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158. Protecting Your Most Valuable Asset: Disability Insurance Demystified | Lawrence Keller, CFP
9 Plays10 months ago
Lawrence B. Keller is a CERTIFIED FINANCIAL PLANNER™ professional and the founder of Physician Financial Services, a company dealing exclusively with the financial needs and concerns of members of the medical profession.
Mr. Keller has spent the last 33 years providing insurance and investment products and services to resident, fellow, and attending physicians.
These include, but are not limited to, disability income insurance, life insurance, and investments.
Mr. Keller represents many well-respected companies in the financial services industry, which allows him the flexibility to provide unbiased advice and help recommend products that best suit each individuals needs and concerns.
Recognizing that a physician's time is limited, and in an effort to remain knowledgeable to provide the most value to his clients, Mr. Keller has obtained his CFP® certification as well as earned the Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC), Registered Health Underwriter (RHU) and Life Underwriter Training Council Fellow (LUTCF) designations.
Mr. Keller continues to keep abreast of the marketplace by attending professional conferences, and is an active member of the National Association of Insurance and Financial Advisors (NAIFA), the Financial Planning Association (FPA) and the Society of Financial Service Professionals (SFSP). In addition, Mr. Keller has qualified for the National Association of Insurance and Financial Advisors National Quality Award and is also a Qualifying & Life Member of the Million Dollar Round Table (MDRT), an independent, international association of the life insurance industry's most successful underwriters. He is also a qualifying member of the 2023 Top of the Table®.
In this show, we discuss:
The importance of having a disability insurance policy
The important variables built into the policy
Pearl and pitfalls of acquiring a policy
Shopping and comparing insurance policies
Finding the right agent who is working on your behalf
Resources mentioned in the show:
WCI on disability insurance
Jimmy Turner on Medicine Redefined
Recommended
Transcript
Introduction to Medicine Redefined
00:00:07
Speaker
Welcome to Medicine Redefined, a podcast focusing on helping you reclaim ownership of your health. I'm Dr. Darshah. And I'm Dr. Altamash Raja. We're your hosts, here to challenge conventional practices and uncover the stories behind pioneers shaping the future of medicine. Our conversations not only focus on the individual level to dissect common practices for health optimization, but also zoom out to enhance systemic change. Join us as we look to break the status quo, move the needle forward, and put the health back in healthcare.
Guest Introduction: Larry Keller
00:00:37
Speaker
Our guest today is Larry Keller. Larry is a certified financial planner and the founder of Physician Financial Services, a company dealing exclusively with the financial needs and concerns of members of the medical profession. Larry has spent the last 30 years providing insurance and investment products and services to resident fellow and attending physicians such as disability insurance, life insurance and investments.
00:00:58
Speaker
Larry represents many well-respected companies in the financial services industry, which allows him the flexibility to provide unbiased advice and help recommend products that best suit each individual's needs and concerns. Recognizing that physicians' time is limited and an effort to remain knowledgeable to provide the most value to his clients, Larry has obtained his numerous certifications and designations that make him more than qualified to help conditions.
00:01:20
Speaker
During his time in the industry, Larry has earned numerous awards, including the National Association of Insurance and Financial Advisors National Quality Award, and is also a qualifying and life member of the Million Dollar Roundtable, an independent international association of the life insurance industry's most successful underwriters. He is also a qualifying member of the 2023 Top of the Table.
00:01:41
Speaker
So in this episode, we talk all about asset protection.
Importance of Asset Protection
00:01:44
Speaker
You know, despite all the time medical professionals and healthcare providers spend training, they often fail to realize that their future skill set is their greatest asset. And much like any other valuable asset in life, your house, your car, it needs to be protected. So we start by discussing the complex topic of disability insurance.
00:02:04
Speaker
DI is one of the most complicated products on the market and quite honestly is one of the reasons people don't consider it because it's intimidating. While I promise you that if you're patient and stick till the end of this part one, you'll have a comprehensive understanding of what disability insurance is and more importantly, why you need it today. You'll also learn how to navigate conversations with insurance agents and what to look for when you're shopping for various policies.
