Doctors on Disability and Why You Need Disability Insurance

INTRODUCTION

This is the White Coat Investor podcast where we help those who wear the white coat get a fair shake on Wall Street. We've been helping doctors and other high-income professionals stop doing dumb things with their money since 2011.

Dr. Jim Dahle:
This is White Coat Investor podcast number 398 – Doctors on disability and why you need disability insurance.

This episode is brought to you by SoFi, helping medical professionals like us bank, borrow and invest to achieve financial wellness. SoFi offers up to 4.6% APY on their savings accounts, as well as an investment platform, financial planning and student loan refinancing, featuring an exclusive rate discount for med professionals and $100 a month payments for residents. Check out all that SoFi offers at whitecoatinvestor.com/sofi.

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QUOTE OF THE DAY

Our quote of the day today is a Japanese proverb, “Money grows on the tree of persistence.”

Thanks for all of you out there. We're glad you're with us. Without an audience, there is no podcast. And without you out there doing the important work that you do, there is no medical system either. I'm particularly grateful for the medical system this year. Today, we're going to be talking about disability. And there's a lot of docs out there who are very grateful for the medical system as well. So, if no one said thank you to you today, let me be the first.

First years out there, I don't care what's your first year in, medical school, dental school, some other professional school. We have a champion program, whitecoatinvestor.com/champion.

What is the champion? Well, there's one in each medical school, dental school, etc, class. Your job is to pass out copies of the White Coat Investor's Guide for Students. We'll supply the copies. All we need is your mailing address. Seriously, that's all you got to do to be a champion. And you will save your classmates literally millions and millions of dollars over the course of their lives. You can sign up for that at whitecoatinvestor.com/champion.

This program is going to run through March 16th. We need time to print the books, get them out to you and for you to pass them out before school ends. So we got to have a deadline in March. But you can do it as soon as possible. The sooner your class starts becoming financially literate, the more benefit they're going to derive from that. Thanks for those who have already signed up. If you haven't been handed a book yet and you're a first year, that's because no one has signed up in your class. You need to step up and be the champion. It's not hard, I promise. And you can be the hero.

Okay. In this episode, we're going to interview three different people. The first two are docs, docs who have become disabled. And they talk about their real life, what it's like, and their real policies, the policies they bought and now have to deal with. The upsides and downsides of those policies.

The third guest is Matt Wiggins, who is one of our recommended insurance agents that can help you get individual disability insurance coverage. This episode was actually supposed to run last August, and I blew it by becoming disabled myself. I fell off a mountain in the Tetons, and I've essentially been dealing with a short-term disability since. By the time you hear this, I'm back at work. In fact, I might even be playing hockey again and even doing procedures again. But it's something I've been struggling with recently.

But at any rate, the reason this didn't run in August was because we couldn't do the third interview because I literally was in the ICU instead of here in this studio recording that interview. So I'm sorry, this is a lot later than we wanted to give you this information, but I think it's still just as important and frankly just as timeless as it ever has been. It's certainly just as important in December as it was in August when we were hoping to run this episode in the first place.

My apologies for the delay, especially the two people I interviewed who were wondering what the heck happened to the interview they did. But I think this is an important episode with really important information in it, so I hope you enjoy it.

AN ORTHOPEDIC SURGEON’S REAL LIFE STORY ABOUT DISABILITY

All right. We've got a guest on the White Coat Investor podcast today. It's a doc who is going to remain anonymous, but he's experienced disability in his career. And we're going to hear his story and talk a little bit about some of the decisions he made along the way and how that's affected him at this point. So let's start with you just telling your story for now.

Speaker:
Sure. Well, thanks for having me on here, Dr. Dahle. I appreciate it. I've listened to several of the podcasts in the past and have learned a lot from you guys, and hopefully my story can help educate some others here.

I'm an orthopedic surgeon. About three years, four years out of training, I started to feel like my left hand wasn't quite as nimble as it used to be. For instance, if I was to shake my hands out after I wash my hands to kind of get the water off them, they just wouldn't move quick enough. Or if I was trying to tell somebody to cross the street, I couldn't do that sign to kind of wiggle my hand to give them the free to cross the street.

I had a little concern that maybe I had some nerve damage or something like that. I went and saw a partner of mine who's a hand surgeon. He sent me to get an EMG. And as I saw the neurologist during my lunch break, she said she had concerns for Parkinson's disease, which took me as a big surprise. I didn't expect to hear that. And she sent me on to see a movement disorder specialist who confirmed that almost immediately upon seeing me.

But fortunately, I was able to be treated with medication for several years and continue my occupational demands without difficulty. I had to inform my administration, of course, and they were able to make sure that from a disability standpoint and from a liability standpoint that I was still employable. And fortunately, I was able to stay on staff.

In terms of a disability and insurance standpoint, I had looked into individual policies as I started to experience these symptoms. But then as I started to read into some of the fine print, I'd already had documentation of having some of this stuff going on. I don't think I was even a candidate to get an individual policy at that point. But I was lucky to have a couple of policies by my employer that would provide for a significant amount of income after disability and that would be a long term plan until age 67.

I'm working on that right now. I'm still in the short term disability. But to go back to my story here. As I continued to operate, I started having a sore throat around the holidays last year. And in January, I was diagnosed with tonsillar cancer. During the spring, I underwent treatment for that with radiation and chemotherapy. And that's still an ongoing process. But my short term disability policy is a good policy that allowed me to have one year of my full contracted pay as I dealt with this during the holding period for my long term disability policy.

Currently, I'm collecting my full paycheck while I recover from the cancer treatment. And I'm going to have to go through some more treatment here in the coming weeks because it has metastasized to the other side of my body based on the recent PET scan.

In terms of my long term policies, as we know, those things can be pretty complex in terms of the way that they read out. One of my policies is a smaller policy and it is defined as an own occupation policy. I hope that that doesn't cause me much of a headache moving forward.

My other policy is the larger of two policies. And that has some provisions for what they define as regular occupation period, which is two years, and then it's gainful employment. The way that's defined is, if they can find me a job, I get paid 80% of my stated income on my definition of benefits, and I get a decrease in my payment. And fortunately, as a high income earner, that number is set at a pretty high bar.

Depending on how difficult these insurance companies are, it might be difficult for them to find a job that meets that 80% threshold. But I've just started the process of working through the long term claim and submit some paperwork for them. So, hopefully that works out in my favor.

Dr. Jim Dahle:
Yeah. Let me summarize. You came out of training at 38. At 40, you were diagnosed with Parkinson's. At 43, you were diagnosed with throat cancer. Your disability coverage was all employer provided. They provided a short term policy, which sounds like it's pretty good, a year of your full pay. And then a couple of long term disability policies that may not be quite as good. You're still sorting out exactly how bad they may be, but you're not quite yet at that period. You're looking at what? About a 50% pay cut when you go on long term disability. Is that right?

Speaker:
Yeah. As the employer paid policies are taxable, I will look at about a 50% decrease in take home pay.

