue, 4/2022 right ankle sprain with recurrent symptoms, last reported 5/2024, and 5/2022-6/2024 psychotherapy for anxiety, major depressive disorder, and adjustment disorder. Please advise of the details of this history, including all testing, results, diagnosis, treatment, date of full recovery, if any residual problems exist, current status, etc.
Due to the client’s history of recurrent UTIs, at best, an exclusion for the urinary tract will apply.
It appears that a skin exclusion may apply due to the client’s recurrent rash.
At best, a mental/nervous exclusion will apply due to the client’s history of anxiety, depression & adjustment disorder.This could be a decline if she has a chronic fatigue diagnosis.
She would be able to move to a GSI plan with no exclusion rider for UTIs, 24 months of benefits for claims resulting from mental/nervous and/or substance abuse disorders (no exclusion rider for these types of claims), no exclusion rider for the skin, benefits to age 65, and the ability to increase her monthly benefit to $15,000.
4) Female Gastroenterology Fellow, Age 31
What medication is the client using for the psoriasis? Are the symptoms well-controlled on the current treatment?
How have migraines been treated?
From the major medical codes, the client has had multiple stress fractures: right fibula. right femur, and pelvis. Is there any history of Osteoporosis, Bone density disorders, or Eating disorders?
What triggered the cardiology workup? Has there been any follow-up?
Will need to exclude psoriasis
25% rating, no Future Increase Option (FIO) or Cost Of Living Adjustment (COLA) Rider due to echo noting minimal regurgitation in multiple valves. ** This could be a decline given overall medical history – eating disorder, osteoporosis, migraines, and cardiac history.
She would be able to move to a GSI plan with no exclusion rider for psoriasis. She would get no rating (additional 25% sub-standard premium charge), benefits to age 65, a COLA Rider, and the ability to increase her monthly benefit to $15,000/
5) Female Ophthalmology Resident, Age 31
In this situation, the client applied to Guardian when she was an MS4 and had recently matched. However, she has a +ANA lab finding and the company declined for fully underwritten coverage. Guardian currently accepts their declines or modified policies. Thus, she would be able to apply for a similar policy under the Special GSI offer at her institution. Her policy was approved and she was covered within 24 hours of the application being submitted.
The questions asked and/or the potential underwriting outcomes may surprise you. Frankly, not me. According to the Milliman 2021 Annual Survey of the US Individual Disability Income Insurance Market, 50% of individual disability insurance policies are either modified (34%) or declined (16%).
6) Male Anesthesiology Resident, Age 30
Diagnosed with anxiety, depression, and insomnia more than 12 months ago and is taking Lexapro. He applied to a company other than Guardian. They issued the policy with an exclusion rider for claims resulting from mental/nervous and/or substance abuse disorders.
The policy was also issued with an exclusion rider for disease or disorder of the left shoulder, or its associated structures, including complications or treatment thereof, or complications resulting from the treatment.
But he applied medically to a company besides Guardian and they offered a modified policy. Thus, he no longer qualifies for the Guardian GSI offer at his institution. What makes this case even more frustrating is that there was a GSI offer from the same company he applied to medically, and he is no longer eligible for that GSI plan either!
7) Female Psychiatry Resident, Age 29
Bilateral hearing loss since childhood, and has a cochlear implant. In this situation, we will say she applied to Guardian through my colleague, Adam Sandman, for the Special GSI offer at her hospital.
Shortly after he submitted the application, Adam received the following message –
We received outside confidential information that this client may also have a disability insurance policy in force or applied with another insurance company. Please re-question and provide full details, as this was not disclosed on our application.
Guess what? She was unaware that another company had an application pending. And based on her medical history, she would be offered a modified policy (with an exclusion rider for hearing loss in either or both of her ears) at best. She was forthcoming about her medical history, so Adam immediately recommended the Guardian GSI plan in this situation.
I have said this repeatedly:
Remember that you do not need to provide your Social Security Number, Driver’s License Number, or place of birth to obtain disability insurance quotes. You should not sign anything—electronically or otherwise—that looks like an application for disability insurance.
Unfortunately, she is no longer eligible for the Guardian GSI offer. It did not surprise me that her ineligibility resulted from the actions of the same brokerage as the prior case (#6)!
While this firm might not think an exclusion rider for a psychiatrist’s hearing is not a cause for concern, I would imagine she thinks otherwise!
8) Male Emergency Medicine Resident, Age 29
This was an application submitted to a company other than Guardian by a relative of a co-resident. This agent was clearly unfamiliar with the “medical market” and disability insurance in general. The one thing I know is that if either one of my sons were resident physicians, I would think I hit the lottery! My days of lecturing and writing blog posts would come to a screeching halt, and I would start taking orders.
This potential client had pre-diabetes. As a result, he was offered a policy with a 25% rating (additional sub-standard premium charge) and no increase options.
Since he applied medically to a company other than Guardian and was offered a modified policy, he would no longer qualify for the Guardian GSI offer at his institution.
You Can’t Handle the Truth!
I believe there are two types of disability insurance agents in the medical market – the “haves” and the “have-nots.” When available, the “haves” can provide potential clients with their own GSI plan or access another insurance agent’s GSI plan if that agent is willing to split commissions or co-broker.
So why are potential clients not offered a GSI plan if one is readily available at their hospital? I suspect it is a result of one of the following:
- Negligence. Agents don’t know what they don’t know and don’t realize the potential harm they may cause to a resident or fellow.
- Willful negligence. Agents do not want to investigate the availability of GSI plans as they don’t want to know. I suppose “ignorance is bliss,” and they feel it is not their job to market GSI plans that do not belong to them.
- Greed. Agents don’t want to share commissions with the “Endorsed Agent” for the Special GSI offer (if they are open to sharing commissions) or, worse yet, they don’t want to give the client away if that agent is unwilling or cannot share commissions.
Lessons learned from these disability insurance case studies
In Blackjack, the player has roughly a 42% chance of winning a hand. The dealer wins about 49% and the remaining 9% results in a push (tie). The house edge, representing the casino’s advantage, is around 0.5% when using a perfect basic strategy, making Blackjack one of the most player-friendly casino games.
Remember, according to the Milliman 2021 Annual Survey of the US Individual Disability Income Insurance Market, 50% of individual disability insurance policies are either modified (34%) or declined (16%). With odds like this, why would a resident or fellow risk becoming ineligible for a GSI plan by applying to a company other than Guardian if a Special GSI Program is available at their institution?
Don’t take the purchase of disability insurance lightly. Your financial future may depend on it one day.
To learn more or request a disability insurance quote from Larry, click here!
Lawrence B. Keller, CLU, ChFC, CFP® is the founder of Physician Financial Services, a firm specializing in disability insurance and term life insurance for physicians. He can be reached at (516) 677-6211 or by email to [email protected] with comments or questions.
In the meantime, here are some other great resources regarding how doctors need to and can protect their most important assets:
- When Should Doctors Get Life & Disability Insurance?
- Finance Flash Go! Episode #60: Whole Life Insurance (Don’t Buy It!)
- Creating an Asset Protection Plan for Real Estate Investments
- Cover Your Assets: Umbrella Insurance for Physicians
- What Types of Insurance Do Doctors Actually Need?
What do you think? Do you have a disability insurance policy in place? What was it like obtaining it? Do any of these disability insurance case studies ring true? Why or why not? Let me know in the comments below!
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