Go Buy Disability Insurance! | White Coat Investor

We’ve spent a lot of time in the last couple of years ensuring that our recommended insurance agents are always doing the right thing for white coat investors. Doing so required learning a lot about the industry that we didn’t used to know. Perhaps the most interesting thing we’ve learned is just how few disability insurance policies are actually being sold to doctors.

Bạn đang xem: Go Buy Disability Insurance! | White Coat Investor

The insurance carriers aren’t exactly volunteering the exact numbers, but we have enough information to estimate it within a few thousand. The fact is not nearly enough of you are buying disability insurance policies.

 

Running Some Numbers

Each year, there are about 21,000 new MD graduates, 8,000 new DO graduates, and 7,000 new dental school graduates for a total of 36,000 new doctors. Not all of them need an individual disability policy. Some didn’t match. A few of them are already financially independent trust fund babies. Many are married to doctors or other high income professionals, and they have reasonably decided to use each other as their disability insurance policy. Some of them have rationally decided that a group policy offered by their employer or professional group is “good enough” and that they aren’t willing to spend any more to get a high quality, portable, level premium, individual policy with a stronger definition of disability and better riders. Some percentage of them are in the military, and they’ve had few issues getting good individual coverage. A small percentage of people have medical issues or interesting hobbies and don’t qualify for any Guaranteed Standard Issue (GSI) policies.

Xem thêm : California wildfires: What to know when filing an insurance claim

Nobody has data on all of this stuff, but let’s use some generous assumptions for each item.

• Total new docs: 36,000
• Didn’t ever match: 700
• Trust fund babies: 300
• Married to another high earner AND comfortable with neither being insured: 15,000
• Happy with their group policy: 2,000
• Military docs: 700
• Medical issues and no GSI available: 1,000
• Total docs who should be buying an individual policy each year: 16,300

How many policies are being sold each year? Less than 1/3 of that 16,300 figure. Maybe less than 1/4 of it. What the heck? Most of our colleagues are running around out there with their greatest asset (the ability to earn a high salary) completely underinsured.

 

Why Doctors Who Need Disability Insurance Aren’t Buying It

Why are they doing that? I’m not sure. I think a big piece is simply ignorance.

I’m doing the best I can. Disability insurance is Chapter 1 (i.e. Step 1) in my Financial Boot Camp book, and it has prominent chapters in the original WCI book and the Guide for Students that we try to give to every first-year medical and dental student every year. It’s prominently featured on the blog and podcast regularly. I don’t know what else to do.

Please, tell your colleagues that they need to buy a disability insurance policy and maintain it until they become financially independent.

Xem thêm : Ohio could soon require health insurance to cover kids’ hearing aids

I think a bigger issue is the hassle factor. Buying disability insurance usually takes a few weeks and at least a phone call or two and an appointment with a medic for a quick physical and blood draw. I’m sure that’s stopping a lot of busy docs. Inertia is hard to overcome.

Sticker shock is probably part of it, as well. Disability insurance is expensive. A policy that provides a $10,000 per month benefit (just $120,000 a year, less than half the income of a primary doc) costs $200-$600 a month. It’s because these policies actually get used. That feels like a lot of money to a resident, fellow, or even new attending.

Mistrust of the financial services industry is also an issue. Who wants to go see somebody and fight off an hour-long whole life sales presentation just to get what you need? And who knows if they’re really doing the right thing for you? Again, we’ve tried to do what we can here. For many years, we’ve maintained (and policed) a list of vetted, active agents specializing in doctor disability insurance. We expect them to do the right thing for every white coat investor, hopefully minimizing this trust issue. They certainly aren’t pushing whole life policies on young WCIers buying DI.

So, let’s figure this out a bit. While our sample is going to be biased (you all are a very different population from doctors at large), let’s ask a couple of questions.

What do you think? What can we do at WCI to double or even triple the number of docs buying policies each year?