Dr. Jim Dahle:
What are your thoughts on the coverage you chose to get? Do you have regrets about not getting individual policy as a resident or right as you came out of residency or anything like that? Are you happy with the policies the employers provided? It sounds like you've got at least some worries about those.

Speaker:
I do. Obviously, in hindsight, I would have liked to have more coverage. The thing about those individual policies is they are quite expensive. And I did get some quotes on them at the time. It seemed expensive to me. But looking back, I certainly would have loved to have some more coverage.

I am fortunate. While the 50% pay cut is a significant chunk, baseline was pretty good for me too as well. I'm going to be pretty comfortable living off the disability insurance coverage that I have. And I also have discussed with my insurers that I can still work in an environment where I can perform orthopedic clinical medicine and still get the benefit of the orthopedic surgeon. That is defined by the inoccupation rider. That is if I do work and just seeing patients in the clinic and treating them medically or referring them out to surgeons, that I should be still able to be getting my benefit.

Dr. Jim Dahle:
Is that going to apply to both of your policies or just the one?

Speaker:
It should apply to both. And I've expressed that specifically with both of them. And they've given me positive feedback on that. Now, as to whether or not that holds true once the time comes for them to pay, we'll see. But so far, so good.

Dr. Jim Dahle:
Yeah. Are there other people depending on your income or are you single?

Speaker:
No, there are other people depending on income. Yes. I've got a wife and a kid, seven-year-old.

Dr. Jim Dahle:
The most important thing I've told people about disability insurance in the past is to have something rather than nothing. And when you realized you weren't going to be able to work, how did that feel knowing you had something in place?

Speaker:
Definitely reassuring. The fact when you train for X amount of years, I was 17 years out of high school in terms of my further education, my training, my residency and fellowship, that I got to this. And to have it stripped away five, six years into your career is devastating. And certainly you get used to living the lifestyle that you have when you're making a certain income. And then to have it taken away from you is tough. To know that there's some sort of security blanket is a big deal.

Going back to talking about whether or not I would have any regrets in terms of not getting further disability, absolutely yes. In fact, I do share with my colleagues, even non-medical professionals, that it's important to get coverage because a banker or a finance guy or anybody who's a high-income potential can lose their job at any time and not expect that. You don't have to be a surgeon to make a lot of money and to count on your skills to pay the bills. I would definitely recommend an individual policy having looking back.

Dr. Jim Dahle:
Yeah. Have you had to get an attorney involved or anything to get your benefits or have they just been the insurance company paid as you expected?

Speaker:
That's a great question. Once I found out I had the first diagnosis, I immediately contacted my contract attorney who referred me to a specific attorney who works specifically with doctors with disabilities in terms of insurance policies. He's kind of dialed in to this subspecialty and he's been great to work with during this process and guided me through.

Luckily he's made sure that I've been ahead of the game during the process to make sure that my documentation for my providers is on point and that I'm not missing anything for when they ultimately do decide to argue. Because with these policies being employer-provided, they are governed by ERISA, which is a governmental standard that apparently gives the insurance companies the benefit of the doubt in most of these arguments. So we have the burden of proof upon the insured.

Dr. Jim Dahle:
It's a serious downside of group policies like that, isn't it?

Speaker:
It is. I'm working through the process of submitting the long-term claim. Fortunately, I have about six more months until that policy kicks in. I'm submitting a boatload of paperwork to them and keeping my fingers crossed that they follow through.

Dr. Jim Dahle:
Yeah. Medically speaking, what's the likelihood of you recovering and going back to operating?

Speaker:
I think my operational career is over. Unfortunately, I don't know if it was the shock of the treatment or the cancer itself or the Parkinson's advancing or me just getting old, it's just too inconsistent with the way my meds are, with the way I respond to my meds. Certainly when I'm medicated well, I can do anything. But when they wear off, it's very hit and miss. As a safety precaution, we decided to hang that aspect of my career up.

Dr. Jim Dahle:
But still the possibility of doing non-operative orthopedics is still out there.

Speaker:
Yes. In fact, I've been offered a job in doing that. This is something that we're working through a contract session on now. So, that's positive.

Dr. Jim Dahle:
Yeah. Now, if you go back and end up working some amount of time, part-time, full-time, whatever, as a non-operative orthopedist, presumably you'll make a lot less money. Say you're making 50 percent less. What do you expect these long-term policies you have to pay in the event that that's what you can do?

Speaker:
Well, based on my discussions with them, I would expect them to pay their full amount because the way that the definitions are listed in the policies is that I can make up to 80% of my income with the benefit from disability as well as my employment income and not get a pay cut. I don't think I'll cross that threshold with this part-time work, but I would expect to be able to get my full benefit from the disability policy and then my earnings from the employment.

Dr. Jim Dahle:
Yeah. That's fortunate. Because that'd be more than 100% of what you were making before. But it sounds like they're considering a non-operative orthopedic surgeon a different specialty than operating.

Speaker:
Right. Because my policy is defined as an orthopedic surgeon. And in my job description, it says I have to be able to perform surgery.

Dr. Jim Dahle:
Very cool.

Speaker:
That's what they're going off of.

Dr. Jim Dahle:
Well, I'm happy to hear that. I'm glad you have some coverage. Even if you have some regrets on the amounts or the type of coverage, having something is way better than having nothing. We wish you all the best in being able to pursue your career to the best amount that you can. Thank you for coming on the podcast and being willing to share your story.

Speaker:
Appreciate the opportunity. Good luck to everybody out there. Thanks.

CARDIAC SURGEON GOES ON DISABILITY

Dr. Jim Dahle:
All right. Our guest on the White Coat Investor podcast is Joe. Joe's had quite a lengthy career and has had some experience with disability that I think would be worthwhile to have you hear about. Joe, thanks for being with us. Let's hear your story briefly about your career and your interactions with disability insurance and with disability.

Joe:
Sure. Well, thanks for having me on, Jim. When I first went into practice back in the late 90s, the group I joined didn't have their own insurance. I had to buy my own disability and life insurance. I bought a term life tenure, like a flat rate policy until I was able to finance my own insurance.

And then the disability, I forget at the time, but it was like a $12,500 a year policy if you became disabled, which I felt at that time, disability was more important than the life insurance.

Dr. Jim Dahle:
Was $12,500 a month or a year?

Joe:
A month at that time. This is back in the late 90s. Again, the salary, I was more in line with my salary at the time as a cardiac surgeon, just coming out of training. I don't remember the details of the policy at all.

And then fast forward five or six years later, I became an employee of a large healthcare system in Pennsylvania, and they offered both life insurance as well as a disability policy. Our disability policy, every employee has to have it. They give it to every employee. It comes out of your paycheck tax after taxes. The benefit becomes a tax-free benefit. And then they give you a credit in your paycheck every month for the disability policy. I think the premium was about $200 a month at the last I checked. This is maybe a year or so ago.

Anyway, I was plugging along, operating every day, loved it. I loved what I did as a cardiac surgeon. It was a very enjoyable career. And about two years ago, I just had some back pain, low back pain. I was dealing with that. I was wearing a brace, having a chair behind me in the OR. And then started working on my core. And then I had an injection, a facet joint injection, which helped my low back pain. I kind of took that away.