00:02:30
Speaker
Now, Larry and I also covered other topics like life insurance and other types of policies. But due to the complexity of this first topic, we decided to break that up for a part two. So you have time to digest the depth of information coming at you today. So please get your pen, pencil and notebook and get ready to learn all about disability insurance. Larry Keller, welcome to the show, man. Thanks so much. Great to be here. I've been looking for this, looking forward to this for what, three years now?
00:02:56
Speaker
It's been a long time coming. Yeah. When we first got the show going, you know, Darshan and I were brainstorming and he's sad that he couldn't be here, but I think he's, yeah, he's actually out of the country now. But I, I just, I was like, man, this is an important topic and we've been waiting for this for such a long time. And as we were brainstorming at one of our earlier meetings, I said, Hey, asset protection, disability insurance, something that we have to
Personal Stories and Anecdotes
00:03:18
Speaker
talk about. This was my senior year in residency and you and I had known each other for a couple of years now and I already done my deep dive in DI.
00:03:25
Speaker
And, you know, I'm the the PM and our chief resident walking around beating the disability insurance drum to all of my core residents. And so, yeah, it's funny that we talk about this because I had the conversation with one of my colleagues earlier today, one of my best friends who's in attending now and he still doesn't have this. So I will be sure to send this his way afterwards and help him out, get you connected with him. But let's let's dive right in, man. I am. You know, I'm actually excited to ask you this question because we've known each other for five, six years now, maybe more.
00:03:54
Speaker
I don't think I've ever really asked you. I know what you primarily do at this point, correct me if things have changed, is disability insurance. Is that correct? Yeah. I would say I'm probably 75% disability insurance, 25% life insurance, and then everything else is just good old fashioned. Let's talk about financial planning strategies. I'm not looking to manage anybody's money. I'm not looking to do written financial plans for them.
00:04:22
Speaker
Any of that is really just ancillary that says, hey, look, I'm not conflicted here. I'm going to give you the advice that you need, whether you want it or not. If you want it, the door's always open. If not, that's okay too. But at least you've got a qualified set of eyes looking over what it is you might be considering. I love that, man. I know now disability insurance is a product that's very complicated and we're going to dive into the nuances of it in a little bit.
Larry's Journey into Insurance
00:04:50
Speaker
I don't think I know your origin story. People don't just dive right into disability insurance. Most people will start, as you mentioned, you'll get some certifications in financial planning and you might want to be a financial planner or advisor of some sort. So talk a little bit about your journey and why you wanted to go that route, and then maybe specifically, why asset protection in terms of insurance policies? What drew you to that? Well, you'll laugh when I tell you this. So unlike medicine, where you guys at a very early age
00:05:20
Speaker
You know what you need to do to become a physician. You know, you typically will figure out your specialty somewhat early on, you know, maybe at least at the end of med school, you've done enough rotations. You're like, I like this. I definitely don't like that.
00:05:34
Speaker
I actually thought I was going to be in men's clothing. I grew up, I was in retail. I worked at just about every place I could have in the mall that was by my house growing up. I graduated. I had a psychology major with a business minor, not realizing how well that would actually serve me for this, because I had no
Understanding Disability Insurance
00:05:58
Speaker
intention of this. I mean, no one wakes up and says, I cannot wait to become an insurance agent.
00:06:04
Speaker
Most of the time, it's either a complete accident, which was what happened to me, or someone like me says, hey, I've got a lot of knowledge. I want to now teach the next generation of planners and insurance agents, and I'll find that person and I will mentor them.
00:06:24
Speaker
They always say when the mentor is now being outperformed by their mentee, that's the highest compliment you can possibly get. I love to see that. I love to share my insights not only with physicians, but with my peers. I really come from the mindset of
00:06:45
Speaker
There's a lot of stuff out there. Scarcity does not need to be one of them. And as we've spoken, I even tell people in my industry, I could tell you what to say. I could tell you what to do. I can try to impart as much knowledge as I can on you.
