Disability insurance: A key component of physician financial wellness and hospital-based wellness programs

Disability insurance: A key component of physician financial wellness and hospital-based wellness programs |Image Credit: © StockPhotoPro - stock.adobe.com.

No one wants to believe that a disability could happen to them. Most physicians enter our profession because of a calling to heal, not driven by financial ambition. Yet, according to the Social Security Administration, one in four workers will become disabled and receive benefits before age 67. While exact data for physicians is proprietary, anecdotal evidence suggests the risk is very real. Many physicians quietly leave practice due to disability, choosing to “retire” rather than publicly acknowledge the health issue behind their decision.

Financial security is inseparable from the ability to earn an income—and income protection is foundational to overall well-being. Disability insurance (DI) is therefore not simply a policy; it is a vital safeguard. Should something happen to you that would preclude you from continuing to practice, you can focus on your health, not your finances.

Despite well-documented risks that ob-gyns face in their careers, formal education about income protection remains virtually absent from medical training. We meticulously teach preventive care principles to our patients, yet often neglect to apply the same proactive mindset to our professional lives. This gap represents a critical oversight in physician education and wellness programs.

Historically, residents and fellows were offered the same benefit levels across carriers, regardless of their income or whether they had employer-provided group disability benefits. Today, that landscape has changed, creating more opportunities and confusion. The “Big 5” carriers—Principal, Ameritas, Guardian, MassMutual, and Standard—now differ in both their base offerings and their “starting practice limits” (SPL), which are available when trainees transition into their first attending role (Table).

Table. Current Benefit by Carrier

These figures often provide higher initial coverage than what an attending might qualify for once carriers begin applying proprietary income-based algorithms. Many new attendings are surprised to discover that their “real numbers,” even with higher salaries, sometimes yield less than the SPL amounts offered at the time of transition. This mismatch underscores the importance of securing coverage early in your career.

Besides the difference in the amounts of coverage these carriers will offer, there are other differences among them. While they all offer a specialty-specific (own-occupation) definition, some have it built in, while others require you to purchase the correct language. How they define their residual/partial disability riders and the cost-of-living adjustment can also vary depending on carrier and product design. You want to ensure that you understand the definitions of your current policy, or if you are considering a new policy, that you understand the potential differences between them.

Understanding policy design

Physicians should be aware of key features that protect their specialty and future income.

Own-occupation coverage: The cornerstone. It ensures you are covered if you are unable to perform your specific specialty, even if you work in a different field.

Future purchase options: Allow you to increase coverage without new medical underwriting as your income grows. This protects against exclusions that could arise from future health changes or complications related to pregnancy. This rider goes by many names.

Residual/partial disability riders: Often more relevant than total disability claims, these provide benefits when illness or injury limits work capacity.

Cost of living adjustment (COLA): Especially valuable for younger physicians facing potentially decades-long claims. It helps benefits keep pace with inflation.

Catastrophic rider: Provides additional benefits if you lose the ability to independently perform two or more activities of daily living or develop severe cognitive impairment.

Non-cancellable, guaranteed renewable policies: Prevent carriers from changing or canceling your coverage as long as you pay premiums.

Employer vs individual coverage

While many physicians rely on employer-sponsored group disability insurance, these policies are often inadequate: benefits are taxable if the employer pays the premium, only your base may be covered, definitions of disability may shift from “own occupation” to “any occupation” after 2 years, and coverage may not be portable. Most define total disability as being unable to perform one’s job and not being gainfully employed. In contrast, individual policies are tailored, portable, tax-free, and allow you to work in another occupation.

The best time to purchase disability insurance is during training. Rates are lower, and discounted resident policies can lock in premiums for life. Women, in particular, face higher premiums (2% to 6% of income vs 1% 3% for men) due to a higher incidence of disability claims. Securing coverage before major health events or pregnancy can prevent exclusions.

A common misconception suggests that residents “cannot afford” disability insurance premiums. In reality, residents cannot afford to forgo this protection. A modest monthly investment protects against losing millions in lifetime earning potential.

Incorporating disability insurance education into hospital-based physician wellness programs ensures that financial well-being is recognized as an integral part of overall wellness. Just as institutions now provide resources for mental health, burnout prevention, work-life balance, and ergonomics, financial literacy, including income protection, should be a standard component of wellness curricula. Introducing disability insurance education during residency normalizes the conversation, reduces stigma, and empowers young physicians to protect their futures at a stage when coverage is most accessible and affordable.

There are benefits for physicians to include financial literacy topics in wellness programs. For residents and fellows, early education may reduce the stigma surrounding income protection discussions, ensure access to affordable coverage, and promote lifelong financial resilience and stability.

Effective integration requires structured educational components within existing wellness frameworks. There can be brief education modules during orientation and with annual training. Expert-led workshops can also be available, where professionals provide guidance. Senior physicians can openly share their experiences and recommendations.

As a retired ob-gyn who experienced disability firsthand, I can attest to both the devastating financial impact of inadequate coverage and the peace of mind that comprehensive protection provides. My own journey has taught me that income protection is not theoretical; it is fundamental to a physician's financial wellness.

Understanding market evolution, recognizing essential policy features, and securing appropriate coverage during training creates the framework for sustainable medical careers. However, individual action alone is not enough. Healthcare institutions must embrace leadership roles by embedding wealth management education within comprehensive wellness initiatives.

The optimal time to act is before a need arises, protect your income, safeguard your future, and preserve the life you have dedicated years to building.