Optometrists
Disability Income Insurance for Optometrists
Optometrists juggle so much, in offering care, building relationships with their patients, and many times directing every aspect of their workplace as a practice owner, or partner in a practice. Disability Income Insurance is a valuable part of their financial life, and we can help research and choose the best Disability Insurance contract for their particular situation.
Why is it so important that optometrists have Disability Insurance in place, especially as they start their practice?
Optometry can be a rewarding career financially, but as an optometrist begins practice they have just finished a 4 year or longer program of study and training. A program that averages between $100,000 and $175,000 in cost, meaning they have student loans. And even though they now possess an ability to earn an above average income, that has not been realized yet.
Later in their career they may open their own optometry practice or partner with others, which most likely mean new business and / or real estate loans.
So optometrists face financial vulnerability at many different points in their career. The plan to combat this is…work!
Working and earning an income will over time, each month, erase student loan debts, business loan debts, etc. all while funding your family budget. But what if you are disabled because of illness or injury? (1 in 4 of us will suffer a disability in our working careers). If you cannot work how will you earn an income to fund your family budget, practice budget, and pay off loans?
The answer is strong individual Disability Income Insurance. Depending on what policy design you choose, there would be tax free benefits available to a) replace your income, b) pay off student loans, c) continuing saving for retirement, d) offer monies for on-going business expenses, and other scenarios.
You can buy Disability Insurance while still in your optometry program or beginning in practice.
Disability insurers base offering you a policy on your income, and require proof of income in advance. But strong DI insurers also offer special programs for young professionals, including optometrists. The programs offer a set amount of monthly benefit without proof of income.
Students in their 3rd of 4th years can purchase a set amount of Disability Insurance monthly benefit And optometrists just starting in practice, but without any income history, can too. Once in practice and earning an income, you can add to the monthly benefit as your income increases over time.
Optometry practice owners need to consider a “BOE” policy.
Disability Insurance companies also offer a secondary type of disability insurance specific to business owners called “Business Overhead Expense” or “BOE” insurance.
Business Overhead Expense insurance, if the insured becomes disabled, steps in and pays the business’s bills; lease or mortgage payment, staff salaries, insurance, utilities, etc. You can even choose coverage that helps pay for a building or practice loan.
If a business owner is away from the business for awhile, the business suffers. A new optometrist needs to be hired. Overall income is down.. BOE monthly benefits can fund the gap between the higher costs and lower income.
If you have an ownership partner in your practice you need Buy-Sell DI.
Disability Buy-Sell coverage is a type of Disability Insurance designed to provide the funds to assist with the purchase of the disabled insured’s ownership interest in a business in the event of their long-term disability.
Many firms have life insurance protection in the event of the death of an owner, but overlook the financial devastation that can occur as a result of a disability of one of the owners. Flexible funding options allow for either a lump-sum buy-out and/or monthly installment payments. These benefit monies help provide the funds to assist with an orderly transfer of ownership, and protect both the disabled insured, and the other owners.
The importance of choosing the "own occupation" (or “your occupation”) definition of disability when choosing optometrist-specific Disability Insurance coverage.
"Definition of disability" is very important when considering Disability Income Insurance. Most people purchase a policy with a definition that says the insurer will pay the benefit if they are disabled, but will stop paying the benefit when the person can go back to work in a job “they are suitable for because of education and prior experience.” This definition can be inadequate for someone who invested a great deal of time and money in their specialized occupation (optometric medicine).
The better “Own Occupation” or “Your Occupation” definition states the insurer will pay the benefit for as long as the person cannot work in the exact occupation they were previously working in. And, that if the disabled person cannot do just one of the main, material duties of their job, then the policy still considers them disabled, and continues to pay the benefit. This means if you cannot work in all capacities of your current practice, you are disabled according to the definition of the disability. The illustration goes on to state that the contract will consider your specialty (the practice of optometric medicine) as your own occupation.
You can even choose a “pure own occupation” definition of disability that adds to the above that you can even work in another occupation and still be considered disabled.
The Disability Insurance application process is faster, easier than ever.
It’s easy to joke about insurance companies as old-fashioned and slow to embrace new ideas. But recently we have been impressed with the Disability Insurance industry’s embrace of technology to make applying for coverage easier for you, and to speed up the process. Here are some of the improvements we are seeing:
Online Application and Electronic Delivery of Policy: When we get to the application process we can send you a link to a secure site to input the application information, signing the forms with Docusign. And when the policy is approved and you accept it, you may choose to receive the policy via email delivery of a pdf.
Simplified underwriting can mean no paramed exam, etc.: One requirement of many DI applications is completing a paramed exam, a short physical paid for by the insurer, and conducted by a nurse, to get basic health information from you for the underwriter. But many insurance companies are no longer requiring these under certain age and income limits, choosing to save the time and expense of the paramed exam and rely on other electronic information they can access.
These improvements mean that the DI policy approval process used to take months, but now can be completed in a week or so.