00:07:03
Speaker
you're never going to be me. So take the information that I give you, take what you like, adapt it to your own style, and use that and be true to yourself. Don't try to be me or anybody else in the industry. So when I first started, I had no idea what I wanted to do. I really thought I was going to be in men's clothing. I ultimately didn't go that route. I finished up
00:07:31
Speaker
I was interviewing in college. The only people that would talk to me were insurance firms, stock brokerage houses. I had no idea. I remember one pretty well-known company said, hey, let me show you what my W-2 was. You can see how much I've earned.
00:07:48
Speaker
I had no idea what a W-2 was. I wasn't slightly impressed with what they were showing me, but I wound up working at a large insurance company, interviewing like a mad dog for a job that had no salary. I was a psychology major, so I kind of knew how to answer these pretest questions.
00:08:10
Speaker
Something to the tune of, I don't want to be a team player. I want to be rewarded for my own efforts. I will work an ungodly amount of hours for my own potential reward. Sounds a little bit like internship and residency. I'll take my tests, and then they set me out on the world. And originally, I was taught to use life insurance as a means of college education funding. Now, thankfully, I was not very good at it.
00:08:40
Speaker
It's certainly less than an ideal product to use for that, especially when children are getting older. I didn't have any kids. I was a kid myself. I started at 21, and I was pretty lousy at it. And I ran into an individual that said, look, I know what you're here to talk about, college education funding and things like that, but that's not what I'm interested in.
00:09:07
Speaker
And he said, I'm a consultant. I am my own business. And what keeps me up at night is if I get too sick or hurt to work, where is the money going to come from? And I flashed back and I'm like, oh my God, he's talking about disability insurance.
00:09:24
Speaker
And that's what got me excited. Unlike creating a financial plan where it's really all based on assumptions, right? Ultimately, what's your tax bracket gonna look like? What kind of rate of return do you expect to get on your assets? What do you think inflation is going to look like? Really is built on so many assumptions that the plan can certainly work, but a long-term financial plan for it to be real
00:09:54
Speaker
is really just a series of short-term financial plans. And if you're doing that, you're going to be okay. But if you're going for a long-term financial plan and you're not checking in with your advisor on a pretty regular basis, the question always becomes, well, is the plan working?
00:10:13
Speaker
Well, sure, the plan's working, but you know, all those assumptions that we made, they're not really holding true. So I can make the plan work that much better. You just have to give me more money to fuel the car. And to me, that was never a pleasant conversation. So here was this guy pouring out his heart of what's keeping him awake at night. And I said, you know, even the best laid financial plans will not work without the money going into the plan.
00:10:43
Speaker
And at the end of the day, if you look at us, whether we're physicians, attorneys, financial advisors, we're really just highly educated, hopefully highly motivated money-making machines. And ideally we love what we do. That's what makes us good at it. But at the end of the day, people really look at this the wrong way. They will ensure, not the machine,
00:11:10
Speaker
they'll ensure what is generated by the machine, right? Their cars, their home, their jewelry. Never thinking that their most valuable asset is their ability to get out of bed every day, do what they love, earn the income that they deserve as a result of their education, training, and experience. And if the machine breaks down,
00:11:35
Speaker
so does their financial plan. So disability insurance is really nothing more than ensuring the money machine. So if the machine breaks down, the money still gets generated. Which is interesting because they certainly appreciate the value of tuning up the machine, right? That's where you do certain residency training. Maybe you'll do one fellowship, two fellowship, three fellowship, right? So you're acquiring these skills. And so you understand that
00:12:02
Speaker
You're only as valuable as the more procedures you can do with the more skills that you have. But then not appreciating is, well, what happens in if in a sudden instant you get a car accident, you're walking the street running or something like that and that's it. You no longer can apply those skills that you've accumulated over a decade, probably more if you consider undergraduate education as well. So I want to start right there. Right. So we talked about you teed it up really well. Disability insurance. I think that is probably the most important thing to understand.
