Tag Archives: loss of income

Physicians’ and Surgeons’ Disability Insurance Plans

Preparation is extremely important in the life of a medical professional. Many physicians and surgeons do not enter their respective fields until their early to mid thirties. College years are spent preparing for examinations and the years in residency qualifying to learn how to manage patients. Many young medical professionals experience financial turmoil, accumulating loans and bills as they proceed through years of study. When they begin earning good incomes, most of the time any planning or preparing for disability, loss of income and/or retirement is least likely to be taken into consideration at that stage.

Physicians and Surgeons’ Disability Insurance Plans are designed to ensure that professionals working in the medical field will be able to maintain their standards of living in the event of an injury or illness which results in their inability to work. It is of primary importance that a physician or surgeon’s occupation or medical speciality is properly classified as this classification determines the premium rate. Premiums can vary greatly from one company to another, as different insurance companies may assign a different occupational class to the same occupation.

Some companies feel that if the above-mentioned medical specialists cannot practice their speciality, but decide to work in another capacity earning a similar income, he or she should not be entitled to receive disability benefits. It is wise to purchase a policy which is both Non-Cancellable and Guaranteed Renewable (i. e. contract that cannot be changed and premiums that cannot be raised). (Source: whitecoatinvestor.com)

“Own Occupation” coverage means that you continue to receive monthly income benefits until you are able to perform the specified duties of your speciality. It is not always available to Neurosurgeons, Orthopedic Surgeons, Anesthesiologists, Emergency Medicine Physicians and Thoracic Surgeons. Some companies feel that if the above-mentioned medical specialists cannot practice the specialty for which they were trained, but decide to work in another capacity earning a similar income, he or she should not be entitled to receive disability benefits.

“Loss of earnings” policy has become more common place in the industry today. It typically pays benefits if you are “unable to perform the substantial and material duties of your occupation and you are not working”. Unless your policy contains a residual disability rider, no benefits would be paid if you choose to work in another occupation or medical speciality.

Residual disability means that you are at work and not totally disabled under the terms of your policy, but due to sickness or injury, your loss of income is at least 20 percent of your prior income. This rider also states that if your loss of income were more than 75 percent of your prior earnings, the insurance company would regard your loss to be 100 percent and future benefits would be paid.

Residual disability:  Examples of information that may be required to obtain Residual disability could be tax returns for the past 5 years, monthly profit and loss statements for the past 3 years and perhaps even bank account statements. Basically, aside from all the details asked, if you were working 50 percent of the time that you used to work and you are making 50 percent of your pre-disability earnings, then you would receive 50 percent of your benefit because you had a 50 percent loss of income. In simple terms, Residual Disability Benefits typically begin when the insured is able to return to their regular occupation in a limited capacity but have incurred a loss of earnings of at least 20 percent.

Partial Disability benefits are paid to the insured person who experienced a loss of time or duties due to a partial disability. The person will be eligible for a flat percentage of their monthly benefit which typically works out to a maximum of 50 percent.  What if he/she no longer performs surgery? What if he/she had eyesight that started to fade or was confined to a wheelchair?

A disability is simply defined as an illness or injury that interferes with your ability to work. You want to have a contract that can never be changed or premiums that can never be increased. The definition of a good contract will read: if you cannot perform the material duties of your speciality, benefits will be paid.

With good disability insurance contracts if you could not perform your speciality because of an injury or illness and you engaged in any other occupation you would still receive your monthly benefit. Even if you were making a higher income in your new occupation, you would still receive your monthly disability benefit. Most good disability contracts will have extra policy riders you can purchase. Riders that would allow you to increase your coverage later in life regardless of your health. A residual rider that would pay benefits in the most realistic claim scenario of being partially disabled but still working in your own occupation. A cost of living rider ensures that if you were to go on to claim, your benefit would increase every year to keep pace with inflation. Insurance companies know from claims statistics that most claims involve partial disability where individuals are still working in their own occupation or in another occupation.

High Limit Disability Insurance

“The highest paid player on an NFL team is the quarterback and the second highest paid player is the left tackle because the left tackle’s job is to protect the quarterback from what he can’t see coming”
The is the opening monologue from the film “The Blind Side”.

