Do Medical Students need Disability Insurance?
Medical students in Canada should consider purchasing disability insurance as soon as they begin their clinical training or start working part-time as a physician. Disability insurance is designed to provide income replacement if you become unable to work due to an injury or illness.
You may not think disability insurance is necessary since you are not yet practicing medicine. However, accidents and illnesses can happen to anyone at any time, and without disability insurance, you could face financial hardship if you are unable to work for an extended period of time.
Disability insurance premiums are typically lower for younger individuals, as they are considered to be at lower risk of disability. By purchasing disability insurance early in your career, you can take advantage of lower premiums and ensure that you have coverage in place should the unexpected happen.
Key Factors to Consider
Understand the Need: Disability insurance provides financial protection in the event that you become disabled and are unable to work. To be blunt, if you can’t work, disability insurance will pay you your income as if you are. As a medical student, your future income potential is significant, making it crucial to safeguard your ability to earn a living in case of disability.
Review Free Coverage: Make sure to look over what your governing body offers for disability coverage. For example, Doctors of BC has the Disability Income Continuance Plan (DICP) which provides up to $15,000 per month in disability benefits and is designed to replace a portion of the physician's income while they are unable to work. Realistically, we will make beyond $15,000/month in the future, therefore insuring yourself beyond this amount is crucial!
Types of Disability Insurance: There are two primary types of disability insurance: short-term disability (STD) and long-term disability (LTD). STD policies typically provide coverage for a shorter duration, such as a few months, while LTD policies offer coverage for an extended period, often until retirement age.
Coverage Amount: Determine the amount of coverage you need based on your anticipated future income as a physician. Consider your living expenses, student loan repayments, and other financial obligations. It's generally advisable to opt for coverage that replaces at least 60-70% of your pre-disability income.
Waiting Period: The waiting period is the amount of time you must wait before your disability benefits kick in. The longer the waiting period, the lower your premiums will be. Consider how long you can afford to wait before receiving benefits and balance that with the affordability of the premiums.
Premiums: Disability insurance premiums can vary significantly depending on the insurer, the coverage options, and your personal factors such as age, health, and occupation. Some insurers offer lower rates for medical students or recent graduates. RBC is currently offering a 25% discount (10% on Oct 1st) on your premium (cost of insurance) for your entire career, if you purchase during medical school! Remember that premiums may increase as you progress in your medical career.
Own Occupation Definition: Look for a policy that includes an "own occupation" definition of disability. This means you will be considered disabled if you are unable to perform the duties of your specific medical specialty, rather than being unable to work in any occupation at all.
Benefit Duration: Consider the duration for which disability benefits will be paid if you become disabled. Longer benefit periods, such as until age 65, provide more comprehensive coverage but may come with higher premiums.
Exclusions and Limitations: Read the policy carefully to understand any exclusions or limitations. Some policies may not cover certain pre-existing conditions or disabilities resulting from specific activities or self-inflicted injuries.
Insurer's Reputation: Research the reputation and financial stability of the insurance company. Choose an established insurer with a strong track record in handling disability claims.
Ultimately, the decision of whether to purchase disability insurance depends on a variety of factors, including the doctor's specialty, their current financial situation, and their risk tolerance. Students and doctors should carefully consider the costs and benefits of each type of insurance before making a decision.