Larry Keller with Physician Financial Services offers rich insight into what doctors need to know about different types of term insurance is best for their financial goals

Curbside Consult – April 2018

Physician term insurance and disability insurance are important topics for our audience– important enough that I decided to have a lingering dialogue about it following our last episode for this Curbside Consult. We continue the conversation with Larry B. Keller, founder of Physician Financial Services, this time to answer questions polled by my Facebook groups, Physician Finance and Financial Residency, regarding term, disability, and supplemental insurance for physicians.

If you haven’t listened to the first episode, you can do so here: Winning Tactics for Finding the Right Insurance Policy

If you’re interested in reaching Larry, call him local at (516) 677–6211 or toll-free at (800) 481–6447. You can also reach him on his website or by email.

11 Questions on Physician Term Insurance and Disability Insurance:

  1. How much term insurance does a physician need and what could be a quick way to determine how much they actually need?
  2. Does age factor into how long you should get a policy for?
  3. How should I target the right firm for me or is it really just based on premium?
  4. How much disability coverage do I need and do these supplemental plans transfer with an employer?
  5. What does it mean for you to be totally disabled if you’re unable to perform one or more of the material and substantial duties of your occupation, and you have a loss of income of at least twenty percent compared to your pre-disability income?
  6. What if I have coverage, and I switch them, and I have an additional policy that I’ve gotten from a third-party provider, and I happen to leave my job and my coverage goes up from let’s say fifty percent to seventy percent and now I’ve got too much coverage between what my new employer offers and the policy that I have?
  7. What is actually considered disabled, resulting in a payout versus something that is excluded?
  8. Can you just kind of quickly chat on what is an elimination period and how does changing that elimination period effect premiums?
  9. If you’ve got a ninety-day elimination period, what do you do from day zero to day ninety? Does short-term disability cover this through work or is there anything else they can do to protect themselves?
  10. Let’s say that we had a female and again, thirty to forty, that’s listening and we’re talking general, is it better to get disability before they have their kids or is it better to wait until everything’s done and post partum’s done? How does that work?
  11. What should residents look for in terms of what they should put more emphasis on? Term, disability, or a combo of both?

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Full Transcript: Curbside Consult – April 2018

Ryan

Alright everyone, so welcome back. We’re doing a continuation episode of last week with Larry Keller. And we are doing an entire show on Curbside Consult with Larry. We’re going to be asking tons of questions that I’ve either polled from you guys and gals out there that I’ve been asked dozens and dozens of times from prospects and clients and things like that or out of the groups, The Physician Finance Group or The Financial Residency Community Group, which if you haven’t joined either of those, go do that now. Join both of them. So, I’ve got Larry back here and we’re going to be talking. Larry, let’s start with some of these term questions. So, the first question I have here for you is how much term insurance does a physician need and what could be a quick way that they could determine how much they actually need?

Keep in mind this good rule of thumb of the amount of disability and term insurance you need as a physician!

Question: How much term insurance does a physician need and what could be a quick way that they could determine how much they actually need?

Answer: A good rule of thumb for term life insurance is a million-dollar death benefit, seven to ten times gross income or a million dollars per survivor.

Larry

So, a good rule of thumb when it comes to term life insurance, being that it’s a really inexpensive financial product, would be seven to ten times gross income or a million dollars per survivor. You know, in either case, I think an absolute minimum should be a million-dollar death benefit. And again, let’s not forget about our non-working spouse. You know, he or she should be insured for at least a million dollars. On smaller policies, you know, there is an annual policy fee that’s built in and if the premium is small, that can actually make up a substantial percentage of the annual premium. So, again, a good rule of thumb, a million-dollar death benefit, seven to ten times gross income or a million dollars per survivor.

And remember, you also cannot arbitrarily just pick a random number. Insurance companies are going to limit you to twenty to thirty times your gross income unless we have a real need for the coverage and we can explain that to the insurance carrier.

Ryan

Perfect. The next question I have for term is, does age factor into how long you should get a policy for?

Question: Does age factor into how long you should get a policy for?

Answer: If you have children, I like the idea of combining policies of either say a twenty-year level premium term with a thirty-year level premium term to allow for a higher initial death benefit and a lower premium cost.

Having a family determines how much your premium will be.