And then three months later, May of 2023 or April of 2023, I woke up with neck pain, severe neck pain, burning in my shoulder, couldn't sleep. Talked to the pain doc who did my lower back, and he put me on steroids, which kind of took it away. It took away the pain. But then a week later, I came back, operated two days in a row, and it came back, and it got worse. And had another injection, which made it worse. And then I had excruciating pain.

I eventually got an MRI, which showed severe stenosis, C3 to C7, with some cord compression, they thought. Saw a spine surgeon, tried physical therapy, but the pain just got worse over the next two months. And I couldn't even stand. Pretty much right after the MRI and the pain I was having, I couldn't sleep. I essentially, at that point, told my boss I can't operate at this point.

In our policy we don't have a short-term disability. We get six months of salary continuance, which is a really nice feature. So I did that. And about two months later, ended up with a three-level ACDF, anterior cervical dissecting with fusion. And the surgeon said, with that type of surgery, that I'd be risking my worst, speeding up the process, even because I still have some residual disease in my neck that I shouldn't operate.

And after a few months of recovering and then getting back into therapy, talking to the surgeon, I just decided, and some other people, that it's probably best that I go on a long-term disability. Now, our policy is a two-year occupation-only policy. So, if you can't do your profession, which for me is cardiac surgery, then the benefit is full. Well, it's not full pay. They have a maximum, depending on your salary, a maximum benefit you can get. And then after the 24 months, they have an incentive to work policy. And depending on if you can go to work or not.

During that time, after about three or four months, about a month or two before my six months ended, they put the application in through New York Life. Pretty much all of my documentation got approved quickly. Some of the things I would tell people is, number one, keep a copy of all your records, any procedures, any doctors visits, whatever you do, physical therapy, because they're going to want to see it. They're going to want it all. And it's ultimately your responsibility to provide it. They'll ask for it, but you know how doctors are with medical records. So make sure you keep a copy of that.

And then the second best advice I got from this Dr. Pearson, who has her own disability insurance company, is she had a mutual friend. She just gave me a phone call. She said, get the actual policy from your company, not just the brochure that they give you with your benefits package, but the actual policy, which ours was 36 pages of medical, legal, insurance, jumbo stuff that I've read multiple times with some understanding, but very challenging to read.

And they also made me apply for Social Security. Pretty much right off the bat, I had to apply for Social Security. And to get Social Security, you have to have two conditions. You have to have worked five out of ten quarters, and somebody clarify you that you cannot work.

I put the application in, they sent me for an IME, and about four or five months later, I actually got approved with Social Security, which I really wasn't kind of looking for, because I don't want to take my Social Security benefit until I was age 70, as you've recommended in some of your…

Dr. Jim Dahle:
But this is Social Security disability you're applying for.

Joe:
Right. But then you're locked in for that rate. Social Security, what I'm getting now, I'm locked in now for the rest. I can't get waived until I'm 70. So that rate you get from Social Security, I'm locked in for the rest of my life.

Dr. Jim Dahle:
I'm not sure I was aware of that. I'll have to look into that more carefully.

Joe:
Yeah. Please do. That's just the way I understood it. And that's why they explained it, that it says now this is the benefit I get. That's what I'm locked in for life. I didn't realize that either. Please let me know if it isn't, but that's the way it is.

And then also health care benefits. After our company, they gave us a full year of medical and dental benefit. One full year from May, my benefit ended. And then you can either get COBRA, or you can go online. Pennsylvania has their own Affordable Care Act, which you can get some discount on your health care benefits. I need benefits for myself, my wife, and my son, who's still in college. My other two children are older and off the payroll, as I like to tell them.

Again, the biggest other thing is the disability check is tax-free. I don't have to pay taxes on it because it was paid with after-tax dollars. And then when you fill out the Affordable Care Act for Pennsylvania or any of these, because the person from the penny said, “No, that counts.” But then when I actually talked to the health plan person, they said, “No, it's only the income that you will show on your tax return.” You have to really make sure you're getting the appropriate information. I think that's what's so great about your sites and your blogs is you do have a ton of information. That's very, very beneficial. That's kind of where I'm at.

I think the other thing that I know you mentioned in other of your posts, I read your blogs pretty much daily, is that one part is financial. The other part is emotional. Right now I'm just focused on getting healthy, trying to work out, go to therapy, strengthen my core, do stuff for my neck. But it's hard to replace that high of being involved in patient care, saving lives, operating. There's just not a things that can replace that. I am a little bored.

Dr. Jim Dahle:
You've experienced a forced retirement earlier than you were planning to retire, essentially.

Joe:
Yeah, pretty much. Yeah. I was a little burnt out anyway. Health care is getting tougher and having so many lives in your hands every day was getting was getting tougher. And as the senior surgeon in the air is getting more and more of the higher risk cases and tougher cases. And then the call, ECMO, we put a lot of people on ECMO, especially with COVID and dissections. And so, it was getting tougher. And then the administrative burden and stuff like that makes health care challenging.

So, I don't know. Right now, number one, I try to plan something every day for myself to have something like today, this is my big thing to do being on this podcast. I'll go work out and do some other things. And try to play a little golf if I could, which I can't play as much as I want, because there's days that I wake up, I get trouble walking for the first two hours, I'm still with my low back issues, still going on. My neck's pretty good. If I'm on the phone or my computer too long, my neck doesn't get tight. That's what reminds me that I know I cannot operate again, even though I would love to go back to do that. But it's kind of where I'm at.

Dr. Jim Dahle:
Now, you mentioned earlier that you had an individual policy at one point, did you cancel that when you went to this new employer?

Joe:
Yeah. I canceled that and the life insurance because by that time, I had enough of my own money saved that if something happened, my wife, who's also a professional, she's a pharmacist, would be able to do okay. But I did cancel that, that other disability policy. I don't remember exactly what it was. I always felt like if I'm able to work, I will work. If you don't really need me, that's just kind of why I enjoy work. I always felt unless I was really, really banged up like why I am now.

Dr. Jim Dahle:
But your story is different from that of others in that you were disabled relatively late in your career. It sounds like you'd already built a substantial nest egg up by that point. Is this disability insurance benefit just kind of icing on the cake for you at this point? Or is this money that you really need to live month to month?

Joe:
Well, they asked Rockefeller, “How much money do you need?” He said, “Just a little bit more.” Actually about a month or two before this happened to me, you had a blog on there about some orthopedic surgeon who lost like a million dollars on their disability policy. I forget the exact story behind it, but it's a benefit they offer.

Dr. Jim Dahle:
I think you got to take advantage of it. We pay into it. All insurance companies are great at collecting money, but I've already gotten about three letters in six months and medical records. “And if you don't do this, we can cancel it.” They just kind of know how to tweak you a little bit. But I still have a son in college. Probably, could I have lived? Yeah, I guess so. I probably had my 4% number.

Yeah. But it gets you there. It made up the difference anyway, and makes things a little more comfortable.

Joe:
Yes.

