Most medical and dental professionals understand the need for Disability insurance. For this reason, the intent of this article is not to explain why you should have Disability coverage, but more so what exactly Disability insurance is, and more specifically why a quality Residual disability rider is so important for private practitioners.
Disability insurance is an insurance product that provides people with a partial replacement of income when an illness or injury prevents them from being able to work and earn an income. Disability insurance insures your income and therefore your eligibility will be impacted directly by your occupation and the amount of money you earn. Most individuals can obtain coverage for 50-65% of their annual income and depending on who pays the premiums, the benefits could be received on a tax-free basis. To describe the parameters in which someone may qualify for a claim, Disability insurance companies use the Definition of Total Disability. As a medical professional or dental professional you want to protect your specialty by having the True Own-Occupation definition, which states, "You will be considered totally disabled if you are unable to perform the principal tasks of your medical specialty, regardless of whether you are gainfully employed elsewhere".
Although the True Own-Occupation definition of total disability is the best available today, it only provides you an "all or nothing" definition of disability, which is why the Residual disability rider is so important to include on your Disability policy. The Residual disability rider expands the definition of disability to include partial disabilities as well. There are many variations of this rider, however the basic concept is that if you suffer a 15-20% or greater loss of income, due to an injury or illness, you are eligible to receive partial/residual disability benefits.
For Private Practitioners however, it goes beyond just having a residual disability rider. Recovery benefits are a part of the residual disability rider that provide benefits for the time frame in which a person is able to return to work 100%, but continues to have at least a 15% loss of income. For Private Practitioners this is especially important because throughout the time of a Disability, many patients will find new care providers. Depending on the duration of the disability, some patients may be loyal but others will not and the chances are likely that even when working 100% of the time, you will experience a loss of income at first. Similar to when you first began your practice and had to build and establish a patient base, you are likely to repeat this when returning from a long-term disability. The question is, how long will it take you to get back to at least 85% of your original income?
There are some insurance companies that limit recovery benefits to a 6-month benefit period, others to a 3-year maximum benefit period and then very few which are willing to provide benefits for the full duration of policy benefit period (normally to age 65). As a Private Practitioner it is important that you protect yourself with the most favorable and comprehensive option - recovery benefits for your entire policy benefit period. Depending on the duration and severity of the disability claim, you could achieve a full recovery within 6 months or it may take multiple years - in either case, you want to make sure your Disability coverage will assist you.