Veterinarians
Disability Income Insurance for Veterinarians
We have worked with veterinarians for twenty years, helping all types, from local hospital veterinarians to veterinary specialists to practice owners, research and choose the best Disability Insurance for their particular situation.
Why is it so important that veterinarians have Disability Income Insurance in place?
All working people who rely on their income to fund their family budget have a real need for Disability Insurance. This need seems amplified 10 times with veterinarians.
Put simply, people who use their bodies in their work worry that a disability would prevent them from working (ex., a manufacturing plant worker). People who primarily use their knowledge worry that an illness or injury that damaged their cognitive ability would prevent them from working (ex., a teaching and research professor). These two "tools" of our work, body and mind, merge seamlessly in the work of a veterinary doctor.
Veterinarians research and share knowledge with their colleagues and patients, use their knowledge to diagnose and treat, and also use their bodies physically to treat, perform surgery, and care for their patients.
So any type of injury or illness, be it something as simple as a hand injury, or a chronic disease that affects their back (ex., bulging disk), or their cognitive ability (ex., Parkinson's disease) prevents veterinarians from engaging in their full range of duties. This harms, in all or part, a veterinarian's ability to earn an income and fund their family budget.
Can’t I just choose the Disability Insurance offered through the AVMA Life Trust? It is endorsed by the AVMA, so it has to be the best choice, right?
The short answers to those questions are “You can, but…” and “Not usually.”
First, you must understand that there are group Disability Insurance policies (one policy type for all, a contract between a group and the insurer, not you, few promises made) and individual Disability Insurance policies (underwritten to your specifications, many options to choose from, a contract between you and the insurer, many promises made). The AVMA Life Trust offered Disability Insurance is a group plan. The stronger 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 AVMA offering.
Individual DI policies are “non-cancellable and guaranteed renewable.”
Individual Disability Insurers offer policies that are "non-cancellable and guaranteed renewable." This promise means the only reason the coverage can be terminated is for non-payment of premium costs.
The AVMA 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. The insurer can drop the AVMA coverage if a certain threshold of people do not participate.
The promise of non-cancellable and guaranteed renewable ensures you always have access to DI coverage. The AVMA group rules could suddenly leave you without income protection.
Individual DI policies promise optional benefits important to DVMs. The AVMA group plan does not offer.
Many strong insurance companies offering individual Disability Income Insurance have begun to offer two additional options (for an extra fee) that suit DVMs:
-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 AVMA group plan does not offer either of these two optional benefits in their “Disability Income Plan” group disability insurance offering.
Individual DI policies are portable and flexible in occupation. AVMA group coverage is not.
Individual Disability Income Insurance providers make the promise that the policy is portable to other jobs and employers, allowing you to utilize the policy throughout your working career. Even in the rare case of an occupation change, the insurer would cover you in case of a disability experienced while in the new occupation.
The AVMA Life Trust group disability insurance plan is not portable. You must be a member of the AVMA to enroll in, and maintain the coverage. If you dropped AVMA membership, or transitioned into a new occupation, the AVMA group DI coverage would end.
If your health has changed for the worse over the years, obtaining a new DI policy may be difficult.
The AVMA 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 AVMA group plan imposes the 2-year limitation on benefits for mental disorder or substance abuse diagnoses, with no option to extend it.
Individual DI policies promise that costs cannot rise for any reason. AVMA 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 AVMA 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.
The AVMA group plan forces you to purchase something called “decreasing term life insurance.”
Eligibility for the AVMA group disability plan includes the requirement to purchase a “Basic Protection Package.” That coverage is essentially a $75,000 group term life insurance benefit that at age 35 begins to decrease in death benefit every year!
Each of us needs to properly plan for our need for Life Insurance, but no one needs “Decreasing Term Life.” That is like buying a new car and each year an important part (tire, window, oil pan) vanishes into thin air! What is the point?
This coverage currently sits (as of 11/01/19) at $4.83 monthly. A new DVM choosing the AVMA group plan and keeping through retirement would pay $2,318.40 for the coverage over a 40 year span!
Individual DI policies promise not to bundle superfluous coverage like this with your policy.
The importance of choosing the "own occupation" (or “your occupation”) definition of disability option when choosing veterinarian-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 (veterinary 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 veterinary 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.
How does this translate to real life?
Here is a good example from one of our longtime clients. A veterinary ophthalmologist, he purchased his Disability Income Insurance policy just 6 months after completing his university work, and securing his first job. 2 years later, while working in his woodworking shop (his favorite hobby) he suffered a deep cut on his hand and fingers and lost the use of one of his hands, with no idea of the healing time or when he would be back to work.
Even though our client still had all of the expertise and experience stored in his brain, the veterinarian's body could no longer fully act on it! Under the first, regular definition I outlined, the insurer might say, after a period of disability where he had recovered, but not the use of his hand, the veterinary ophthalmologist could teach in veterinary school, or just see patients, no surgery. He was suited for each of these jobs because of education and experience. But, his earned income would be much lower because he could not perform surgery with the current range of motion in his hand.
With the "own occupation" definition his policy carried he received the full disability benefit his policy offered since he could not perform surgery, a key component to his practice. If his hand was disabled forever that benefit would have continued to his age 67, per his policy. Luckily his hand healed and was able to return to work within 14 months of the accident.
You can buy individual Disability Insurance while still in vet. school.
Insurance companies that offer individual Disability Insurance offer special programs for young professionals, including veterinarians.
You can purchase a set amount of Disability Insurance monthly benefit while still in veterinary school without having to prove a current income. Once in practice, you can add to the monthly benefit as your income increases over time.
Veterinary 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.
Rates depend on what you do at work as a veterinarian.
One of the cost factors of Disability Insurance is risk, or how dangerous your work is. The more “ hands on” work, the higher the cost.
This means that small animal veterinarians enjoy lower rates than large animal veterinarians, when comparing similar income levels. And Veterinary Technicians, whom should also consider Disability Insurance, also pay rates for “higher risk” at work.
