The Own-Occupation Disability Policy a 41-Year-Old Surgeon Just Renewed at Half Her Old Premium Despite Earning Twice as Much
A surgeon's disability insurance renewal revealed a premium quirk that most high-earning professionals never think to check, and it could mean the difference between financial security and catastrophe if they can no longer do their specialized work.
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If you’re in a high-earning field, your biggest financial risk may be losing the ability to do your job.
Doctors, dentists, attorneys, and other specialized professionals often spend years developing highly specific skills that can generate substantial income. But if an illness or injury prevents you from doing your job, the financial consequences could be severe.
Imagine you’re a doctor earning $300,000 a year. If an injury forces you to stop working mid-career, you could lose out on millions of dollars in your lifetime.
That’s why it’s so important to buy disability insurance. But the type of insurance you buy matters, and so does the timing of your application.
Recently, a 41-year-old surgeon renewed her disability insurance coverage and was surprised to discover that her premium was roughly half of what she had previously paid, despite the fact that her income had more than doubled since purchasing the original policy. Her experience highlights the importance of applying at a relatively young age, shopping around, and choosing the right coverage.
Understanding own-occupation disability insurance
Not all disability insurance policies provide the same level of protection. The specific type of policy you have dictates what coverage you get based on different circumstances.
True own-occupation insurance usually provides the highest level of protection. It pays your full disability benefit if you can’t do your specific job, even if you’re able to work in a different field or earn money doing something similar. For example, if you’re a surgeon who can no longer perform surgery but choose to teach medicine, you may still be eligible for your full disability benefit.
Modified own-occupation insurance, meanwhile, is a more restrictive version of true own-occupation insurance. It pays your full disability benefit only if you’re unable to do your specialized job and also can’t work in another field.
How to make sure you have the coverage you need
Sometimes, comparing insurance rates could allow you to save loads of money on your premiums like the surgeon above did. But also, one of the most important things you can do is purchase your insurance while your health is still in great shape.
Insurers price policies based largely on age, health status, occupation, and risk factors at the time coverage is issued. A young physician in her early 40s is more likely to snag a lower rate than a physician in their mid-50s.
When you look at different policies, make sure to read the language carefully. It’s important to know exactly what coverage you’re buying.
It’s also important to have a comprehensive disability income strategy that includes employer-provided long-term disability coverage. But you don’t want to rely on long-term disability coverage through your job alone.
While employer plans can provide some protection, they may only replace a limited portion of your income. If you’re a higher earner, a long-term disability policy alone may not allow you to maintain your lifestyle if you can’t work in your field any longer. Adding own-occupation insurance is therefore crucial if you earn a large paycheck in a specialized field.
In many cases, financial professionals recommend targeting a total disability benefit that can replace 60% to 70% of your earnings. But you’ll need to take your own specific needs into account when buying coverage to ensure that you’re adequately protected.
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Maurie Backman has more than a decade of experience writing about financial topics, including retirement, investing, Social Security, and real estate. Her work has appeared on sites that include The Motley Fool, USA Today, U.S. News & World Report, and Kiplinger.
Prior to becoming a full-time financial writer, Maurie worked in the financial industry trading distressed debt. She then changed course and spent a few years designing electronic toys. After a stint in content marketing and UX, she shifted back into writing and has since covered everything from the housing market to estate planning to Medicare.
When she's not busy writing, Maurie can be found hiking, walking her dogs, driving her kids to their various sports practices and games, and curling up with a good book. She cooks on occasion and bakes way too often.