Family and insurance coincide, term insurance, disability insurance

Larry

I would say that probably more than age factoring in, you know, would be the individual circumstances, and if applicable, you know, ages of children. Ideally, we’d like to get the kids out of college. So, if I have no children now and I’m married and I was to buy a twenty-year level premium term and I was to have a child tomorrow, only one, that twenty-year level term is not going to get my child out of college. If I plan on having more kids, that works against me and my twenty-year level premium term only becomes less valuable. I like the idea of combining policies of either say a twenty-year level premium term with a thirty-year level premium term to allow for a higher initial death benefit and a lower premium cost. Or if I have no children at this point at all and my plan is to have children, I’m probably just going to go out and buy a thirty-year level premium term policy for either a million dollars or two million dollars today.

And then my plan would be to layer or ladder additional policies on top of it for a shorter duration. You know, I might buy a twenty-year level term on top of my thirty-year level term. Premium rates are based on age and the younger you are the less expensive it is. The other thing you have to realize, is certain companies use what’s known as your age-nearest birthday. And that means, once you hit your half birthday, they round you up to your next highest age. Other companies use your actual age and literally until the day before your birthday, you can lock it at your younger, less expensive age. So, that might also impact pricing as well and when you’re speaking with your agent or doing your own online research, that could certainly be one of the difference, underwriting premium classification aside.

Question: How should I target the right firm for me or is it really just based on premium?

Answer: A lot of it really is based on premium. You might find that there are some extenuating factors like some of your family history might be taken into consideration and you’ll qualify for the best category with one carrier and you might not qualify for the best category with another one.

Ryan

And I know that we’re not mentioning any company names, but there’s a ton of companies out there that do this stuff that offer these products. How does one maybe select, it’s not just based on premium, like how does one maybe select, hey these, I should target these few firms or is it really just based on premium? This is the lowest cost for, let’s say that million-dollar twenty-year policy and I’d go with them.

Select a carrier that is well-known for their cash-value type.

Larry

A lot of it really is based on premium. You might find that there are some extenuating factors like some of your family history might be taken into consideration and you’ll qualify for the best category with one carrier and you might not qualify for the best category with another one. You might find that your goal is, in fact, to convert or switch from a term life insurance policy to some type of permanent life insurance policy. And there are better carriers for permanent insurance than there are others. So, ideally, if that is your goal, you’d probably stick to the carrier that’s more well-known for their cash-value type insurance. And most of the time, you know, you might think, well, if I buy my coverage online, I’m going to do better because I’m going to avoid the insurance agent. I’m going to avoid the mission associated with my purchase.

Larry

Well, the reality is the majority, the overwhelming majority of insurance companies do not sell directly to the public. And even though you might think you’re buying online direct from the company, you’re actually not. Your purchasing an insurance product from a licensed insurance agent that is going to be compensated for the sale of the product. And you may or may not talk to that individual again in the future. So, my preference is to find someone that you like that understands your individual needs, goals, and budget; and you know if you pick up the phone, you are going to get them.

And that’s usually going to be someone that owns the firm or has been in the insurance agent world for a long period of time that has a reputation that really wants to maintain the reputation that they have, and they will be there for you when you need them.

Question: How much disability coverage do I need and do these supplemental plans transfer with an employer?

Answer: A good general rule of thumb if you’re buying individual coverage and you only have an individual policy because you’re self-employed is sixty percent of income, at least at the lower income levels. And we will find that the percentage of your income can be replaced drops substantially as you earn more income.

Physicians should know how much disability insurance they need.

Ryan

That’s very well said. So, we’re going to now switch over to some of the disability questions that have come through or that I’ve kind of pulled from various sources here. And I do want to kind of just give this overarching disclaimer that what Larry and I are talking about is, let’s say someone that’s in the thirty to forty years old, could be male or female depending on the question, obviously it’s not a male if we’re talking about someone who’s pregnant, but that is in good health and we’re not talking about any particular circumstances that you may have, so this is really, I just want to say it again, like we’re talking generalities on some of these questions and obviously on Larry’s answers here. So, Larry, first one we’re just going to talk about is how much disability coverage do I need and do these supplemental plans transfer with an employer?

