Without Disability Insurance, Medical Residents Take a Huge Gamble

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Originally Posted On: https://www.doctordisability.com/without-disability-insurance-medical-residents-take-a-huge-gamble/

Dr. Jennings, a fourth-year resident in plastic surgery, was at home in her kitchen. While unloading her dishwasher, she dropped a coffee cup. She reached down to try to catch it before it hit the floor, but the cup broke, and a large shard of glass bounced up and severed a nerve and tendon in her right thumb.

She had years of medical school debt, not to mention an investment of untold hours of studying and sacrifice. On the cusp of realizing her dream, she found herself out of work, unsure if she’d regain mobility—or even feeling—in her thumb.

You’re Already Worth Millions

As a doctor, you have the potential to earn a lifetime income in the tens of millions of dollars. That doesn’t count the assets you can buy with your money, like securities and property, and the way those assets will appreciate over time.

And, you could be one unexpected injury or stray contaminated needle stick away from losing it all.

Consider the dishwashing plastic surgery resident mentioned above. The average plastic surgeon, according to the Medscape Physician Compensation Report 2019, makes approximately $471,000 a year. Over a 35-year career, she would have made more than $16.4 million. If she invested 5% of her annual income in securities, earning a very conservative estimated return of 6%, she’d make almost $3 million additional dollars before her retirement.

When you’re scraping your way through resident life, it’s not always easy to see yourself as someone who’s already a millionaire. The fact is that if nothing goes wrong, and if life rewards the hard work required to become a doctor and sustain a career as one, you’re headed toward a pretty secure financial future. You’re not just setting yourself up for success; you’re building a secure future for your children and grandchildren.

The cost of a disability insurance premium doesn’t seem so expensive once you appreciate what you’re protecting.

You’re Investing in Student Loan Protection

Are you counting on your student loan debt being forgiven if you’re disabled during your residency? Bad news: Most loans aren’t forgiven unless you’re completely and permanently unable to work. It doesn’t matter that you’ve sunk hundreds of thousands of dollars into your medical education—most medical students launch their careers with nearly $200,000 in student loan debt. Even if you can’t practice medicine, if you can do any job, you’ll be expected to repay those student loans.

Imagine you’ve borrowed $200,000 combined for undergraduate work and medical school. To pay that loan off in 20 years, assuming an unsubsidized loan interest rate of 6.08%, you’ll have to make payments totaling $1,442.11 per month. That’s almost a mortgage. It’s multiple car payments—and you’ll have no choice in the matter as long as you can do some kind of work. You won’t be setting yourself and your kids up for success. You’ll be struggling for the rest of your life.

With a disability policy for medical residents, you’ll be better positioned to repay those loans if something happens to you. Again, when you think about what you’re protecting, it’s much easier to see that monthly premium for the great investment that it is.

Disability Insurance Will Never Be Cheaper

Disability insurance premiums are based on your age and your health at the time you purchase your policy, and that premium won’t, in most cases, increase once you’ve locked it in. You’ll never be younger or more healthy than you are right now, and the premium you pay will never be lower.

Even better, when you buy now, you have the guaranteed option to purchase more insurance in the future without an additional medical exam. You can start out with a small resident policy now, and then, as your career trajectory goes upward, increase it to protect your much higher attending income – regardless of your health at the time. As long as you’re still working and you qualify, it won’t matter what your physical condition is once you’ve purchased your initial disability policy. That’s a huge advantage to making the purchase now rather than waiting until you get your first job.

Even better than that: Many insurers give discounts to residents and fellows. Buying now, in addition to giving you priceless peace of mind, could save you thousands over the course of your career.

Disability Insurance Means Having Options

When doctors want to make the leap from working for a hospital or large health group into their own private practice, one of the benefits they lose is their employer’s group disability insurance. Starting a practice is already a huge investment, and it’s a big professional risk.

If you already have your own disability policy, it makes you a lot less dependent on your current group disability benefits; you can feel a lot more confident when you’re ready to launch your practice. By making that investment now, you’re setting yourself up to truly own your future and your career trajectory.

The Value of Prevention

Most people don’t become doctors just for the money; they want to pursue their intellectual curiosity and live a life that aligns with their ideals. One of the biggest benefits of becoming a doctor, however—and one of the rewards for the sacrifices you make during residency—is the great financial future that awaits you and your family.

Preventing something from happening to that future is a lot better than seeing your future income slip away if something unexpected happens. After all, no one has to tell a doctor that prevention is better than trying to cure something later.

Invest in your personal “ounce of prevention” today by purchasing your first disability insurance policy.

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