In this episode of Cover Your Assets, disability insurance specialist Billy Gwaltney addresses whether physicians should prioritize paying down debt or increasing private disability coverage. He emphasizes the importance of having adequate insurance before debt repayment, especially for physicians facing high student loans and career uncertainties.
Key topics
- Importance of disability insurance for physicians
- Risks of relying on employer policies
- Timing of insurance purchase relative to debt payoff
- Balancing debt repayment with insurance coverage
Key Takeaways
- Physicians often face a real tension between paying down debt and increasing disability coverage.
- Billy recommends having adequate disability insurance in place before aggressively paying off debt.
- A physician’s ability to work in their specialty is their most important financial asset.
- Employer disability policies may not provide the same claim protection as private specialty coverage.
- Waiting to increase coverage can be risky because illness or injury may make it too late to qualify.
- Strong disability coverage can help protect income, debt repayment plans, family needs, and long-term financial goals.
Transcript
(00:01.836)
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.
(00:20.034)
Hi there. Welcome to this episode of the Cover Your Assets podcast. I’m Billy Gwaltney, your host. It’s great to be with you. Today’s episode, I’m going to answer the question, should I pay down debt or increase my private disability coverage? I’ve gotten this question a number of times, sometimes from people in training, other times when they’re thinking about buying insurance at all, other times
from new attendings who really want to pay down a lot of debt as soon as possible because they’re finally making an attending income and they really would like to put off increasing their disability coverage. And I totally get that. It makes sense to me. I would be tempted to do that as well. Put everything else off and throw every nickel I can towards the debt.
Obviously getting rid of the medical school debt, is massive. It’s one reason I love working with physicians. I admire what you ladies and gentlemen have to go through to get where you are. And then for the privilege, when you come out of training and start making a decent living, hopefully to then have to pay down a lot of debt that got you there. So I understand that.
I do have some words of caution and that is whether you’re thinking about it as a trainee or an attending, not getting insurance, the issues with that, either not buying it or not having enough, is that if the bad day shows up, your plan B has to be in place prior to that day occurring. You can’t fix your plan B once plan A is not working.
So plan A is to have a long productive career, pay down the debt and save money and never need insurance. But plan B needs to be the best insurance on the planet so that if you did become disabled, you can still pay down the debt and you can still live in the house you live in and hopefully your children can go to the school you want them to go to and your dreams don’t all disintegrate in front of you. And if you don’t have insurance, those dreams are likely going to disintegrate.
(02:41.676)
relying on an employer policy. Some new attendings think that, I’m going to work at this employer where they say they’re going to pay me 15 or 20,000 a month in my group disability. Good luck collecting on that. Our clients on claim, over half of them never see a nickel from their employer policy just because the definitions are so bad. Even if they call it own occupation, they define that very differently than how this private specialty coverage defines it.
I’ve got plenty of podcasts and happy to discuss in as much detail about the difference in the definitions and private coverage versus group or employer coverage. It’s like night and day in terms of actually what happens at claim time. But staying to the point about should you increase versus paying down debt? I would say that to the extent you want to have insurance in place,
to be able to maintain your way of life and hopefully also pay down debt, whether it’s through a student loan repayment rider or whether it’s through just having enough disability coverage to still pay down the debt and save for retirement and so forth, then yes, you need to buy it and not put it off. Because if you put it off and the illness or injury shows up and you can’t do your specialty, then you’re toast if you don’t have enough insurance.
The category that this falls into, if you’re not careful, is the same penny wise and dollar not so wise, where we can get so focused on maximizing every nickel and dime towards the debt that we shortchange smart and prudent financial decisions that we need to make. And your number one asset as a physician is your specialty, your ability to do your job and do it well and make a good living doing that.
And that’s going to produce a paycheck every two weeks or once a month or however frequently you get paid. And that’s a nice paycheck that your family’s counting on. So ensure that Warren Buffett insures his most important assets. Insurance makes sense. Whether you’re a billionaire or not a billionaire. Insurance is just smart business when it comes to your most important assets. So bottom line, yes, I would, I want to go on record recommending that you
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increase your disability coverage or buy disability coverage and not put it off until you’re debt free. It’s a risky approach. Obviously if it works, more power to you. But if you’re Plan A, it doesn’t take much for an illness to hurt back or herniated disc and you can’t do your job and then it’s too late to add to it at that point. So factor that in. I certainly understand the
kind of the angst behind making that decision. makes sense. So consider this as food for thought. I would love to discuss your situation in more detail. Message me here. Text me 704-270-2376. Once again, 704-270-2376. Thank you as always. 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.