Larry

Well, yeah. A good general rule of thumb if you’re buying individual coverage and you only have an individual policy because you’re self-employed is sixty percent of income, at least at the lower income levels. And we will find that the percentage of your income can be replaced drops substantially as you earn more income. And the insurance companies don’t want to put you in a position where you’ll be earning a higher income not working than if you continue to work. You know, they also believe, rightfully so, that in most cases at the larger income levels, you have a more disposable income and generally none of these policies are going to be reduced should you collect under Social Security Disability or Workers’ Compensation.

Larry

So, if you go out and you buy an individual policy. We’ll call it a supplemental individual policy, even if it has a discount via your employer, that discount is going to be permanent. That plan is going to go right along with you the same way you would take your luggage. A good rule of thumb is if you have employer-provided group disability insurance, the benefit is going to be taxable to you, so the individual insurance companies are going to discount what you have known that you would have to pay tax on those benefits. You might also find that your employer-provided group long-term disability coverage does not cover any kind of shift differential, overtime, incentive pay, or bonuses. And all of these plans are going to have a percentage of your income that’s covered up to a maximum monthly benefit.

disability insurance depends on your situation

Larry

And this can vary tremendously from one institution to another. You might literally find, I’m going to get sixty percent of my salary with a two-thousand-dollar maximum. You might also find that I’m going to get sixty percent of my salary with a thirty-two-thousand-dollar maximum. So, another good rule of thumb for those of you that are not residents or fellows. If someone comes to my website or calls me and asks me for a quote and I ask you if you have other disability insurance and you know you’re an employee of a large employer or health system, I know the odds are very good that you do.

Larry

You might not know you have this, but the odds are very good that I’m going to either know what you have or I’m going to tell you, you need to contact Human Resources. You likely have other long-term disability coverage and we need to factor that in to determine the amount of individual coverage available to you. You know, if you are in a situation where you have employer-provided group long-term disability coverage, now your total replacement ratio will likely be somewhere between seventy and eighty-five percent between the group insurance plan as well as your individual disability insurance plan.

Ryan

And you said something important there, which was you need to factor in what your work has and obviously you’re looking at potentially paying taxes on this. You said a great point there. So, you’re looking at what you have at work and let’s say it’s sixty percent coverage, it’s actually on your base pay. They don’t include the bonuses or all the overtime or anything that you would think hey, this is my income, this is what I should be replacing. If they sixty percent, it’s all of that, but it’s not. And that is one of, probably the biggest, misconceptions that I see with clients that are bringing me stuff, is that they’re thinking that it’s covering everything when, really, it’s only on their base pay.

Larry

And that’s where it’s important to actually get a copy of the long-term disability certificate. So, we can see in fact what is covered and what’s not. Some group insurance plans are going to cover those things, other ones are not. Another enormous misconception is that physicians especially believe that their employer-provided group long-term disability plan is own occupation. And I will say in the best-case scenario, it’s not. It’s usually going to say we will consider you to be totally disabled if you’re unable to perform one or more of the material and substantial duties of your occupation and you have a loss of income of at least twenty percent compared to your pre-disability income. But what does that mean?

Why does a physician need a long-term disability certificate?

Question: What does it mean for you to be totally disabled if you’re unable to perform one or more of the material and substantial duties of your occupation and you have a loss of income of at least twenty percent compared to your pre-disability income?

Answer: As a result of that, you will collect absolutely nothing from your individual policy. You no longer meet the definition of total disability. An individual plan does not have this. They have two separate and distinct definitions.

Larry

This means, if I’m a neurological surgeon and I’m diagnosed with an essential tremor and I can no longer perform neurosurgery, normally I would collect full benefits under an individual policy, assuming it was own occupation and assuming occupation analysis played out to show that I really was performing the duties consistent with that of a neurosurgeon. Well, imagine if I’m a thirty-five-year-old neurosurgeon that’s diagnosed with an essential tremor and I can no longer work, I’m still really smart, I still have great ability and I still know I’m going to be alive with a long career horizon over me. Not necessarily practicing neurological surgery anymore, because that is what I have lost. So, what I decided to do is to go back to law school and now I’m an MDJD and I decide I’m going to open up a law practice and I’m going to specialize in asset protection and I’m going to teach physicians how to better position their assets to protect against malpractice claims.