Dr. Jim Dahle:
Well, it almost sounds like the bigger burden for you has been the transition into an unplanned retirement more so than financial struggle. And it's interesting to hear that perspective because the last interview I did just a few minutes before yours was somebody who got disabled much earlier in their career. And the financial piece of it was a far bigger concern for them. But it's not the same thing getting disabled at 60 as at 35, is it?

Joe:
No, absolutely not. I think it's more important for those people because they don't have the financial unless you come from some real money. Most people don't have that financial security. I didn't even finish my training until I was 38, 36, whatever I was. I guess 36, I practiced for 24, 25 years.

But yeah, I think it's very important early on, especially if you have family and children. And your recent article was explaining the different disabilities with the occupation only. It was very well done. A lot of good information. I forwarded actually another surgeon friend of mine, he has his own disability policy and he keeps it because it's occupation only. And we were talking about that. So I forwarded him here that article, just to hopefully help him explain it.

But yeah, like I said, the two big parts, which you've highlighted are both the emotional part and the financial. It is nice to have time off. This year, last year, I remember it was in the fall and the first Thursday night game, I was able to stay up and watch the whole football game because usually I was in bed at like 09:30, 10:00 o'clock. That was an interesting feeling of being, “I don't have to worry about getting up the next day.” There are some definite benefits to it.

Dr. Jim Dahle:
I think you'd rather have your health though, wouldn't you?

Joe:
Yes, absolutely. There's days that I wake up, I'm in pain, I'm taking Motrin and I'm trying to avoid low back surgery. And even though I have some severe lumbar stenosis there as well, but yeah, absolutely. Yeah. You really don't want to be in the boat. We're promised nothing in this world. So I just try to make the best of it each day.

Dr. Jim Dahle:
Now, if you had been disabled, let's say you got disabled 20 years earlier than you did. Would you have been dissatisfied with this group policy that you have versus an individual one?

Joe:
I think if you get one of those higher occupation only, and that you could still work in addition to that, and they still pay, that's ideal. That would have been ideal. But I think as you've highlighted, they're a lot more expensive for people. But I think that would have been ideal.

Dr. Jim Dahle:
Yeah. All right. Well, Joe, thank you so much for being willing to come on the podcast and tell your story. I think it's important for White Coat Investors out there to realize that there are doctors out there getting disabled at all stages of their career. This is a real risk they face, and I think the statistics are as high as one out of seven of those who buy a physician disability policy end up actually making some sort of a claim on it. We appreciate your time and being willing to share such a personal story with us.

Joe:
Yeah, one comment on that. Yeah, it's clearly an occupational, especially the neck injuries are clearly an occupational, well-written about hazard for surgeons, dentists, and hairdressers. So, it's just the position we're in all day long. Yeah, I think you have to be prepared. That's what insurance is about.

Joe:
All right, Jim, keep up the great work. Really appreciate everything you've done. I've learned so much from you, and hopefully one of these days I can get out to your conference. It seems like a fun time.

Dr. Jim Dahle:
Thank you. We'd love to see you.

Joe:
All right. Take care, my friend.

Dr. Jim Dahle:
Bye-bye.

THE CASE FOR DISABILITY INSURANCE

Our next guest in this pod is Matt Wiggins. Matt, welcome to the podcast.

Matt Wiggins:
Thanks for having me.

Dr. Jim Dahle:
Tell us briefly about your company, because it's one of our recommended companies here at WCI.

Matt Wiggins:
Yeah, the company's name is Doc Insure, and it's designed exactly to do what it says, is to insure doctors with life and disability insurance. I've worked with over 15,000 doctors in my career and given them all unique advice and education and helped them get the right policy the first time. My team and I, everything we do is designed around making it simple and easy to understand, and that's our passion. That's our heartbeat.

Dr. Jim Dahle:
You can get the more information on these folks we work with for disability insurance by going to whitecoatinvestor.com/insure. Okay, Matt, let's start out by talking about the problem with this particular podcast episode. We were supposed to record this months ago.

Now, those of you listening to this, you've just heard two interviews we did with docs who are dealing with disability in their lives. I made those interviews in July or so. That's when we did those interviews. And then we're going to have this interview with Matt toward the end of August, and this podcast was supposed to run at the end of August.

Obviously, it did not run at the end of August because I never finished this interview with Matt because I was sitting in an ICU at the end of August with my own disability. Basically, as we're recording this, I'm recording this the day before I get the pins out of my wrists. Basically three months after when this thing was supposed to run, and it's not going to run for another month yet. And so, I feel a little differently about disability than I did a few months ago. It feels very much more real. These things can happen in an instant, it seems.

But the first thing I want to talk about with this interview with you, Matt, is my biggest dilemma with disability insurance. We're always talking about “Is this rider better than that rider? Do I really need this one? Which company's best?” And all that. But the big problem is that there's so many docs running around out there with no policy at all. Why is that, Matt? Why do so many people not buy these? Is it just sticker shock or inertia or why?

Matt Wiggins:
I'll tell you, it's a big deal. First of all, it's nice to have you back. I'm glad you're upright and good to go. I'm really happy to have you back. I think that it's a good question. Years ago, 15 or so years ago, it was estimated only 30% of doctors got disability policies. That's a huge problem.

When I was kind of starting one of the first of its kind online companies that worked with doctors and you were getting started with what you do, there was a whole movement of educators, if you will, who were pushing to say, “Hey, docs, you really need to protect your income.” I'm glad to say this isn't scientific, but there are numbers out there with some of the carriers that suggest that around 50% of doctors get disability insurance.

Dr. Jim Dahle:
Hey, that's a win. We've gone from 30% to 50%. So maybe I'm doing some good here.

Matt Wiggins:
It's a win. Yeah. Thanks for all you do. And obviously, we're all trying to get the word out there. But I really think what it comes down to is you can go out and buy a term life insurance policy dirt cheap and you can do a lot of other things. Insurance is kind of this thing you're sold that it's insuring things that don't really happen. And you always feel like you waste money on it. But disability insurance is far, far different.

There are studies that show that the likelihood of a doctor being disabled during the course of their career, I've seen as low as one in seven. I've seen as high as one in four. I think the tried and true numbers about one in five doctors go on some type of disability claim during the course of their career. It's one of the most likely things you would insure. But doctors, because they know the body, they know medicine, they know all kinds of things. I don't know. I don't know if it's kind of a Superman complex or if it's whatever else, but it's, “Oh, that's not going to happen to me.” And shockingly, it does more than most people realize.

Dr. Jim Dahle:
It's interesting because I feel like doctors are probably better at buying this than most people. I think most people out there are running around without disability insurance. I'll bet the percentage is actually higher among doctors than it is for a lot of people. If you talk to the regular Joes you know in your life, how many of them actually have a disability policy?

Matt Wiggins:
No, that's true. And this is what's funny. I have insurance companies coming to me all the time saying, “Hey, you've done a really good job of developing this educational platform where you can help doctors learn about DI and buy it. Can we do this for the general public?” And no one's been able to solve that so far. And I'm too focused on helping doctors to come off of that right now.