00:12:32
Speaker
Larry, we've had no shortage of our financial health topics. We talked a lot about student health. When we talk about, it's a health podcast, but financial health is just as important to physician, life satisfaction, quality of life. It's one of the pillars and it's also a big reason for burnout and things that we're passionate about and we try to avoid and empower ourselves
00:12:55
Speaker
And so I think it's important to understand. And one of the most critical foundational pieces of information is for young physicians as early as residency, maybe even towards medical school. You'll talk about that to understand this product. So how do you, somebody who's an absolute beginner has never even heard about disability insurance. You've already kind of
00:13:15
Speaker
explained it really well, I think using the analogy of a machine. How do you start that conversation? Introducing some of the key variables, phrases that come to mind for me as own occupation, guaranteed renewable, non-cancelable, and then we can talk a little bit more into the nuances. Where's a good place to start for those who are just getting introduced to this?
00:13:33
Speaker
Yeah, so if they're just getting introduced and they're like, okay, academically, it makes sense. It sounds like I need disability insurance, but where do I even start and what do I look for in terms of a policy? So there's a couple of pillars to a policy I would say that really need to be there. So the first one is exactly what you said, is you wanna make sure your policy is both non-canceable and guaranteed renewable.
00:14:01
Speaker
And this really means, well, once you're in, you're in. The insurance company can't take it away from you. The insurance company cannot change the premium rates, but you can actually get rid of them. You can make changes. Think about it. It's better than a spouse. You can throw it out, and you don't have to worry about losing a large percentage of your stuff. From a consumer standpoint, it really leaves you in control.
00:14:27
Speaker
So the first thing we want to make sure is that we have both non-canceable and guaranteed renewable. Now there is something that's called a guaranteed renewable policy. And the guaranteed renewable policy is good. The contractual provisions are all the same and they're guaranteed with one exception. And that happens to be the pricing or the premium is what it's known in the industry. So let's say I bought a policy in the state of New York
00:14:56
Speaker
It was guaranteed renewable, not both non-canceable and guaranteed renewable. And the insurance company that I bought it from is experiencing a significant amount of claims. And maybe not their entire book of business, but maybe specific areas or a specific segment of the market. So let's say orthopedic surgeons. So now they go to the New York State Insurance Department, the insurance company, and they say, hey,
00:15:26
Speaker
Look at how much we've taken in, look at how much we've paid out. We're really getting crushed here. We would like to ask you for a 25% rate increase. And the New York State Insurance Department says, you can ask for whatever you want. We're not gonna give you 25%, but we will give you 15. Once they receive that approval, that now gets passed right along to the policyholder.
00:15:54
Speaker
So if you're young and you're early in your career and you've got a long horizon ahead of you, if you think about it, we don't know where medicine's going. We don't know where the stock market or the financial industry is going. So what happens if I buy this really young, hoping to lock into a low premium rate,
00:16:17
Speaker
Claims experience is high among my segment. Now the insurance company retains the ability to change the rate based on class of policy holders. So they can't single me out as a solo orthopedic surgeon, but everybody that bought a policy in New York state in that same occupational classification
00:16:37
Speaker
They can pass that along to me. So the first thing I want to make sure is ideally my policy is both non-canceable and guaranteed renewable. If you see that your policy number starts with GR, which stands for guaranteed renewable,
00:16:55
Speaker
Right away, a red flag should go up. And it doesn't mean that what you have is a bad policy. It just means some of the guarantees are not there. And insurance in a really basic nature is about transferring risk. Me paying a premium to transfer the risk away from me towards a third party, the insurance company. The more risk I keep,
00:17:21
Speaker
to me, the less beneficial that policy is. And then you're kind of walking the walk of cost versus benefit provided.