Larry

And I make more money doing this than I ever did when I was a neurological surgeon, well how much would I collect under my group insurance plan? In my example, you’d actually collect nothing. And here’s the reason, you have lost the ability to do one or more of the material and substantial duties of your occupation. You can no longer perform neurological surgery. But remember that ‘and,’ and it said and you have a loss of twenty percent or more of your income. In my example, I now have you earning more money practicing law then you were earning as a neurosurgeon. As a result of that, you will collect absolutely nothing from your individual policy. You no longer meet the definition of total disability. An individual plan does not have this. They have two separate and distinct definitions.

Important definitions of total disability for a physician’s insurance policy.

Larry

One is the own occupation definition that generally says if I can’t perform the material and substantial duties of my occupation; again, those are the duties that cannot be reasonably omitted and still allow me to practice within that specialty, I’m done. I’m going to receive my full benefit, there’s nothing about income loss in there at all. The only time income loss would come into play is if my own occupation policy contained a residual or a partial disability benefit. And this would only be triggered if I was still able to perform my duties as a neurosurgeon, but because of my accident or sickness, I had to work fewer hours, see fewer patients, perform fewer procedures and this caused a loss of income generally of fifteen to twenty percent or more compared to my pre-disability income.

Larry

So, you could very likely have a situation where a client collects full benefits under their individual disability policy, yet they collect no benefits under their employer-provided plan, which leads to something I get all the time. You know, Larry, I’ve gone through the plan, you discussed it with me in detail, my employer-provided plan is not good. I don’t want it. The answer is, if it’s not a voluntary plan and you don’t have the ability to waive the coverage and it’s employer-provided, and likely the insurance company that’s providing it to your employer requires one hundred percent participation of the physician employees, you have no choice but to take it and I have no choice short of new and practice limits to take that into consideration and integrate and coordinate that with your individual policies.

Larry

So, the fact that you don’t like the definition or you believe that that definition is inferior and makes it less likely for you to collect benefits, essentially is meaningless.

Question: What if I have coverage, and I switch them, and I have an additional policy that I’ve gotten from a third-party provider, and I happen to leave my job and my coverage goes up from let’s say fifty percent to seventy percent and now I’ve got too much coverage between what my new employer offers and the policy that I have?

Answer: So, if you change employers and now your employer provides a more lucrative group long-term disability benefit and you end up in a situation where theoretically you are over-insured, you can legally collect full benefits under both policies as long as you meet the definition of total disability in each.

Know what your long-term disability certificate says about coverage

Ryan

And let’s say sticking with this kind of employer coverage concept, what if I have coverage, and I switch them and I have an additional policy that I’ve gotten from a third-party provider, and I happen to leave my job and my coverage goes up from let’s say fifty percent to seventy percent and now I’ve got too much coverage between what my new employer offers and the policy that I have. What do I do there, because I can’t be worth more disabled than I am working. Like how does that actually work?

Larry

Believe it or not, you actually can be. And that’s just one of the few situations where if you had your individual policy and it was non-cancellable and guaranteed renewable, or even it was guaranteed renewable only, and at the time of your application, you disclosed what your income was, what your other disability insurance was, and you were approved for this policy and you put the policy in force, the insurance company has no restriction in terms of what you can or cannot do in the future. So, if you change employers and now your employer provides a more lucrative group long-term disability benefit and you end up in a situation where theoretically you are over-insured, you can legally collect full benefits under both policies as long as you meet the definition of total disability in each.

Larry

Now, by the same token, if you wanted to reduce your individual policy and the benefit associated with it, you could. But let’s say you did that and now you’ve changed jobs again, and now that you’ve changed jobs, you’ve lost your group insurance, and now you’ve gone to a private practice where there is just nothing available to you and now you look to increase your individual coverage again, if that is an option, you’re older and it’s going to be more expensive. So, I would recommend just you keep what you have. Are you over-insured in theory? Yes. Are you paying a premium for a higher benefit? Yes. But you can still legally collect on it and it does give you more flexibility should you change jobs again in the future.

Question: What is actually considered disabled, resulting in a payout versus something that is excluded?

Answer: Disabled is you’re unable to perform the material and substantial duties of your occupation or your medical specialty.

Ryan

Perfect. I think this segways really nicely into this next question is, what is actually considered disabled, resulting in a payout versus something that is excluded?