Can’t I just choose the Disability Insurance offered through the AOA Excel program? It is endorsed by the American Optometric Association, so it has to be the best choice, right?
The answer is…it is one of the options, not the only. And not even close to being the best choice.
First, you must understand that there are group Disability Insurance policies (one policy type, a contract between an employer group and the insurer, not you, few promises made… this is what employees are offered as an employee benefit by large employers) and individual Disability Insurance policies (personalized for your needs, many options to choose from, a contract between you and the insurer only, many promises made). Despite how it is presented the AOA Excel program offered Disability Insurance is a group plan. The stronger choice most people choose, and we research and offer, are individual Disability Income Insurance policies.
There are many differences, but the one to focus on are the “promises made” by the insurance company. As that is what all insurance is based on, and why you pay monthly costs to an insurer for in the first place….the promises the insurance company makes in the case that a disability prevents you from working. Below are six (6) main differentiating factors when it comes to “promises made” with individual Disability Insurance policies from multiple insurance companies vs. the AOA Excel offering.
Individual DI policies are “non-cancellable and guaranteed renewable.”
Individual Disability Insurers offer policies that are "non-cancellable and guaranteed renewable." This tounge-twister of a promise means the only reason the coverage can be terminated is for non-payment of premium costs.
The AOA Excel Plan makes no such promises, reserving the right to cancel the coverage if they no longer sponsor the coverage, or choose to work with a new insurer. And if a certain threshold of people do not participate, the plan can cancel immediately.
The promise of non-cancellable and guaranteed renewable ensures you always have access to DI coverage. The AOA Excel group rules could suddenly leave you without income protection.
Individual DI policies promise optional benefits important to optometrists. AOA Excel does not.
Many strong insurers offering individual Disability Income Insurance have begun to offer two additional options (for an extra fee), perfect for optometrists:
-Student Loan Reimbursement Option: This optional rider, if the proposed insured becomes disabled and begins receiving the monthly benefits makes additional payments to a disabled insured’s student loan provider while the insured is out of work, covering all or part of the student loan payment due.
-Retirement Savings Option: This optional rider, in the event of disability, while the insured is receiving benefits, other monies are set aside to help the insured continue to save for retirement.
The AOA Excel group plan does not offer either of these two optional benefits in their “Group Long-Term Disability Income Insurance Plan” offering.
Individual DI policies promise innovation in benefit options. AOA Excel group coverage does not.
Individual Disability Income Insurance providers improve on their benefits over time to keep pace with our ever-changing financial landscape. For example, individual DI insurers offer Disability Insurance benefits up to age 67, and up to age 70, as options to mirror current retirement age trends. But the AOA Excel plan is stuck at the older limit of to age 65.
Another example is that the AOA Excel plan offers an “own occ” definition of disability, but benefits are not payable if the insured works in any other occupation. Individual DI insurers offer the optional “pure” or “true” own own definition of disability where benefits are payable if you cannot work in your occupation, optometry, but choose to work elsewhere in another occupation.
The AOA Excel group plan limits disability benefits due to mental health diagnoses to 2 years.
Many Disability Insurance providers impose a 2-year limitation on benefits for disabilities resulting from diagnoses of mental disorders or substance abuse. Benefits would be paid for the duration of the benefit period if the disability continued (examples, 10 years, to age 65, age 67 or age 70) for any other diagnosis.
Then those same DI insurers offer an option or rider, removing the 2-year limitation on benefits for M.D. / S.A. disabilities. They give you the choice to:
-Accept the two year limitation for mental disorder and substance abuse diagnoses to lower the cost
-Choose the rider to build a stronger benefit policy
The AOA Excel group plan imposes the 2-year limitation on benefits for mental disorder / substance abuse diagnoses, with no option to extend
Individual DI policies promise that costs cannot rise, ever. The AOA Excel group coverage does not.
When you apply for and accept an individual Disability Income Insurance policy, the insurer make the promise that the initial premium cost each month is set for life. For the coverage applied for the cost will not rise as you get older, or develop a health issue, or just because a year has passed and costs have moved up. The rate is the rate!
The cost of AOA Excel group DI coverage can rise, whenever the insurer that offers it decides to raise the rates on a class-wide basis. (“class-wide” means for everyone in the group) At any time.
There is no promise of holding cost, and much like a term life policy, a surprising letter with a rate increase can show up in your mailbox at any time.
Individual DI policies promise the possibility of increasing benefit as your income rises. AOA Excel caps.
Throughout your optometry career your income will rise over time due to experience, excellent care, and practice ownership. So your Disability Insurance benefit needs to keep pace with that increase.
Individual Disability Insurance providers promise that you can keep requesting for more base monthly benefit as your income increases, up to a maximum that keeps pace with those increases. The best insurers offer up to $35,000 monthly in benefits if your income warrants it, and will coordinate with group coverage up to $35,000 total. The AOA Excel plan caps the maximum total monthly benefit at just $7,500.
For optometrists starting in practice with no income history the AOA Excel program offers a $2,000 / mo. benefit. Individual insurers offer $4,000 monthly.