00:17:34
Speaker
That's awesome. Yeah, I'm not really sure I understood that deeply as well. Now, you were talking about the other risk in terms of the premiums increasing over time. I forget, so there's a level of premiums, right? We're going to dive more into that, but are you referring to ... What's the other terminology that's escaping me right now? They call it a graded premium or ... Is that kind of what you're alluding to there, is that if you lock in at a lower rate with a greater premium and that rate increases for the whole class, over time, you might end up paying a lot more later on?
00:18:03
Speaker
Well, that could be a double whammy. So the guaranteed renewable is a type of policy form. Okay. And you either have both non-canceable and guaranteed renewable together. Got it. Or you have guaranteed renewable by itself. What you're referring to is really just the payment structure for the policy. And we'll talk a little bit more about this. But if you think about it, in a very simplistic manner,
00:18:28
Speaker
And I would imagine most physicians have a significant amount of debt, or at least they understand student loans. So a level premium is typically going to be your least expensive way to own the policy over your career. You're locking into a premium rate based on your age today, and that's going to stay the same until your age of 65 or longer for at least that initial purchase that you made. Let's call it $5,000 a month in benefit.
00:18:58
Speaker
But if you're in training and you say, hey, I'm just starting out. I've got a lot of stuff to do. I could be in a high cost of living area. I know I need the insurance and I want to buy it, but my cash flow is just a little tight. Then certain companies offer what's called a graded or a graduated premium where it's a lower rate in the beginning. Each year it gets a little bit more expensive, but you always have the ability to convert or switch from an annually increasing rate
00:19:28
Speaker
to a fixed premium rate. Now the downside to it is the fixed premium rate is going to be based on your age at the time that you make the switch. And ideally the sooner you can get to the fixed rate, the younger you are, the less expensive it's going to be. Now some people
00:19:47
Speaker
are very into the FIRE movement. And you guys probably have spoken about this. And it stands for Financial Independence Retire Early. So let's just say you are a PM&R resident. You are 29 years old. You're looking at a company that has both a graded and a level premium structure. The level premium, think of that like a standard repayment option on your loans. And think of the graded premium like interest only on your loans. Same education.
00:20:17
Speaker
you're just funding it a little bit different. And if you saw on a year-to-year basis, the graded premium is now crossing over the level premium, let's say 13 years, you might say, okay, 13 years, that's pretty good. If I'm 29 and I add enough time to that, now I'm gonna be 41 or 42, yeah, I'm probably not going to be financially independent at that point in time.
00:20:46
Speaker
So then we look at the next column, which is the cumulative basis. And maybe that's going to cross over at, say, 20 years. So now I'm late 40s, maybe even early 50s. I could go one step further. Well, hey, if I took the difference, what I was saving, between the level premium that I should have paid and the graded premium that I chose to pay, I could invest that difference.
00:21:12
Speaker
and potentially that's going to extend those time periods. So now if I bought it at 29 and it's 25 years later, now I'm in my late 50s, there's a good chance if I'm doing proper financial planning, I don't need my policy anymore. And if I cash it out or cancel it before the greater than the level premium crossover, I kind of won the game.
00:21:39
Speaker
Now, I don't see this a lot in medicine. Most of the time physicians are working a very long time and it takes so long for you to get to where you need to be in terms of paying down debt, saving for retirement, paying down your mortgage, saving for your children's college education if that's a desire,
00:22:02
Speaker
that odds are good, you need the policy a pretty long time. If that's the case, the level premium will make the most sense over time. If your cashflow is tight initially, start with a graded premium if it's available and look to switch from graded to level as soon as possible. Yeah. I don't know if we talked about this before, but this is the exact situation I was in. Again, first coming across fire back in 2017, I was
00:22:29
Speaker
all eggs in that basket. And I ultimately ended up working with Paul, who you referred me to, great guy as well. And we had the same conversation. I was like, Paul, look, that crossover for me is around 45, 46. I plan on being financially independent. I can self-insure at that point. It's like, well, that's fair. And he had a very similar conversation, kind of what you're describing at this point. And now we fast forward, I guess, seven years later.