Larry

Well, ideally, disabled is you’re unable to perform the material and substantial duties of your occupation or your medical specialty. So, let’s say we’ve got a surgeon diagnosed with an essential tremor that can no longer perform surgery. The occupational analysis airs out that for the most part, they were a surgeon and when they were not performing surgery, they were doing pre-op consultation and post-op follow-up and that was incidental to the fact that they were a surgeon, benefits would be payable. You know, what’s not going to be covered? Something that would not be covered would be a specific exclusion that the insurance company during the underwriting process said, you know, you’ve had prior surgeries. You’ve had carpal tunnel repair. You applied for the policy shortly after that and they specifically stated in the contract ‘we are not going to cover disability caused by or contributed to by either or both of your hands, wrists, or forearms.

What are demonstratable conditions limiting a physician from working?

Larry

And there is clearly a demonstrable relationship between your current disability and your prior medical history, that would not be paid. The other thing would be something like mental and nervous conditions. You know, if your policy has a twenty-four-month lifetime maximum limitation and now you’re disabled as a result of one of those causes and you do not meet the exception, you really cannot expect to get more than twenty-four months of benefits. And this is all going to be outlined in the contract that you actually sign when you except the final policy and put it in force.

Question: Can you just kind of quickly chat on what is an elimination period and how does changing that elimination period effect premiums?

Answer: The elimination period or waiting period is simply the number of days that you need to be out of work, either totally unable to perform the main duties of your occupation; or partially, you’re still working in your occupation, but you’ve got a loss of income because you’re working fewer hours, seeing fewer patients, or a combination of the two.

Ryan

Perfect. So, going through some of this disability stuff, I actually received a bunch of questions around elimination periods. And can you just kind of quickly chat on what is an elimination period and how does changing that elimination period effect premiums?

Larry

So, the elimination period or waiting period is simply the number of days that you need to be out of work, either totally unable to perform the main duties of your occupation; or partially, you’re still working in your occupation, but you’ve got a loss of income because you’re working fewer hours, seeing fewer patients, or a combination of the two. The most common waiting period that’s purchased is ninety days. And that means that from day ninety-one going forward, that’s when benefits are accruing. If you were to switch the waiting period from ninety days to one hundred and eighty days, in my opinion, you know, you’re waiting twice as long. There’s a lot of disabilities that’ll never make it to one hundred and eighty days, but will make it past the ninety.

What is the recommended waiting period before benefits become payable?

Larry

The savings associated with that is about ten percent. So, someone that’s young in their career, that does not have an emergency fund and they don’t have a significant amount of assets to adequately protect themselves against this, I would only recommend a ninety-day waiting period. That’s where you’re going to find the overwhelming majority of policies purchased. By the same token, if the insurance company makes a sixty-day waiting period available, so you’re getting your money one month earlier, it could literally mean a three hundred to four hundred percent premium increase. So, ninety days really is the sweet spot as far as a waiting period or elimination period. Again, those are the days you are waiting, literally, it’s a deductible of time before benefits become payable.

Question: If you’ve got a ninety-day elimination period, what do you do from day zero to day ninety? Does short-term disability cover this through work or is there anything else that they can do to protect themselves?

Answer: Usually you want to have three to six months of your living expenses put away into something that’s liquid that can easily be converted to cash. Some hospitals or large institutions will make available a short-term disability plan.

Ryan

So, if you’ve got a ninety-day elimination period, what do you do from day zero to day ninety? Does short-term disability cover this through work or is there anything else that they can do to protect themselves, or should they, or is this, and I always look at it as this is where your emergency fund kind of kicks in. You’ve got at least three months of expenses, but, you know, I’ll let you kind of take it from there.

Larry

Yeah, that’s exactly it. You know, the emergency fund is crucial here. You know, usually you want to have three to six months of your living expenses put away into something that’s liquid that can easily be converted to cash. Some hospitals or large institutions will make available a short-term disability plan. You know, generally, I have found that they’re not a good value and if you look at what you’re paying in the premium over a duration of time versus what you could potentially collect under it, it’s not a very favorable ratio. You know, that being said, if anyone is going to buy a short-term disability plan that’s available, it’s likely going to be a female, and it’s likely going to be a female that either is thinking about getting pregnant or is actively trying to get pregnant. For the guys, typically not a great value at all.

Question: Let’s say that we had a female and again, thirty to forty, that’s listening and we’re talking general, is it better to get disability before they have their kids or is it better to wait until everything’s done and post partum’s done? How does that work?