But you're right. Doctors to a greater degree buy disability insurance because I don't have to convince an ER doc that bad things happen. I don't have to convince most doctors that they see patients all the time that get into disabling situations, either illnesses or injuries. The data is there in their head. They have the experience to know that it needs to be protected against. But there's just that, “Hey, this is expensive. I don't fully understand it.” I think that's a big barrier to entry. “Who do I trust to help me understand it? Because I don't. And I don't just want all these salespeople bombarding me.”

Sometimes I think just trying to get over that hump of a lack of knowledge, a lack of knowing where to get the knowledge and then actually paying for it. I think those are kind of some of the barriers.

Dr. Jim Dahle:
Yeah, there's a little bit of work too. Everybody understands how term life works. You can put it on an index card. And you're either alive or dead. I’m an emergency doc. I see all the gray between alive and dead. It only lasts about 15 minutes. But disability is not like that. It's 50 shades of gray. The policies are longer. They've got more riders. There's all this stuff with them. I wonder how much of it is the inertia of, “Oh, I got to learn about this. I got to spend time talking to somebody about this. It's harder to buy.” How much of it do you think is that?

Matt Wiggins:
Yeah, I think that's a big part of it. That's why we've kind of looked at this. The average doctor who goes to a website and tried to learn about disability insurance or whatever, most of the time is not successful in finally buying disability insurance on their own. It takes the confidence of talking to someone who has history and experience and expertise and knows what you're talking about. And even then, many doctors will still say, “I still can't get my head around it necessarily. What's the real threat here? What's the likelihood?” All that kind of stuff.

But yeah, when we have the riders and different elimination periods, different benefit periods, when you're talking about ONOC versus true ONOC versus modified ONOC versus enhanced medical ONOC with Guardian. It just gets to be too much.

And I do think there are salespeople out there from companies that don't sell the right kind of disability insurance, and they're probably the most effective at reaching the doctors. I won't name any names unless you want me to, but there's a lot of salespeople out there.

Dr. Jim Dahle:
I think we all know the name you're talking about, but we won't mention it on here just so we don't run into any legal issues.

Matt Wiggins:
Yeah, they're the most effective sales group in the country, maybe the world with insurance. And so, the doctors are getting hit with that message, but then they stumble on White Coat or they come to us or somebody and they go, “Wait a minute, that's not one of the big five to do this true and occupation coverage. So what's going on?” And it just makes it even more murky. I would say for sure, the murkiness, it keeps people from buying, keeps doctors from buying.

Dr. Jim Dahle:
I think part of it might be the cost too. This is expensive stuff and people get sticker shot. I've been telling people for years, a good individual policy is going to cost them 2% to 6% of the amount of income they're protecting. As much as $600 a month for a $10,000 a month benefit. How many people do you think turn around when they see the price and say, “No, I'm not going to do it?”

Matt Wiggins:
It's funny. I would say probably 60% of the doctors that I work with are in training. And so, they're going to get a small policy that expands later. They're looking at maybe $5,000 a month in coverage, and maybe it's up $125 a month or something like that. Or they do something like graded premium with Guardian that starts even lower and pumps up over time.

There's ways to make it cheaper. There's discounts in training. Theirs looks cheap, but then all of a sudden you take $5,000 a month for $150 and you expand that out to $15,000 a month and it's $450 a month. All of a sudden people are saying, “Hang on a second, that's a big chunk of change.”

The way I've been successful at overcoming that in the past is to be able to show if you pay for this for 10 or 15 or 20 years. That's going to be a lot of money but you've also got a huge amount of benefit that they're looking to pay you. And it's all tax-free if you have your own personal policy you're paying for with after-tax dollars. You all of a sudden take a 12-month, 15-month, 18-month disability, which is highly likely, and all of a sudden you've made up for 15 or 20 years of paying into this thing.

I think the premium is high and that can give them some sticker shock. But if you really think of the cost versus the benefit and the likelihood of disabilities and the average length of disabilities, 18 months to two years, you make up for one, one and a half, two decades of paying into it pretty quickly.

Dr. Jim Dahle:
All these doctors that aren't getting, make the case for disability insurance for them.

Matt Wiggins:
Yeah. I hear that all the time, “I'm a pediatrician, do I need this? Or I'm not a surgeon, do I need this? I'm a psychiatrist.” All these kinds of things. But I want to tell you, there's four major points that I make, the four whys of disability insurance.

Number one, the unpredictability of it. Two-thirds of the disability is coming from illnesses, injuries we can't prevent from other people's driving habits or whatever. We end up in situations where it's so unpredictable, we can't see, predict or control the future. And so, I'd say the unpredictability of disabilities is a big number one reason why.

The number two why is that it's one of the most likely risks that you'll ever cover. We think it's a no brainer to buy life insurance, but the chance of you dying before you're 65 is remote compared to the roughly 20% of doctors who get disabled during the course of their career, or even protecting a home or protecting a car. We're talking about the chances are very remote compared to that. I think that the higher likelihood of this risk particularly happening to you would motivate me to buy disability insurance.

I think the third why is thinking about what you're protecting. You can think about this in several different angles. Number one, it's the largest financial asset you'll ever own. Tens of millions of dollars for doctors. Number two, it's the return on the investment you've made in your career. You've literally spent blood, sweat, tears, accrued debt, whatever you've done to get to where you are. And the return on that investment you've made is the career income and the lifestyle it affords. And if that goes away, the return on your investment is not very high.

Also, you can ask the question, “If my income is not protected, what really is?” Not only your current lifestyle, but retirement, kids education funding. I had a smart out resident one time say, “Well, my marriage is still protected, even if I don't have DI.” The number one cause of divorces in America, at least, is financial trouble. You get disabled without disability insurance, that causes financial hardship on a marriage. I'd say ask that question.

And the third thing is, “Who are you protecting?” You're not only protecting yourself, but a spouse, and current potential spouse, children or potential children. But I also bring up the multiplicative effect of a doctor's income. All of your future spending that will be done that blesses benefits locally and all around the world, giving doctors tend to be fairly generous. There's all kinds of organizations and foundations that you'll donate to. There's a real cascading multiplicative effect of a doctor's income.

I'd say the unpredictable nature of disabilities, it's a 20% likelihood for most doctors that they'll get disabled during their career. Think about what you're protecting in your income and who you're protecting that relies on that income. I think those are four salient points to think through when you're thinking about the importance of DI.

Dr. Jim Dahle:
Yeah. You mentioned earlier illnesses and injuries. What's actually causing people to make claims?

Matt Wiggins:
Yeah, that's a good question. Here's what you get all the time. You get people saying, “Well, I'm not mountain climbing like Jim. I'm not out there doing this dangerous stuff. Do I even need disability insurance? I'm a safe person. I drive safely.”

The issue is, is that two thirds of disabilities, if you look at all the different carriers, all the different companies, I talk to them all the time. They say roughly two thirds of all disabilities come from illnesses, not injuries. Illnesses, you've got mental illness that is in the top five causes of disabilities. And most of the time, these are acute things. These are loss of a spouse. These are job related. These are stress related type things where they just need a year off to get together. And so, you have a claim like that. Mental illness claims.

