Insurance, Financial, Wellness

Heart of EM: Protecting Your Greatest Investment

Doctors wouldn't think of going without malpractice coverage, but far too many fail to insure themselves against an even more expensive risk. Do yourself and your loved ones a favor and get your disability and life insurance in place STAT!

I was recently approached by a physician who wished to thank me for telling him to buy disability insurance. Since I tell every non-financially independent doctor to buy a policy, I did not think the advice was particularly remarkable. His story and the timing of his purchase, however, were remarkable.

We share his story (anonymously) as an example of the value of preparedness. This could have happened to any one of us.

In His Own Words
On April 21, 2019, I was caught up in the excitement of an upcoming medical mission trip to help the people of Madagascar. I had spent the past 6 months working tirelessly planning, fundraising, and acquiring supplies in preparation for this special trip. It was now only weeks away, and other than a few minor details, we were ready.  

At this time, I was approaching the end of my second year as an emergency medicine resident. My confidence was building, and I had a number of exciting things going on professionally and personally. Life was really good.  

I was in the middle of a toxicology rotation for which I commuted by train each day. On April 22, as I was getting off the train, I noticed my left leg felt "asleep." I just shook it off and went on with my day. However, the feeling never went away. The next day when I got on the train the strange sensation persisted in my left leg, and now I noticed a similar feeling on my left flank. Later that day, I felt it on the left side of my face. At this point I wasn’t sure if I was crazy or if something was actually going on. I started calling all my doctor friends and colleagues. We went through the differential ad nauseum, but given the lack of any objective abnormalities I decided to just watch and wait.

On April 24, I was awake at 5 am and ready to catch my train, but now the entire left side of my body from head to toe had a tingling sensation. At this point I was pretty sure I wasn’t just crazy, so I went to the emergency department where I worked. I was greeted by nurses, staff, techs, co-residents, and attendings whom I knew well from my previous 2 ½ years of training. I received exceptional care from concerned friends and colleagues. I had developed very mild weakness in my left leg, and I got a full stroke work-up. By the end of the day I had an MRI, which showed a small lesion on my right pons. To complete my work-up and manage unforeseen complications, I spent 5 days in the hospital.

I'm an avid rock climber, biker, outdoors enthusiast, and I've never had anything close to a major medical problem. I'm young and healthy, careful about my eating and exercise habits. I've tended to countless patients as a resident and medical student but never thought I would be the one on the stretcher. I'm so grateful for what I learned from the time I spent as a patient. However, this article isn't about my medical journey, but recognizing our mortality and preparing for our future.

Serendipitous Knowledge
Just 2 weeks prior to this event, I had begun reading Dr. Dahle's new book, The White Coat Investor's Financial Boot Camp. During my 1-hour commute each way by train I would study and take notes on this book. The first chapter is about long-term disability insurance, and the second chapter discusses life insurance. Dr. Dahle emphasizes how important this insurance is for protecting ourselves and our loved ones from catastrophe. I already had a sufficient life insurance policy, but long-term disability insurance was much more complicated and expensive.

After reading this book, I knew I needed the financial protection of disability insurance. Like many others, I did have a small amount of long-term disability insurance through my hospital as a resident, but the more I read the more I realized this coverage was desperately insufficient. I organized my notes and called my insurance agent. I was able to approach this phone call with educated questions and the basic idea of what I needed to protect myself as a physician, father, and husband. Thanks to what I had learned from that first chapter I felt confident the new policy I purchased would provide appropriate coverage at a fair cost. In just a few short days I had confirmation that my policy was active. I paid my first premium for this policy on April 24, which happened to be the day I began having symptoms.

Unfortunately, once you need to make use of disability insurance it’s too late to purchase it. If I tried to apply for coverage today, I would likely be denied or wouldn't be able to get the coverage I needed for a premium I could afford. I recognize I was extremely blessed to have purchased a policy when I did. Life is full of the unexpected, both good and bad. We won't know the future, but we can take steps to prepare. Each of us has family, friends, and/or have personally experienced tragedy that has impacted their ability to financially succeed and provide.

I'm extremely humbled to have the opportunity to team up with Dr. Jim Dahle, founder of The White Coat Investor, to share my story and provide you with the tools you need to protect yourself, your loved ones, and your future. We have invested so much and sacrificed even more in our calling to provide care for those in their worst possible moments. However, we rarely stop to think about who will care for us or our loved ones if tragedy strikes. The truth is that no one will do it for you, and it’s your responsibility to provide this necessary protection.

How to Protect Your Greatest Investment
If you have enough money to live and provide for your dependents for the rest of your life, you likely have no need for disability or life insurance. However, that's not the case for most people who work for a living. Young physicians need to buy disability insurance, and if anyone else also depends on their income, term life insurance. Physicians, including resident physicians, become disabled all the time. Sometimes the disability is only partial or temporary, but other instances may be complete and permanent. Either way, protecting your decade-long investment in medical knowledge and skill is one of the most important pieces of your financial plan. Think about how much money is at risk. If the average emergency physician makes $375,000 per year for 30 years, a disability could cost you more than $11 million!

Understand Your Options
Compared to life insurance, disability insurance is complicated; life and death is black and white. Sure, as emergency physicians we know there is a little gray there, but it generally only lasts a few minutes. That is not the case for disability. Thus, you want a disability insurance contract that has the strongest possible definition of disability, with the least amount of wiggle room for the insurance company. For a doctor, that means a true own-occupation, specialty-specific policy from a company such as Mass Mutual, The Standard, Ameritas, Guardian, or Principal.

Besides a strong definition of disability, you also want to make sure the policy has a partial/residual disability rider that will cover partial disabilities and continue to pay benefits as you recover.

Young physicians, particularly residents, should also consider buying a Future Purchase Option Rider (so you can buy a larger benefit later even if you develop a pontine lesion or take up rock climbing) and a Cost of Living rider, so your benefits will go up with inflation over the years in the case of a long-term disability.

Disability insurance, because it is frequently used, is not cheap. Expect to pay between 2% and 6% of the monthly benefit amount in premiums (ie, $100-300/month for a $5,000/month benefit). However, it will never be cheaper for you than right now when you are young and healthy. While it is true that you are less likely to become disabled now, when you are young and poor a disability is much more of a financial catastrophe than it will be later. The consequences (and thus the benefits of a lifelong stream of income despite being disabled) are simply larger at this stage of life. It is best to purchase this policy from an independent agent who sells hundreds of them each year. They can help you understand what you are buying and provide the best possible recommendation for your age, gender, state, specialty, medical condition, and hobbies.

A Note About Life Insurance
Compared to disability insurance, buying life insurance is easy. Most young doctors with dependents should buy $2-5 million in 20-30 year level premium term life insurance from a reasonably reputable company. You can usually use the same agent you bought disability insurance from. If they recommend whole life insurance to you as a resident or young physician, get a new agent. The good news is term life insurance is much cheaper than disability insurance. A 30-year-old healthy female can buy $1 million of coverage for just $520/year.

Take-Home Points

  • Disability insurance will never be cheaper for you than it is right now.
  • By the time you need this type of insurance, it’s too late to purchase it.
  • Doctors wouldn’t think of going without malpractice coverage, but far too many fail to insure themselves against an even more expensive risk. Do yourself and your loved ones a favor and get your disability and life insurance in place STAT!

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