Answer: If they’re actually pregnant at the time of application, you know, think of it as a pre-existing condition.

Ryan

And so, speaking of being pregnant, let’s say that we had a female and again, thirty to forty, that’s listening and we’re talking general, is it better to get disability before they have their kids or is it better to wait until everything’s done and post partum’s done? Because I know there could be some exclusions on there. How does that actually work?

If a physician is pregnant, it may be perceived as a pre-existing condition by their employer’s insurance provider.

Larry

Yeah. So, if they’re actually pregnant at the time of application, you know, think of it as a pre-existing condition, no insurance company is going to say ‘sure, we will medically underwrite you and in the event something happens, pregnancy, complications of pregnancy, spontaneous abortion, voluntary abortion; we would love to pay you. They’re going to say congratulations, but you were pregnant before you ever came to us. We do not want to be on the hook for significant amounts of money for a condition that you had before you were insured. So, if you are currently pregnant, there is going to be an exclusion rider, which is where the insurance company says we will not cover any disability related to or caused by pregnancy, voluntary abortions, spontaneous abortions, a complication of pregnancy.

Larry

You know, there are still a lot of other things that could happen to you during pregnancy and that will encompass your normal accident or sickness. So, I think it’s really important to still lock in the coverage. Yes, you will have an exclusion rider for pregnancy. Once someone is back to work full-time for thirty days or more if they had a normal pregnancy without complications that is an exclusion rider that can be reconsidered or potentially removed. Of course, if a female is not pregnant at the time of application, but they’re thinking about it, and they haven’t gone through fertility treatments because that can be an issue as well that will lead to an exclusion, I would look to purchase my policy as soon as I could, because it’s not a pre-existing condition, and now in the event if I do become pregnant or I have a complication of pregnancy, that would be covered the same way as any other accident or sickness.

Larry

Not a normal pregnancy. I get this a lot. Well, what if I want to have my child and then stay home with them for a couple of months, that you could do, it’s just not going to pay disability insurance benefits. Those disability benefits are tied to a medically necessary reason why you’re unable to work in your occupation on a full-time basis, or why you can still work in your occupation on a limited basis. It’s not, I just don’t feel like going to work because I want to stay home postpartum, you know, with my child.

Question: What should residents look for in terms of what they should put more emphasis on? Term, disability, or a combo of both?

Answer: If someone is single, really the only one that they’re responsible for is themselves. At that point, it’s an easy one. They should just buy disability insurance. Now, let’s assume for the moment, everything you said is the case. If I’m married and I have children, there’s really nothing to discuss. They need coverage and God forbid something happens to this person, their family is going to be in a lot of trouble financially if they don’t have life insurance.

If they don’t have life insurance, physicians could be in a lot of trouble if they have a family and something happens.

Ryan

So, I’ve got a couple more questions for you. What is, you know, think of it as like we’re talking about residents here. They’re just starting out, they only have a small amount of money that they could put towards any insurance, what should they look for in terms of, like, what should they put more emphasis on? Term, disability, a combo of both?

Larry

Well, if someone is single, really the only one that they’re responsible for is themselves. At that point, it’s an easy one. They should just buy disability insurance. Now, let’s assume for the moment, everything you said is the case. You know, they like the idea of disability insurance, they understand the importance, they realize that their health is actually what buys the insurance, the money is what just keeps the insurance in effect. But their budget is extremely limited. I’ll make it up, let’s say thirty to fifty dollars a month. You know, there are insurance products where the insurance company will allow them to buy a minimal benefit, let’s say a thousand dollars a month, and still allow them to increase up to fifteen to twenty thousand a month, never doing another exam, blood test, urine test, or answering any medical questions.

Larry

Now, that is not my normal recommendation, but given the choice of buying nothing because I feel that I can’t afford something that’s reasonable, or putting in a little bit of money to lock in my future ability to purchase coverage when I feel I either really need it, or I can better afford it, makes an awful lot of sense. I literally call this my lease with the option to buy a plan. If I’m married and I have children, there’s really nothing to discuss. They need coverage and God forbid something happens to this person, their family is going to be in a lot of trouble financially if they don’t have life insurance. And given the choice of putting money into a 401k, 403b, or 457, or an IRA; at this stage of our life, putting that money in a year or two early is not going to be the difference between retiring successfully or not. But not having appropriate insurance in force literally can be all the difference in the world.