00:22:54
Speaker
and recently coming across Bill Perkins work, you're probably familiar with him, right? Die with zero. So not only that, but also as you get wiser in your years, you get a family, you get a kid, your financial philosophy changes a little bit too. And even the fire movement, I think there has been evolution to that as well. All these people who were in it, to your point, we were talking about physicians rarely, I shouldn't say rarely, but less commonly will stop their day physician job.
00:23:24
Speaker
You know, because again, we're all high, strong type eight people. We need to be doing something. So unless you find some other avenue to keep you busy, you're not going to just, you know, sip Pina coladas on the beach. You're going to be doing something. And a lot of people, they're no longer interested in the retire early portion, but the five portion of it. And that is what excites me today. You know, needless to say, I ultimately did end up switching level premium. And now again, I'm a little bit ascribing more to enjoying
00:23:51
Speaker
kind of life and living in the moment. And partly that's due to my co-host who's helped me appreciate the value of that. And listen, I'm no longer looking to kind of just grind it out, so to speak, you know, and save every little and pinch pennies and, you know, be completely financially dependent at a 45 rather try to enjoy this time that you have, you know, kind of live in the present, so to speak.
00:24:14
Speaker
And then, okay, I'm okay paying until 50, 55, or whatever that ends up being. I'm also fortunate. And if you think about it, there's a saying that I picked up a long time ago. And once you taste the good life, it really is hard to go back. It's very difficult to finish your training as a resident, become an attending, and go back to fellowship. So the saying is, once a luxury is consumed, it becomes a necessity.
00:24:40
Speaker
Very rarely do you find someone driving a Porsche 911 Turbo S convertible. And then they say, you know what, I can't wait to trade this in for a lesser car. If they do, it's probably because they're getting something that's more practical. The desire is probably still there to keep that. But it just doesn't make sense based on their family situation. And you can apply that to just about anything.
00:25:04
Speaker
Yeah. Lifestyle creep is a difficult thing, which is why I think Ryan Inman, you know him really well, right? It's something that I was a big fan of. He would always talk about when you graduate your training, give yourself a 50% increase or even a 25% increase. So you don't feel that hit and you get a 50% increase if you're making 50, 60, 70,000 in your final year, you do that and you're still going to have so much left over to be aggressively putting down towards your savings. So I love that.
00:25:32
Speaker
Um, you, you highlighted some of the, the very critical concepts to understand the other one, you know, this own occupation thing, which is often built in, right? At least some of the big players, but there's own occupation and then there's true own occupation. And sometimes that, that word is put out there and people think they have a good policy, but they don't. Can you talk a little bit about what that truly means? And then some of the implications of not having a true own occupation policy.
00:26:00
Speaker
should you have to file a claim 10 years down the road? Yeah, absolutely. So you're right. I mean, the term own occupation has been, I'll use the term bastardized by physicians, by my industry, guys that sell individual policies like myself, guys that specialize in group policies where they sell them to practices to cover not only the physicians, but the rank and file employees. So let's kind of go from the ideal
00:26:29
Speaker
to maybe a little bit less than the ideal. So the ideal is, and they're all going to read very similar. They're going to say, Altamash, look, if you're disabled and you can no longer perform the material and substantial duties of your occupation, you will be deemed totally disabled.
00:26:47
Speaker
And that's it. It ends right there. It doesn't say you're not gainfully employed. It doesn't say you can't do something based on your education, training, and experience. You really want it to be very simple. So let's say I'm a physical medicine and rehab physician. I can no longer perform my job duties as a physical medicine and rehabilitation physician.
00:27:09
Speaker
I can literally do whatever I want. I can make as much money as I want doing something else. If an accident or sickness prevents me from doing that, I'm deemed totally disabled. And a material and substantial duty are basically the duties that cannot be reasonably omitted from your occupation and allow you to still practice in that occupation.
