Long-term disability insurance helps cover you when you’re injured.

Unexpected injuries can cause financial stress. That’s where long-term disability insurance comes in.

Why should you consider long-term disability insurance?

Serious illnesses or accidents can come out of nowhere. They can interrupt your life, and your ability to work for months—even years. This type of insurance provides financial support to manage your disability and your household.

What is covered by this type of policy?

The principle of long-term disability insurance is simple enough: you pay premiums and if you become disabled and are no longer able to work, you get regular payments to make up some of the lost income. As with life insurance, it’s often a smart way to protect you and your family (or financial dependents) if the worst happens.

A variety of payment options are available.

The details with your insurance matter since policies have several key options. For example, you’ll need to check how long you have to be disabled before any payout starts, and for how long the payments will continue. Some policies pay for a fixed period only (or until you reach retirement age if that comes first), while others may guarantee to payout until you reach retirement age, regardless of how long that is.

Determine payout levels that work for you.

You’ll also need to decide on a payout level. Generally, long-term disability insurance policies pay a maximum of around 50 to 70 percent of whatever your pre-tax salary is when you become disabled. When you take out the policy, you may be able to choose a lower payout level, which could reduce your premiums.

  Long-term disability vs. short-term disability.

The main difference between the coverages is in the name—the length of time you will receive payouts. Long-term policies vary between 5, 10, 20 years, as well as retirement, depending on your specific policy. Short-term policies may only cover anywhere from a year to two years.

Get disability coverage through your employer.

Your employer may cover you with a long-term disability insurance policy or give you access to buy one at a discount. Even if this is the case, don’t automatically rule out getting your own policy instead or in addition to your employer’s policy. The employer’s policy might not offer a payout level that meets your needs, for example. Also, payments you receive from an employer policy may be taxed differently from those you receive from a long-term disability insurance policy you buy yourself.

Want to learn more about the details of long-term disability insurance? Contact us to learn more and to walk you through your coverage options.

Definition of disability and your policy.

The most important feature is the definition of disability. Unlike life insurance, where life and death are straightforward, disability is much more complex.

Own Occupation

Your policy will pay if you cannot work in your occupation/specialty, even if you can and do work in another field and make as much money as you want. Just make sure that your occupation is defined as your specialty, not just “physician.”

Own occupation policies cover people based on the occupational duties they’re performing at the time of claim. If your policy includes an own occupation definition of total disability and you are exclusively performing the customary duties of your medical specialty or sub-specialty at the time of claim, the policy will cover you when you can’t perform in your specialty or sub-specialty. If you have transitioned into a different role or expanded into a new career path that requires much less direct patient contact or procedural duties, you may no longer be considered totally disabled when unable to work in your specialty or sub-specialty. This is because your “occupation(s)” involves additional material and substantial duties, no longer limited to the performance of your medical specialty or sub-specialty. In these instances, you may be considered partially disabled or not disabled at all, depending on the exact circumstances.

Transitional Own Occupation

Your policy will pay if you cannot work in your occupation/specialty, even if you can and do work in another field. But if you exceed your previous income while you now work in another field, your monthly benefit from the policy would likely be lowered.

Modified Own Occupation

Your policy will only pay if you can’t work in your occupation/specialty AND if you are not working in another field. This definition is also sometimes called “Own Occupation, Not Engaged” or “Own Occupation, Not Working.”

Any Occupation

Your policy will only pay if you cannot work in any occupation. Note that some policies are own occupation for a couple of years and then transition to any occupation.

Be aware that the last two categories are common in group disability policies. Naturally, the less risk you ask an insurance company to take on, the less expensive the policy. Most procedural physicians are going to want at least transitional own occupation, and most non-procedural physicians are going to want at least modified own occupation, depending on the price difference.

What definition of disability is important for physicians?

You want own occupation, specialty specific coverage. The definition of disability is all-important. The most important aspect of a policy is that it actually pays you when you become disabled. This is particularly important for surgeons, dentists, and other procedural specialties, but most specialties do at least some procedures. You don’t want a policy that incentivizes you to not do any work at all after a disability or, worse, won’t pay you because you can still do some sort of work you don’t actually want to do. There’s a reason people have to hire an attorney to get their Social Security disability benefits. With a strong definition of disability, you won’t have to do that. Yes, it costs more to get a top-notch policy from one of the Big 5 companies, but you get what you pay for.

We asked Chris Carrigan, CLTC of Shadow lake Insurance to address the question of just how important own occupation is and whether it is really necessary.

Here’s what he wrote:

Q. How important are own occupation riders for non-procedural fields, and what is the role of transitional own occupation riders?

A. This is all about how much control does a physician want at claim time. Regardless of whether a physician performs procedures, having the “true” own occupation rider on a disability insurance policy is something to consider. This rider allows more flexibility and if they become unable to perform the specific tasks of their specialty due to illness or injury, they can still receive their benefits. Without this occupation-specific coverage, an insurance company could decide that the physician is capable of working in another, possibly less satisfying or lower-paying, role, and thus deny their claim. It depends on what the definition of disability is on the contract. A “true” own occupation rider puts the control back in the hands of the physician, allowing them to receive benefits while choosing whether to pursue another medical role or even a different field altogether.

This rider is particularly valuable because non-procedural physicians often perform tasks that are cognitively demanding and tailored to their specialized training. For example, a psychiatrist who loses the ability to concentrate or an internist who can no longer manage complex patient cases effectively may not be able to continue in their role. With a “true” own occupation rider, they are protected financially, and they can focus on recovery. Without this, the physician would potentially be at the mercy of the insurance company deciding for them if they are able to do any other job they may not be passionate doing but something they can do based on their education, training, and experience: “Any Occupation Definition of Disability.”

The transitional own occupation rider offers a similar but slightly different kind of protection. The definition is designed for situations where a physician can’t work in their exact specialty but decide to work in another job, even if it’s in a different field. This rider covers the gap between their previous income and what they can earn in their new role, up to 100% of their original earnings. Essentially, it helps prevent significant financial loss while adapting to a new professional path.

For example, if a neurologist becomes unable to practice due to a physical disability but can still teach or consult, a transitional own occupation rider will help maintain their income level. It prevents them from suffering a severe financial setback while they find their footing in a different role. However, it’s worth noting that while a “true” own occupation rider allows for potentially unlimited earnings in another job without reducing benefits, a transitional own occupation rider adjusts benefits if the physician’s new earnings exceed their previous income. This means if they earn more in their new role, the insurance benefits will decrease accordingly.

Modified own occupation disability insurance is not going to offer the same level of protection as transitional or true own occupation coverage. With modified own occupation coverage, a physician can collect their full monthly benefits if they become unable to perform the duties of their medical occupation. However, this benefit is contingent on the physician not working. For instance, if a cardiologist can no longer practice due to a disability but chooses to work in their field or a different field—perhaps as a medical consultant or in an entirely non-medical job—they would forfeit their disability benefits. This restriction makes modified own occupation riders less flexible than own occupation policies.

The bottom line.

Disability insurance is expensive, especially if you’re a resident or a young attending. But disability insurance is all about mitigating risks that you cannot afford to self-insure against. It doesn’t make sense to calculate your return because you really do have a need for this insurance. If you become disabled as a doctor before you’re financially independent, it is a financial catastrophe.

Long-term disability insurance shields the most valuable financial asset of a doctor—your ability to trade your time for money at a high rate for the next 30-40 years. Doing it with an own occupation policy is the best protection you can get.