A physician’s paycheck is protected from a very basic sense with insurance.

Larry

I mean, if you think about it from a very basic sense, disability insurance protects our paycheck, and if we’re working because we need the income to develop a lifestyle for ourselves and our family, pay down debt, funding for college, funding for retirement; and I am not financially independent, I need disability insurance. It’s that simple. And the same thing is true for life insurance. If I have dependents and I have someone that is relying on my ability to earn an income and bring money into the household, I need life insurance. Now, we can make an argument, a very real argument, if I’m in a dual physician household and we have no kids, I probably don’t even need life insurance. You know, my spouse would go on, they’ll continue to practice medicine, and they’ll do very well.

Larry

And as much as they would want to grieve for me and there will be a real loss, financially it’s negligible. But once I have others that depend upon my income for their lifestyle, it really is non-negotiable. It should be done and you’d be surprised how many people I run into that are in these situations and it’s almost like they don’t know what they don’t know. And they should have disability insurance and they should have life insurance and they believe that this is very expensive, but they can purchase products to protect themselves and their families that are really, really low cost and is a building block for the future.

Ryan

Yeah. I’d almost push back on you a little bit with the dual physician, no kids, not having coverage; only because, let’s just say they were two pediatricians. I can speak first hand, I know pediatricians aren’t really well compensated compared to let’s say a surgeon, and if one of the spouses became disabled and required more time and more money and more effort from the other spouse that took away from their job, they’re already not earning six, seven, eight hundred thousand dollars. So, you lost half of your income. Let’s say they were both making two hundred and then the second spouse that’s the healthy one has to scale back just to take care of their other spouse, you know, disability could really help there in that sense.

Disability insurance protects physicians in more ways than one.

Larry

Oh, there’s not even a question in my mind. You know, it’d really just be more on the life insurance side that if we have no kids, one of us passes away. No, disability is ultra important. Believe it or not, one of the insurance companies in their product as a built-in feature, has what’s called a family care benefit that allows a policyholder that’s not disabled, but needs to take time off to care for their loved one, can actually collect benefits up to a certain limited basis to stay at home with the family member. So, if they have a loss of income of twenty percent or more because they, the healthy individual, need to reduce their work hours to care for a loved one that’s sick, their policy will actually pay them.

Ryan

Yeah. I’d be curious to see how much that’d cost in premium and how that kind of offsets, you know, how long would you be paying, I mean, there’s all sorts of math you can do around this.

Larry

Yeah. Believe it or not, it’s a no-cost rider that’s built into the policy. It’s not available in all states, but it is a really, really nice feature and if someone was looking towards that insurance company anyway, where they were comparing two of them, that literally could be a deciding factor, you know, in a physician household. Because as a physician, not only are you looked upon as the son or the daughter or the husband or the wife, you’re also looked at as potentially the caregiver.

Ryan

Yeah, absolutely. Well, Larry, thank you so much for being on the show. I greatly appreciate it. This was fascinating. I think listeners are going to get a ton of benefit out of this. Real briefly, can you just tell us, or tell them I should say, how they can get ahold of you if they have questions or want policy reviews, or if they’re looking for policies, how can they get a hold of you?

Larry

Absolutely. So, very, very easy to reach. You know, if they want to chat, they can certainly call. It’s (516) 677-6211, that’s my local number. I also have a toll-free number, which is (800) 481-6447. They can certainly visit my website, www.physicianfinancialservices.com or they can easily send me an email at lkeller@physicianfinancialservices.com.

 

Disclaimer:

Lawrence B. Keller is a Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). 355 Lexington Ave. 9th Floor, New York, NY 10017. 212-541-8800. Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is an indirect, wholly-owned subsidiary of Guardian. Physician Financial Services is not an affiliate or subsidiary of PAS or Guardian.

This Material is Intended For General Public Use. By providing this material, we are not undertaking to provide investment advice for any specific individual or situation or to otherwise act in a fiduciary capacity. Please contact one of our financial professionals for guidance and information specific to your individual situation. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. Riders may incur an additional premium or cost. Riders may not be available in all states. Guardian does not issue nor advise for Malpractice Insurance. 2018-58859 Exp. 4/20

 

Ryan Inman