You have things like cancer. One of the top leading causes. For some insurance companies, cancer is the number one cause of disability claims. Cancer, you have musculoskeletal stuff, connective tissue stuff like arthritis. You've got things you can't predict. I think one of the doctors that you got interviewed on this podcast, he got early onsets of Parkinson's or other things like that. Neurological disabilities. It happens, Alzheimer's.

These illnesses are actually causing the vast majority of disabilities and they're unpredictable. We can live the most cautious, safe lifestyle ever. And no one can predict these illnesses when they might strike us. I'd say the unpredictability of illnesses makes it that way.

And then you just get to the accidental side, the injury side. People are getting disabled all the time from injuries, from musculoskeletal issues, from car accidents or other types of accidents. We can't predict them. You couldn't predict on a beautiful day when you're out there climbing that something would go wrong and you'd end up injuring yourself. And you don't know when you're going to go through the perfectly good green light that somebody ignores the red light coming from the other way and T-bone you. Not only can you not see the future, but you can't predict it.

I would say the unpredictability of the illnesses along with can't predict other people's actions and the injuries that can happen, makes a pretty good case. And that's why you see 20% of doctors is a good number to stick to over the course of their career, getting disabled. These illnesses crop up, injuries happen. It's very unpredictable.

Dr. Jim Dahle:
Yeah. It's interesting. We dropped our disability policies after becoming financially independent. When I got hurt this summer, I didn't have any disability insurance in place at all. But if I had had the two policies that I had prior to becoming financially independent, neither one of them would have paid me for this injury. And I suspect a lot of injuries, that's the case. The reason why… Well, in the case of one of them, I had an exclusion on climbing. In my individual policy, I was climbing when I bought it and I had an exclusion. But my group policy did not have that exclusion. So, I would have been paid by one of them, even getting hurt climbing.

But bones heal in about 12 weeks. Which is amazingly similar to the typical 90-day waiting period on most disability insurance policies. You're just better. You're better from your injuries in three months and you can go back to work. And so, that might be part of why so much of it is illness. Even though you hear about lots of people becoming injured, I'll bet a lot more short-term disability is injury compared to illness.

Matt Wiggins:
Yeah. I think that's obviously a good observation. I think that too, when you talk to the insurance carriers, there are a lot of people who get injured who don't make claims because they know that they're not going to be disabled longer than 90 days, or there's even a contingency out there.

And this is a number I can't track down. I've tried to at the companies, but there's a number out there of people who have an injury and they just live with it and it affects their work. And if they knew that they had partial disability, the partial disability rider on there, they've had to cut back some time of work to like 20%. And so, they take a pay hit, but they don't think of it as, “Well, I'm not totally disabled, so I'm not going to get anything.” They actually could get partial claims for that injury that's preventing them from working fully and having to take that pay cut.

I don't know, there's all kinds of reasons out there, but the best numbers I see is that the majority of disabilities that go on claim are coming from illnesses, which are obviously highly unpredictable.

Dr. Jim Dahle:
Yeah. Let's talk for a few minutes about guaranteed standard issue or GSI coverage. If people have a GSI policy, is that enough? When does it pair well with a fully underwritten policy? How do we make the most of or think about GSI?

Matt Wiggins:
That's a good question. It's popped up a lot recently because GSI, there's actually been a kind of a proliferation of GSI policies out there. It used to be few and far between, but now there are more GSI policies that have been set up in the last five to 10 years. So there's more access to them now more than ever.

What I'd say is GSI stands for guaranteed standard issue. It just means that no matter what your health history is, no matter the medications you're on right now, no matter your health history, it could be chronic, it could be acute, it could be whatever. They're guaranteeing that anyone who applies to them, as long as you're not currently disabled and you haven't been denied for disability insurance or had a highly modified offer back, you can get a standard policy, meaning normal premium, normal coverages. You can get everything normal, just like anybody else who has no health history.

You have to kind of ask yourself the question, “Is there a trade-off there? There has to be a trade-off there.” And there is. I think the main thing to know about GSI is it serves an absolutely crucial purpose out there. If you have had any health history that you're concerned about, that disability insurance might exclude and you want covered, if there's a concern there, you should absolutely look at going the GSI route and getting a policy if you have that available to you.

Dr. Jim Dahle:
Let me pause you right there, Matt. I think we need to, because doctors gloss over what you just said. They don't think what they have is concerning or should be concerning to an insurance company. They have some little ditzle that they consider in the past doesn't even really affect their lives. They're not even taking a medication for it. They think it's nothing. The insurance company does not think it's nothing, I assure you.

These little things that you're like, “Oh, my doctor's not even worried about this.” Well, the insurance company is worried about it. So, it does not take much to have one of these minor medical issues that can cause you to actually be declined for an insurance policy. I think the bottom line is if you have almost anything, maybe you ought to grab a GSI if one's available to you and then go through the underwriting process.

Matt Wiggins:
That's a good point. Strategically grabbing a GSI plan before you go into the medically underwritten plan, that can be a good strategy. I run into the same thing. I run into doctors who are like, “This is nothing. It's not a big deal.” Well, disability insurance is far more sensitive to your health history than life insurance because obviously there's lots of things that you can have that won't kill you or even affect your longevity, but those things could lead to potential disabilities.

And so, you're absolutely more sensitive to your health history. But on the flip side of that, just so you know, if you are overweight, if you're obese, that's a reason to get a GSI plan. If you've got a history, if you've got diabetes, that's a reason for GSI plans. If you have back issues or neck issues or even history with migraines, I'm just trying to give you some examples. Those are things that would be excluded if you go the medically underwritten route. I'm with you on going GSI for that.

If you don't have any health conditions or even some minor things here or there, you ought to talk to someone before you make up your mind on what to do. I have people come to me all the time who say “I had childhood ADHD. I haven't really had any symptoms or anything for the last 15 years. Should I go the GSI route?” My answer is “That's not going to affect it. So you don't necessarily have to, but if you want to be safe, you can go the GSI route before going for the fully medically underwritten route.”

The difference between medically underwritten and GSI plans, typically medically underwritten is going to have a higher ceiling for coverage later. A lot of times $30,000 a month as your ceiling, you can go up to versus $15,000 with most GSI plans. You're going to have cheaper rates. If you get it on your own, it could be 10, 15% cheaper by getting it on your own versus GSI. You're having to counterbalance the unhealthy people who will go through the GSI program. And then there's some things like catastrophic coverage or other riders you may or may not want, but they would be available at least to consider under medically underwritten.

You can get better rates and better policies under medically underwritten, but you never want to jeopardize getting coverage at all by just throwing it against the wall. If you know there's some things you're concerned about, you should certainly check out GSI options.

Dr. Jim Dahle:
Now, what's the way to find out if you even have a GSI policy available to you?

Matt Wiggins:
A lot of times you can talk to the benefits department or HR department, depending on what your institution or your employer is, large hospitals, small practice, whatever it is. But typically if it's HR benefits folks, you can ask them. There are also people like me and some of the other agents that are on White Coat that have lists nationwide of all the places where there are GSI programs.

