In this episode of Cover Your Assets, host Billy Gwaltney addresses whether residents and fellows should wait until graduation to purchase guaranteed standard issue disability insurance. He covers the benefits, timing, and strategic considerations for securing disability coverage during training using his expertise in disability insurance.

Key  topics:

  • Eligibility and timing for guaranteed standard issue disability insurance
  • The importance of securing disability insurance during training
  • How insurance carriers manage growth and risk with GSI
  • Strategies for affordable coverage as a resident or fellow
  • Long-term benefits of early disability insurance purchase

Transcript:

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Welcome to the Cover Your Assets podcast, a show for the physician who understands the importance of protecting everything you’ve worked so hard to achieve. If you’re ready to find the peace of mind that only financial security can bring, let’s get started. Here’s your host, Billy Gwaltney.

Welcome to today’s episode of the Cover Your Assets podcast. I’m your host, Billy Gwaltney, and it is good to be with you as always. Today’s topic is covering a question that I was asked recently by a resident, which is, is it OK to wait until I get to graduation before I buy guaranteed standard issue disability insurance? And that’s a good question. It’s a valid question.

And I went over the answer and I think they were slightly surprised because some of the answers are not necessarily intuitive. And so I give them credit for wanting to know. The answer is technically you are eligible for the GSI, guaranteed standard issue, which is the best disability insurance on the planet, best contracts where the insurance carrier completely waives the medical screening component of it.

And this is eligible for you if you are a resident or fellow at the facility where they are allowing it to be purchased as long as they allow the program to exist. What’s important to know is that insurance carriers are not required by law or statute or any other reason to offer guaranteed standard issue. The only reason they do it is to incentivize growth over a period of time. And there will be a time when they will shut it down.

not shut down the access to their disability insurance, but shut down the no medical screening component of it. There are actuaries at insurance carriers that are essentially nervous all the time. And they are going to reach a point where they’re just too concerned about adverse selection, which means when there’s no medical screening, the people that know that they have medical history

Patrick Childers (02:11.544)

a lot of times the most significant medical history. Those are the ones that are first in line typically as soon as they find out about it. And that scares insurance companies. can bankrupt insurance companies if they had to pay out too many claims. Now these carriers have been around for close to 200 years, so they know what they’re doing. And so they’re gonna spur the growth. They waive the medical screening. They allow you to have access. And it’s there until they decide not to allow it. Technically,

They don’t have to announce it. They could stop today. There’s no, they generally would give an off ramp of maybe 30 days or to the end of the month, or sometimes they’ll announce it, hey, this is the last resident graduating season, we’re gonna do this. But generally, they’re shorter on the announcement because they’ll just make a decision that says we have enough growth and we’re gonna kind of turn back.

the spicket, the water spicket, so that the water doesn’t come out as fast, so that we’re not growing as fast, because their actuaries actually get nervous about that. So it’s not necessarily intuitive. People tend to think insurance carriers are greedy. They want your money. They’ll always take your business. They do want to grow, but they want smart growth. And so there are actually times when they don’t want your money. They don’t want your business, unless you go through their medical screening, which is where you sign a HIPAA and they ask 30

you know, 25 or 30 medical questions, they do a script check and they reserve the right to decline you or rate you or exclude pre-existing conditions. So yes, technically you can wait. Is it wise to wait? That’s an entirely different discussion. And I know that residents and fellows, clients we work with, the budgets are really tight typically. And so they’re just looking to kick the can down the road if they can. And I would too.

And so that’s why I think that’s a valid question to at least understand. The other thing to understand is that the insurance carrier may not require you to buy 5,000 or 7,500 or 8,000 or whatever of initial benefit. Maybe you could start lower. One carrier we work with will let you go down to $1,000 a month. Another one will let you go down to 2,500 a month if you’re a resident and 4,000 a month if you are a fellow.

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So you could start off lower and one carrier offers a graded or increasing premium that starts off cheaper and gets more expensive. Now you ultimately overpay for that, but that would allow you to on a tight budget get the coverage without having to wait. The key to understand is that once you get the insurance, they can never take it away from you. Okay, so if you buy the insurance on Monday and you pay the premium for that,

and the insurance carrier says on Tuesday we’re no longer offering this to anyone, you’re in. You’re in forever. It’s non-cancellable and guaranteed renewable. They can never take it away from you. They can never cancel the policy. They can never change the rate or the definitions. So the key is just getting it. Find out what that entry point is that your budget can handle and check the box.

because then you can, number one, you have coverage in case something happens in the meantime while you’re still in training. We have had clients get disabled in training. So it’s, you know, there’s no suspension of the risk of life until you become an attending, as if being disabled in training is impossible. And I think obviously, you know that, but so you have the coverage, but also you have the ability to flip the switch and increase up to 15,000. Once you become an attending with the same definitions, the same discount.

no medical questions, and so you’re securing your future. Your most important asset will always be, as a physician, your ability to earn a significant income over your career. Ensuring that is just smart business. It’s the key. It’s the foundational piece to any financial plan, making sure that your private specialty disability coverage is in place. Your employer group long-term disability policy is much more difficult to ever collect.

it would be unwise to assume that you’re going to get anything from that. You want to base your plan on can your bills and your dreams and your retirement be funded with your private specialty disability coverage benefit. Technically you can wait, there’s no law that requires you to buy it now, but it is buyer beware. It will also cost more if you’re older when you buy it. If you’re disabled then you no longer can get it.

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If you apply elsewhere, you’re forever removed from eligibility for the GSI. And if you miss any work, one carrier has a six month, if you miss any work in the six months leading up to the application, they reserve the right to remove your eligibility. Now, if you miss a sick day or take a long weekend, that’s okay probably. But if you are out on maternity leave, if you’re out for surgery, if you take an extended vacation, those can be deal killers for the GSI.

So get it while it’s there, put it to bed, and then move on down the road. That’s the wisest approach that I can advise someone to take. I’d be happy to discuss your situation in more detail. Every situation is unique. So message me here if you’d like to discuss further 704-270-2376. Again, 704-270-2376. Thanks for your time. I appreciate it.

Take care, see you next time. Thanks for listening to the Cover Your Assets podcast, an odd conduit media production. New episodes drop every two weeks. If you’ve enjoyed the conversation, subscribe, rate, and review this podcast. For more tips and advice, visit the website and YouTube channel. Check the show notes for links. Join us next time for another episode dedicated to helping physicians like you get your disability insurance right and protect your way of life.