Question:

What Is the Difference Between a Group Long Term Disability and an Individual Physician Disability Insurance Policy?

The Difference Between a Group Long Term Disability and an Individual Physician Disability Insurance Policy

There are some important differences between a typical group disability plan and a more comprehensive physician disability insurance policy. The most significant of which are noted below:

• Cost. A typical group disability policy is often less expensive than a doctors disability insurance plan. But, remember, you usually get what you pay for so the extra cost may not be an issue.
  
• Definition of disability. This potential difference can be very significant to you. A typical group disability policy considers a person no longer disabled if they can perform the duties of “any gainful occupation.” Individual medical doctors insurance can often include an “own-occupation” provision, which considers the insured to be disabled (and eligible for income benefits) as long as they are unable to resume the duties of their medical specialty.
  
• Taxability of benefits. Benefit income from a group disability policy that is paid for by an employer is normally taxable. Because most group insurance policies provide for a benefit level of around 60% of your gross monthly income, after taxation, your true benefit income will be around 45% or less. A doctor disability insurance program, that you purchase personally, normally provides that your benefit income is tax free. Therefore, even with an identical benefit income level (60%), you will generate 15% to 20% more real income with a physician disability insurance policy.
  
• Portability of insurance. If you leave your group and move to another position, your insurance ceases. By having your own disability insurance for doctors program, you can take your coverage with you wherever you decide to practice.

Refer to your insurance policy contract for specific information regarding your coverage and for actual terms, conditions and exclusions. The above statements are general in nature and may or may not reflect the actual terms of your insurance policy.