And then also, just ask. And then you also have to be careful because some of these GSI programs are set up at certain hospitals and institutions, but they only apply to GME doctors. If you're a resident or a fellow there, they don't apply to you once you're attending. You want to be careful before you start digging into it if you really have that available or not.

Dr. Jim Dahle:
Something to be thinking about, something to be asking about, talk with your agent about, you can still start by talking to a regular agent like you though.

Matt Wiggins:
Yeah.

Dr. Jim Dahle:
Say, “Hey I want a policy. I got this little distal, maybe I need GSI.” Is there even a GSI? They can start talking to you. There's no problem with talking to you. There's not even a problem with you informally shopping them around to the companies. The only problem is if you actually apply and then you get declined. Now you've got a big problem because you can't go get a GSI policy now, and you don't qualify for a fully underwritten policy.

Matt Wiggins:
That's the problem. What we normally do is if a doctor comes to us, they're concerned about their history. I have them write a quick little dialogue. It could be a few sentences or whatever, but we take that dialogue anonymously to the big five companies, happen to know the heads of underwriting companies. We get an answer before we ever just throw it against the wall of an application. And if we have certainty when they come back, then we can proceed. If we don't have certainty, then we're definitely looking for GSI.

Dr. Jim Dahle:
The one thing I'd say too, is all these companies are different. I can't tell you how many doctors come to me and say, “Hey, I was trying for disability insurance with this company, one of the big five, and they declined me. Am I out of luck for all the companies?”

I can give you one concrete example, and they wouldn't mind this. MassMutual has flat out told me, if you have someone with any mental health history, probably don't send them our way. It's one of those things where they underwrite mental health history very strictly. Whereas standard is one of the big five. Typically though, if you have mental health history, they might give you an exclusion, but they'll do a two age 65 fully blown policy, discounted rates if they're available to me. They're going to treat it very differently.

So, just because you've traveled with one company and not had success with them, that doesn't necessarily mean you're out of luck. Different companies underwrite different health histories differently.

Yeah, that's useful information. Let me share an experience a WCI-er had here. I got this email and he says, “I wanted to share my story because I don't want someone else to do what I did. I'm an anesthesiology resident, really an intern. Last March, I found out I was moving to Florida. Moving to Florida from Utah with my wife and toddler.

I thought disability insurance made complete sense. I had some extra time before the big move. So, I pursued getting a policy before I started residency, use your website to understand the appropriate policy writers, et cetera, and use your DI references on your website. I had a general idea of the process, but never thought ahead on how my past medical history would be seen by the underwriters or what underwriters would even think of my case.

Not to go too in depth but I had some idiopathic neuropathic symptoms, some pressure and tingling and numbness that I've had for years and years and years, et cetera. I've seen many doctors for this without a clear answer on diagnosis or definitive treatment. It's just something I live with, not really causing a lower quality of health or diminishing my goals or future plans. I consider myself very healthy.

We applied through one of our agents. I'm not sure he actually told them about those symptoms. I did a brief phone call with the agent, sent some policies, that everything I wanted, and I was so eager to just get this done and check this off the list before I started working on our move to Florida. I put all my medical history, thinking that my condition was really benign and didn't receive any other guidance.

Weeks go by. I moved to Florida with my wife and child. I get an email from the agent saying I'd been denied. That's it. About a week later, I found out that my program offers a GSI plan. I definitely screwed up, but I'm still disappointed. I heard about the need for DI quite often, did not see much education for those with obscure past medical history like chronic fatigue syndrome, burnout, et cetera, which I think is more common for physicians these days than what society would think.”

We dove into it and tried to get him some help. And it turned out a month later, despite this DI denial he had with Principal, he was able to get a GSI plan through the University of Florida. Guardian had a recent change where someone's denial of disability insurance before residency would be waived. But if he'd gotten denied while he was actually a resident, it would have burned his bridge and he would have been ineligible. So, he was lucky and fortunate, made a dumb move with good intentions, but ended up okay in the end. Your thoughts on that story? Obviously we're happy this doc was able to get disability insurance, but your thoughts on what happened?

Matt Wiggins:
What a blessing he was able to get it. So that's a big, big deal. I think that disability insurance, when you think about it, it protects your largest financial asset that you'll ever own. If you're a pediatrician, you're an internal medicine doctor, you're talking about $5 to $10 million. If you're an orthopedic surgeon, Mohs surgeon, whomever, you might be talking about upwards of $20 or $30 million asset is your income.

I think it should cause us to pause and say, before we try anything, you want to make sure that you're talking to experts who are unbiased and who really have your best interests at heart. And Jim, I got to give you kudos, man. You've put together quite a list of folks who do that. Obviously I see myself as one of those, but you really want to talk to people who have expertise with disability insurance because you're right. You can burn that bridge and end up in a situation where you can't protect that largest financial asset you'll ever own. So, it can really put you in a bad situation.

That phrase that you said when you were going through that and reading that, “I see myself as a perfectly healthy individual.” I hear it all the time. All the time. And then they'll say, “Well, except that I'm 5'6″ and 305 pounds and I have sleep apnea and I'm noncompliant with CPAP.” But whatever the case is, really happy you got it.

But you really need to be sure before you go for any insurance medically underwritten, because it can affect, there's a thing called the MIB, the medical information bureau. All insurance companies can see when you apply for other coverage and they check it.

So, if you go to apply with one company and you're trying to hide that you applied for disability insurance six months ago, they're going to see it. And they're going to say, “What was the outcome?” They can't always see the outcome. Sometimes they can’t, but they're going to know about it and they're not going to issue anything until they find out what happened.

You want to make sure you talk to someone who's an expert, who's dealt with this a lot and who can help guide you through whether you go GSI or fully underwritten, or you have a strategy of getting GSI before you go medically underwritten.

And the last thing I'll say on that is be sure that you talk to an agent or someone that you can trust and that you can share all this with. It does not benefit you any to hide any medical history from them. Most of them, when you're talking to them, they're not recording this. This is not going to be used against you.

In fact, if agents are anything, they should be very good, unbiased shoppers or buying agents for you. The more you share with them, the more I can say, “Hey, this company handles your medical situation better than others. This is the right one to go to. Whereas if you don't tell me, maybe we apply to that one and you get declined and now you're in that position.”

I'd say, be sure that you find, really dig into who you can trust to help you in an unbiased way and with expertise, and then just let them know and ask for their help on it. And you should get good advice.

Dr. Jim Dahle:
Yeah. Obviously agents have a conflict of interest. If they don't sell you a policy, they don't get paid. They get paid on commissions. But their interest is aligned with yours. You want a policy, they want to sell you a policy. They do not want you to be declined. This is bad for them. So, don't hide those little things because they may pick them up when they review your prescription history, when they review this database with medical information in it. You don't want that to be the first time that your agent finds out about a medical problem you have. That is not the right way to buy this stuff.

Matt Wiggins:
That's right. And I can see your doctors. Everyone’s unique situation. Sometimes going GSI and then going medically underwritten to see what you can get, sometimes you do that. And especially if you're going to be making the kind of income where you need $20,000 or $25,000 a month in coverage, you might cap your GSI out at $15,000. So maybe you lock that in and then you're going for the additional coverage from another company. But it's impossible for me to steer you in the right direction if you're hiding things.

