Physician Protection

Physician Disability Planning: Protecting Your $10M+ Asset

Safeguard Your Future Earning Potential

Your future earning potential is your greatest asset. Learn why own-occupation disability coverage is essential and how to layer protection with Section 7702.

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$10M+

Career Earning Potential at Risk

1 in 4

Physicians Disabled Before Age 65

60-70%

Target Income Replacement

Own-Occ

Essential Definition for Physicians

Quick Answer

Your $10M+ future earnings are your greatest asset - disability is the biggest threat to this wealth
Own-occupation coverage is non-negotiable: pays if you cannot perform YOUR specialty even if you could do other work
Group disability rarely exceeds $10K-$15K/month - individual coverage is essential to fill the gap
Purchase during residency to lock in low rates and insurability before any health issues develop
Section 7702 living benefits add a third layer of protection for chronic/critical illness beyond traditional disability

The Opportunity

Why This Matters for Physicians

Your Earning Potential is Your Greatest Asset

A 35-year-old physician earning $350K has $10M+ in future earnings over a 30-year career. Disability is the greatest threat to this asset. A surgeon who loses fine motor control, an anesthesiologist who develops tremors, or a radiologist with vision problems cannot practice - even if they could work in other fields.

Own-Occupation Definition: Non-Negotiable

True own-occupation coverage pays if you cannot perform YOUR specific specialty - even if you could work in another field. A surgeon with hand tremors receives full benefits even if they could teach or do administrative work. Any occupation definitions only pay if you cannot work AT ALL. For physicians, own-occupation is essential.

Group vs Individual Coverage Gap

Employer group disability typically covers 60% of base salary to $10K-$15K/month maximum. A $400K physician receiving $10K/month (30% replacement) faces catastrophic income loss. Individual policies fill this gap with own-occupation coverage, higher limits, and portable protection that follows you between jobs.

Section 7702 Living Benefits

Modern Section 7702 policies include living benefit riders that accelerate the death benefit for chronic illness, critical illness, or terminal diagnosis. This creates a third layer of protection alongside disability insurance - accessing cash value tax-free during health crises without surrendering the policy.

Implementation

Proven Strategies

Layered Disability Coverage Strategy

Build comprehensive protection: Group coverage as base (often free or subsidized), individual own-occupation policy to fill the gap, and Section 7702 living benefits as third layer. Target 60-70% total income replacement with own-occupation definition.

Best for: All practicing physicians - this is foundational protection for your earning potential.

Example:

$400K income: Group covers $10K/month (30%). Add individual policy for $10K/month own-occ. Section 7702 living benefits provide additional chronic illness protection. Total: $20K/month disability income + living benefit access.

Specialty-Specific Coverage Selection

Surgical specialties (orthopedics, neurosurgery, cardiothoracic) need true own-occupation that pays for inability to perform surgery even if you could do other medical work. Procedure-heavy specialties should prioritize policies with strong own-occupation language and no transitional own-occ limitations.

Best for: Surgeons, interventionalists, and procedure-heavy specialists whose skills are highly specialized.

Example:

Orthopedic surgeon with $600K income: Secure own-occ policy that specifically defines disability as inability to perform orthopedic surgery. Do not accept policies that transition to any-occupation after 2-5 years.

Resident/Fellow Early Lock-In Strategy

Purchase individual disability insurance during training when you are young, healthy, and rates are lowest. Most policies allow future increase options to add coverage as income rises without new medical underwriting. Lock in insurability before any health issues develop.

Best for: Residents and fellows who want to lock in coverage while young and healthy.

Example:

Resident at 28: $5K/month policy with future increase option. As attending, exercise option to increase to $15K/month without medical questions. Health issues at 35 would have made new coverage expensive or impossible.

Avoid These Pitfalls

Common Mistakes

Relying Only on Group Coverage

Employer disability rarely exceeds $10K-$15K/month regardless of income. For a $400K+ physician, this is catastrophic underinsurance. Group coverage is a nice base layer, but individual own-occupation coverage is essential for true protection.

Accepting Any-Occupation Definition

Any-occupation policies only pay if you cannot work AT ALL. A surgeon with hand tremors who could teach receives nothing. Always secure true own-occupation coverage that pays if you cannot perform your specific specialty.

Waiting Until Attending to Purchase Coverage

Health issues can develop at any time. Purchasing disability insurance during residency locks in coverage at young, healthy rates. Waiting until attending means any health issue discovered during training could result in exclusions or denial.

Questions

Common Questions

Here are the most common questions we receive about this topic.

Ask Your Question

Target 60-70% of gross income from all sources combined. If group covers $10K/month and you earn $400K ($33K/month), you need additional individual coverage for $10K-$13K/month. Remember: individual policy benefits are tax-free if you pay premiums with after-tax dollars.

True own-occupation pays benefits if you cannot perform the substantial duties of your specific specialty, regardless of other work. You could work as a consultant, administrator, or in another field and still receive full disability benefits. This is essential for physicians.

Yes, absolutely. Rates are lowest when young and healthy. Most policies offer future increase options allowing you to add coverage as attending without new medical underwriting. Health issues during residency could make attending-level coverage impossible to obtain.

Living benefits accelerate the death benefit for chronic illness, critical illness, or terminal diagnosis. This provides additional protection beyond disability insurance - accessing potentially hundreds of thousands tax-free for conditions that may not qualify as disability but significantly impact your ability to work.

Individual disability policies are portable - they follow you regardless of employer. Group coverage typically ends when you leave. This is another reason individual coverage is essential: job changes, practice transitions, and career moves do not affect your protection.

Ready to Protect Your Greatest Asset?

Every physician's situation is unique. Let us help you build comprehensive disability protection that safeguards your earning potential.

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