We’ve spent years in medical school, endured grueling residency hours, and finally achieved the financial stability that comes with being an attending physician. With our hard earned income, we should be focused on paying down debt, investing in real estate, achieving FIRE (Financial Independence Retire Early) or planning for early retirement. But what if all of that could be derailed in an instant? That’s where disability insurance becomes very valuable.

There’s a silent threat that too many physicians ignore, one that doesn’t discriminate based on specialty, skill, or work ethic. That threat is the sudden loss of your ability to earn an income. And for early and midcareer physicians, your income is your most valuable asset. This is where disability insurance becomes not just a safeguard but an essential and valuable pillar of wealth protection.

I’m asked key resource, Jamie K. Fleischner, CLU, ChFC and president of Set for Life Insurance, to help me out a bit. As an independent broker, Jamie represents most companies in the industry, working on behalf of clients to find the most suitable products at the best rates. Her client-centric approach, vast experience, and exceptional reputation provide access to special services like priority underwriting and unique discounts.

Here, Jamie is going to share a bit more about disability insurance, its importance for physicians, as well as the nuts and bolts of what you actually need (and don’t need)!

The Financial Blind Spot in Physician Planning

Most physicians are well versed in financial strategies like maximizing retirement contributions, investing in index funds, and maybe even exploring real estate ventures. However, many overlook the most fundamental aspect of financial security: protecting their ability to earn.

Here’s a thought experiment: Imagine you had the choice between:

1. A $5 million lump sum right now.
2. Your future career earnings of $10–$20 million over the next 20 to 30 years.

The rational choice is clear; your future earnings are worth far more. And yet, many physicians fail to protect this asset adequately.

The Odds Are Not in Your Favor

If you’re young and healthy, disability might seem like a distant possibility. But the statistics paint a different picture:

• One in four physicians will face a long-term disability during their career according to the Council for Disability Awareness
• The average disability claim lasts 34.6 months—nearly three years of lost income.
• Common Causes of disabilities stem from illnesses like cancer, autoimmune diseases, or mental health conditions, not just accidents.

Unlike life insurance, which protects your family after you’re gone, disability insurance protects you while you’re living. It ensures you can continue to pay your mortgage, student loans, and maintain your lifestyle if you’re unable to work.

The Biggest Mistakes Physicians Make with Disability Insurance

Despite its importance, many physicians make critical mistakes when it comes to disability insurance. Here are the top pitfalls:

1. Relying on Employer Provided Coverage

Most hospital or group provided disability plans cover only 50–60% of your base salary up to a maximum benefit. If the employer pays the premium, the benefits are taxable. Most group policies require you to be totally disabled and not working and are not portable if you leave your employer. These drawbacks create gaps in your coverage.

2. Skipping Own Occupation Coverage

If you’re a plastic surgeon and suffer a hand injury, can you still work? Technically, yes but in a nonsurgical capacity. But without own occupation coverage, your policy might not pay benefits because you can still work in a general medical role. Own occupation disability insurance ensures you get paid if you can’t perform the exact specialty you trained for regardless of income earned in another specialty or occupation. 

3. Foregoing Increases Over Time

A $10,000 monthly benefit might seem sufficient today, but will it still cover your expenses in 20 years? It is important to update your policy over time to ensure it continues to cover your needs as your income increases and expenses change.

Why Young Physicians Need Disability Insurance Now

The best time to get disability insurance is when you’re young and healthy. Why?

1. Lower Premiums – Premiums are based on age and health. Locking in a policy early means lower lifetime costs.
2. No Future Health Surprises – A minor diagnosis like ADHD  or back pain could preclude you from obtaining a policy or would place an exclusion on your policy. Obtaining a policy prior to any diagnosis will allow you to increase in the future without medical limitations. 
3. Guaranteed Standard Issue (GSI) Policies – Some residency programs offer special GSI disability policies that require no medical underwriting, making it easy to get coverage before any health issues arise.
4. Discounted Rates. Purchasing a policy while in medical residency allows you to lock in resident discounted rates for the life of the policy. These discounts will apply to all future purchases.

Real World Scenarios: Why This Matters

Let’s look at two real life scenarios of physicians who approached disability insurance differently:

Case Study 1: The Surgeon Who Was Prepared

Dr. A, a 37-year-old orthopedic surgeon, secured a private own-occupation disability policy during residency. A decade into practice, he developed early onset Parkinson’s disease. Because his policy covered own-occupation disability, he received full benefits even though he could still work in a non surgical role. There was no reduction in his monthly disability benefit despite the fact he was earning an income and benefits teaching. His financial plan stayed intact, and he was able to transition into teaching without financial strain.

Case Study 2: The Physician Who Procrastinated

Dr. B, a 42-year-old internist, assumed her employer provided a disability plan was enough. She developed multiple sclerosis, limiting her ability to work full time. Her employer plan provided only 50% of her base salary (taxed), leaving her with just 40% of her previous income. She had to downsize her home and delay retirement, all because she didn’t secure an individual policy earlier. Her group policy wasn’t enough to replace her income or to pay her expenses. She was now uninsurable and couldn’t go out and purchase additional benefits.

What to Look for in a Strong Disability Policy

To ensure you have appropriate coverage, look for a policy with:

• Own-occupation definition of disability
• Coverage for at least 60–70% of your income
• COLA (Cost of Living Adjustment) rider
• Residual/Partial benefits if you can work part-time
• Non-cancellable and guaranteed renewable terms. This means your premiums are guaranteed and the company cannot change the policy terms.

Don’t Leave Your Greatest Asset Unprotected

As physicians, you spend years investing in your education, training, and career. You wouldn’t hesitate to insure your home, your car, or your malpractice risk. But the most valuable asset you have, your ability to earn an income, is often without protection.

Disability insurance isn’t an optional expense; it’s a valuable, critical investment in your financial security.

If you haven’t reviewed your coverage recently, now is the time. Whether you wish to request a quote or set up a time to discuss your current coverage, you can contact Jamie at Set for Life Insurance today!

After taking care of disability insurance, you still need to make sure you have the other necessary insurance coverages in place! Here are resources to help:

• When Should Doctors Get Life & Disability Insurance?
• What Types of Insurance Do Doctors Actually Need?
• Cover Your Assets: Umbrella Insurance for Physicians

What do you think? Do you have disability insurance? Is your disability insurance valuable to you? Is it protecting you adequately? What would you do if your income was lost now? What about earlier in your career? Let me know in the comments below!