And so, yeah, if you can trust the agent that you have, which I would never use an agent you don't feel like you can trust, but if you have an agent you can trust, maybe one of the White Coat agents, then make sure you're forthcoming with them on stuff.

Dr. Jim Dahle:
Yeah, again, if you're interested in that, go to whitecoatinvestor.com/insurance. All right. It's also important to recognize that a GSI policy is not the group policy your employer is offering you. A GSI policy is a portable individual policy you take with you when you leave. So, let's talk about these folks that say, “Hey, I got a policy through my employer, I don't need an individual policy, I'm good.”

Matt Wiggins:
Oh, man.

Dr. Jim Dahle:
What do you think? Are they good or aren't they good?

Matt Wiggins:
This is one of the biggest objections we face. “Well, my employer's covering me and they employ physicians. So the coverage they give me must be great, right?” And that's just not the case. There's three major issues with group disability insurance. If you remember these things, check into them, you'll find them to be true.

For the most part, if you're given a disability insurance policy from your employer, it's taxable. And so they'll say, “Hey, we're covering 60% of your pay up to a maximum of maybe $10,000 a month, but after taxes, it's only going to be maybe like $6,000 or $6,500 a month.”

I have doctors all the time who call me up and say, “Hey, I got disabled and 60% of my income was $18,000 a month and I'm getting $6,000 or $7,000 a month, what happened?” And when I have to explain to them the cap and the taxability of it, that's a big deal.

The second thing is, it's not going to be own occupation coverage. I think there's one location of Kaiser Permanente that has a true own occupation policy. It's grandfathered in from a MetLife contract years ago. Virtually everyone else, they're told that it's an own occupation policy, but if you get money from social security disability, if you get money from workers comp, if you can actually teach or work at a library or do anything, it's going to cause them to reduce their paying you the benefit. That's not a true own occupation or specialty specific policy.

And number three, most of the time it's not portable. Let's say that you go to an employer, let's say the other things aren't even true. Let's say it's covering you wonderfully, which is not the case, but let's say it is. And so, you put all your eggs in a basket and then over the course of 10 years of working for that group or that hospital, you develop some medical history, some medical items, and all of a sudden you leave there.

Well, let's say the next job you're going to, they don't provide disability insurance. You're like, “Well, I'll just go get my own DI.” Because the past one wasn't portable, you're stuck 10 years down the road with all this new medical history. You're stuck trying to get a policy at that point in time and may or may not be able to. And it's certainly going to be vastly more expensive.

That's why relying on your group insurance leaves you hanging in an awful situation. Less coverage than you think, not the right kind of coverage and not even portable to take with you for the rest of your career once you leave that employer. I'd say those three reasons make it paramount to have at least some individual coverage that's portable, that makes up for the taxes lost, and it will also cover you for your specific duties or procedures, unlike the group policy.

Dr. Jim Dahle:
Anything is better than nothing, right? Anything's better than nothing. In fact, I met a doc a few years ago that was living on a $2,500 a month disability benefit and had been for over a decade. That's what he lived on, $2,500 a month. And it was like the policy he picked up as a resident years ago and he never exercised any sort of additional purchase option, never bought another policy, got disabled. That's what he lived on was $2,500 a month. I don't think he qualified for social security, but he couldn't work and that's what it was.

Anything's better than nothing. But that said, the two people we interviewed earlier in this podcast, neither one of them had an individual policy and look at the hoops they're jumping through. One of them had their benefit reduced because they also qualified for social security. The other one had two policies from work, but no private policy, no individual policy and ended up with about a 50% net pay cut.

So yes, the group policies are often cheaper. They often don't ask as many pesky questions. They're very convenient because it's right there at your employer, the policy's already picked out and everything, but they're not the same thing. They are not the same thing.

I actually had two policies back in the day. I had the individual one I picked up as an intern and I exercised an additional purchase option on it later. And so, that was part of my coverage. The other part of my coverage was a group policy. And one of the things I really liked about that group policy, besides the fact that it was cheaper because it wasn't as good, was that it didn't ask about rock climbing. That one didn't have a rock climbing exclusion on it. And so, I used both for a number of years. And I've talked to a lot of docs that have taken that approach as well. They have some of their coverage as individual and some as group.

But you got to recognize that those group policies are not as strong as what you can buy on the open market. There's a reason they're much cheaper. And it's not just that your employer might be paying some of the premium.

Matt Wiggins:
That's the key. It depends on how much cheaper it is. I'll have some doctors that say, “Hey, I've got this group plan” and we'll look at some discounted coverage. Maybe they're coming out of training. They still have some discounts available. And we're looking at a disparity of costs. If the group plan is 20% the cost of the individual plan, then a lot of times it does make sense to have this not as quality coverage, but save some money and then get some quality coverage and kind of combine the two.

If you find yourself where the group plan is 70% the cost of an individual plan, you might save 30% on the cost, but the chance of them paying you 30% less if you get disabled or 40 or 50% less if you get disabled is also pretty high. At some point in time you go, “Am I really saving enough to potentially get paid a lot less if I get disabled?”

But that's something you really have to wrestle through on an individual basis. Look at the rates. I personally on a weekly basis, I look through 100 page benefits documents. And oftentimes in about two minutes can find what would take most doctors, an hour to find probably.

You can find an agent or someone who can look through your benefits documents, point out where these things are, and then really help you compare apples to apples. And if they're doing a good job for you, they're not just going to try and sell you the biggest individual policy they can get. They're going to really thoughtfully look at your group coverage and help you decide if that's something you match up with your individual policy, or is it really not worth it, you want to go all individual.

Dr. Jim Dahle:
All right. Well, Matt, our time is now gone. It's been wonderful to chat with you about this very important subject that feels even more important to me than it did a few months ago. As we mentioned earlier, you can go to whitecoatinvestor.com/insurance and see all of the agents that we work with that other White Coat Investors, hundreds and thousands of White Coat Investors have worked with over the years. But if they just really like you, like hearing from you, Matt, and they want to get in touch with you, what's the best way for them to do that?

Matt Wiggins:
Yeah, they can go to docinsure.com and click “Get a quote.” We're here to help, we're here to educate, and anything I can do. You're going to get a fair shake. You're going to get to see all your options side by side. And if you'll share enough with me, I can guide you towards GSI plans or whatever. You're going to get the best individualized quotes and really guidance that you can get. So, I look forward to helping anyone who comes our way.

Dr. Jim Dahle:
Thank you very much for your time today.

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All right, we've come to the end of this episode. I hope it was helpful to you. Please, if you don't have disability insurance yet and you're not financially independent, go get yourself some disability insurance. There are way too many docs running around out there without it. As Matt said earlier, 50%, that's just too many. And some percentage of you are going to be disabled and not have coverage. That's not okay. Please get it.

Keep your head up, shoulders back. You've got this. We'll see you next time on the White Coat Investor podcast.

DISCLAIMER

The hosts of the White Coat Investor are not licensed accountants, attorneys, or financial advisors. This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.