What to Look for in a Chiropractic Disability Income Insurance Policy
Did you know that according to the Council for Disability Awareness, Long-Term Disability Claims Reviews, 2013, approximately 90% of disabilities are caused by illness rather than accidents, and that 30.7% of existing long term disability insurance claims by cause are due to back and neck pain, arthritis, osteoporosis, and other musculoskeletal/connective tissue disorders? You treat patients every day. What would your day/month/ year be like if the tables were turned and you become too sick or too hurt to continue in your practice? What’s in your disability program?
The conditions for which you treat patients may be the very things that prevent you from continuing to treat patients because you are too sick or too hurt to continue in your practice. What “treatment program” have you put in place to protect your practice and your family if your ability to work and earn an income is affected by a disability?
Important Policy Provisions and Definitions
There are two major types of disability insurance that every chiropractor should consider: income disability coverage, which will protect your paycheck, and business overhead expense coverage, which will protect your business if you aren’t there to bring in revenue. Today we are going to focus on disability insurance that protects your income. We are going to talk specifically about long term disability because it is the disabilities that last 3 months, 3 years, or 3 decades that will destroy your financial future if they are not planned for in advance.
The first thing we want to keep an eye out for is a policy that is guaranteed renewable, and, if possible, non-cancelable. “Guaranteed renewable” means that the insurance company must renew your coverage every year, as long as you pay the premium on time. Insurance companies cannot change the terms of a guaranteed renewable policy but can raise the premium for everyone in the state, everyone who purchased a policy in a particular year, or for anyone in an occupation class like chiropractors. If a policy is non-cancelable it means that insurance companies cannot change the premium rate. It is best to seek out a policy that is both guaranteed renewable and non-cancelable to give yourself certainty when protecting your income.
Definition of “Disability“
The next thing to look for is the definition of “disability.” You want to look for a policy that covers you in your own occupation. An “own occupation” policy will pay benefits if you can’t perform the material and substantial duties of the occupation you held at the time of disability and you are not employed in another field or occupation. As a chiropractor, this is important because there are many low paying jobs you could still do if you become unable to work as a chiropractor. Some plans will give you the “own occupation” definition, but only for a couple of years, and then the definition changes to “ANY occupation.” Under the “any occupation” definition, you must be unable to do any job to collect disability benefits.
A residual disability benefit is the next component to look for in the policy. Does the policy pay a benefit if you can only work part-time due to a sickness or injury? If it does, how does it define being partially disabled? You should only look for a policy that will compensate you for a partial loss of your duties because with most disabilities you lose some, but not all, of your physical ability. Better policies will also pay a benefit even after you are back to work full time but continue to have a loss of income due to the disability. As a chiropractor, if you are out of work or working part-time for 6-12 months, you will likely lose some patients; if your income has dropped significantly, usually over 20%, you should have a policy that will help make up for the lost income.
Another useful feature is the cost of living adjustment (COLA) rider. This will increase your monthly benefit once you are receiving a disability benefit. This is a must-have for doctors in their 30’s and 40’s and can still be valuable for older doctors as well.
A guaranteed insurability rider allows you to purchase more insurance, as long as your income justifies it, without needing to re-qualify medically. This is crucial for younger doctors who have not reached their full income potential.
Other Important Coverage Features
Mental and nervous disorders are usually only covered for a period of time, 12-60 months, depending on the policy. Substance abuse will fall into this category as well. You should understand how long your policy will cover you for different disabilities or disorders.
Recurrent disability is the timeframe during which an insurance company will consider multiple disabilities from the same cause to be considered the same disability. For example, if you have a disability claim due to a back injury following an auto accident, and you return to work and aggravate the injury, you will not have to wait through another elimination period to make another claim if the re-injury is within the recurrent disability window. This recurrent disability period can be as short as 90 days or up to 365 days; the longer the period, the better it is for you.
Know whether your policy is offset by any income from Social Security, pension/profit sharing plans, auto insurance, or other sources of income. It’s important to know if that benefit of $4,000 a month will really be for the full amount or if your additional income reduces the benefit, resulting in a monthly payment of only $2,000. The only thing worse than not having disability insurance and needing it is having a policy and finding out it won’t pay out what you thought it would.
Believe it or not, this isn’t a complete listing of all the details regarding long-term disability insurance. If you decide to purchase a private policy, then you might want to work with an independent insurance agent or a financial planner to make sure you get the policy that best meets your needs.
Christopher Clepp has been an insurance agent for 13 years, works for Strategic Financial Group, Inc and is a member of the International Disability Society and NAIFA (National Association of Insurance and Financial Advisors).