A study by the University of Colorado performed in 2007 said that the career of a pro football player is about 3.5 years. Baseball players are slightly better at 5.6 years. An athlete may have to quit, when, for example, in the case of Joe Theismann, a 250 pound line backer falls on his leg.  Did he have High Limit Disability Insurance?

What does a player do when he cannot play in games anymore but he has acquired a life of luxury due to his high income? Unfortunately many athletes listen to bad advice and make bad investments. A report in Sports Illustrated stated that 70% of all professional athletes are either broke or have hit hard times within 5 years of ending their playing days.

Professional athletes often need High Disability insurance for:

  • Personal Disability
  • Contract Guarantee
  • Team Indemnification
  • Loss of Endorsement

Here are some examples:

Auto Racing:

“A client is rated based on the type of motor sport, class and medical history” says Adam Bates, vice president of Insurance Services of America, which offers niche insurance including health coverage for amateur and professional racers. “I usually recommend an Accidental Death and Dismemberment Policy, as most life policies exclude racing”.

Laura Hauenstein, president of WSIB Motorsports Insurance, which insures racers, says some of the agents familiar with motor sports will use the Internet to research the driver. If they find they have a history of crashing, rates can be higher.

WSIB offer worldwide 24 hour coverage on and off the track with varying deductibles and multi-year policy terms;

Benefits are paid on a per race missed basis and/or weekly or monthly basis for a driver who due to illness or bodily injury is unable to drive in a race.

Temporary Disability benefits for periods up to 60 months.  Permanent Disability benefits are paid in a lump sum to compensate for future loss of income.

Professional Baseball:

This is an intense contact sport requiring optimum physical health. A player’s ability to perform could be jeopardised due to either overuse or trauma, such as: muscle strain and meniscus tears; hand and wrist injuries; tendinitis, especially of the elbow; rotator cuff tears; “dead arm” and ulnar collateral ligament tears.  In these scenarios, the athletes need High Limit Disability Insurance.

A Disability Insurance Plan for Professional Baseball Players can provide monthly benefits from $1,000 to $100,000 or higher and offer lump sum benefits of $50,000,000 or more.

Injuries in other sports: offering similar benefits for disability:

Basketball:

  • ankle sprains, ligament tears and breaks;
  • knee and foot injuries;
  • muscular tears, sprains and breaks;
  • jammed fingers;
  • stress fractures;
  • deep thigh bruising.

Football:

  • knee injuries including ACL damage
  • concussion and other head injuries;
  • sprains, tears, broken bones, especially to the legs

Hockey:

  • concussion;
  • shoulder and elbow injuries;
  • wrist fractures;
  • lower back injuries;
  • injuries to the hip

Soccer:

  • ankle sprains;
  • achilles tendonitis;
  • concussions;
  • iliotibial band syndrome;
  • muscle cramps;
  • delayed-onset muscle soreness;
  • patellofemoral pain syndrome
  • plantar fasciitis
  • shin splints
  • calf, hamstring and groin muscle pulls and strains.

These plans are used in a number of ways to insure the professional athlete personally or to insure the team of which the athlete is a member as to the financial losses that result from a disabling accidental bodily injury or sickness. Career length varies by the sport in which the athlete performs. Exceptionally high earnings are generated in a short time span making the adequate insuring of the earning potential a primary financial planning process.

Here are some of the uses of those plans:

1. Loss of Future Earnings

A professional athlete can anticipate income levels and probable playing time. A disability can affect the level of income to be earned in the future and a disability can shorten the career period. As an example, an athlete has no income assurance beyond the term period of the present contract. This plan can insure an income should disability shorten the expected career period.

2. Contract Completion

The loss of an athlete by disability puts the team in double jeopardy. Revenue may slip and the team must continue to pay the non-performing athlete. These plans can insure the contracted compensation to the athlete, thus relieving the team of the financial burden.

3. Loss of Endorsements

Endorsement income and fees continue to flow as long as the public remain fans of the athlete. A political statement, a drug involvement, a drunk arrest, a public relations blemish, and the advertiser/endorsers pull back from sponsorship. This loss is also insurable.

4. Cost of Agents/Managers

During periods of disability it is in the athlete’s best interest to continue the use of agents and managers to keep the athlete’s value as an athlete and as a product spokesperson keenly in the minds of those who contract for their services. These costs can be insured.