00:27:31
Speaker
Now we go one step further. You might see something that says modified own occupation. And this will say you'll be deemed totally disabled if you're unable to perform the material and substantial duties of your occupation and you are not gainfully employed.
00:27:48
Speaker
So if you work and it's your choice to be gainfully employed or not, if you can't do physical medicine and rehab, but you choose to work in another occupation or medical specialty, now you're gainfully employed. And unless you have a loss of income piece that we'll talk about, your policy really is all or nothing. It's almost like pregnancy. You either are or you're not. If I say to you, hey, look, I don't think I should be able to work. And you're like, well,
00:28:18
Speaker
Yeah, but I can only work Monday. I can only work three days every other Monday. If I was an attorney, I would say,
00:28:26
Speaker
You didn't answer my question. I don't want to hear any of that stuff. Are you working in your occupation or are you not? There's no clarifications there. Well, yes, but I can only do it three hours a day every other Monday. I'm like, it doesn't matter. You are working your occupation. Own occupation protects your inability to do your job and you actually are doing it. So this loss of income policy that says,
00:28:55
Speaker
Are you gainfully employed? If the answer is yes, and you don't have a loss of income component, you are not going to be deemed totally disabled unless you have a significant loss of income. And that's, again, if you have a loss of income component to your policy. Now, one thing which gets really interesting is what if I've got either multiple jobs
00:29:20
Speaker
or multiple job duties and I'm very entrepreneurial. So I'm a physician, I work in clinic, I see patients clinically. I'm gonna say I'm not a surgeon. I also run a podcast for physicians, could be any audience that you like. And then I also do consulting and I lecture for pharmaceutical companies. Well, now at this point,
00:29:49
Speaker
Unless you're totally disabled and you can't do any of those jobs, the insurance company's claims examiner is thinking, this guy has three different jobs. He's filing a claim because he can't do one of those jobs, which is work as a physician.
00:30:07
Speaker
It's my job to figure out if this guy is totally disabled and pay his full benefit, or he's not totally disabled and he could still do two of the three jobs. In fact, he'll probably do more of those because he can't work as a physician. His loss of income will actually go down as a physician as he's doing more of these other things.
00:30:29
Speaker
And if I have this income loss component, I'll pay him less as he earns more doing the other things. And ultimately, if he doesn't have a loss of income of 15% or 20% or more, I might stop paying him altogether.
00:30:45
Speaker
So Guardian, just one of the insurance companies out there, they came out with something that's called the enhanced medical specialty definition. And this is not the policies-based definition, which is a common mistake that physicians make. It starts out with the own occupation definition. Are you unable to perform the material and substantial duties of your occupation or occupations if you have more than one?
00:31:11
Speaker
Well, I have three jobs, I can't do one, I don't really meet that. I probably am more partially disabled like that claims examiner is thinking. So now they say, can we take a step back? Can we apply the enhanced medical specialty definition? And this is what can make a partial disability claim potentially become a total disability claim. And now what they say is prior to your disability,
00:31:42
Speaker
If you were not a surgeon, did more than 50% of your income come as a result of hands-on patient care? And this is where you're interfacing with a patient to diagnose and treat them. Well, yes, I had three jobs, but 60% of my income was coming from clinical medicine. 40% was coming from the podcast and consulting. Well, I don't need to be a financial advisor to tell you,
00:32:09
Speaker
60% is more than 50%. You've met that test. You're now deemed totally disabled. If you now take job number two and job number three and make that 100% of what you do because you can't do clinical medicine, you're deemed totally disabled. You're getting your full disability insurance benefit plus what you earn in those two other jobs, even if you have no loss of income as a result of that.
00:32:37
Speaker
Does that make sense? It does. I'm super glad you went there too, because that's exactly what I wanted to talk about. Today's day and age with the opportunity on social media, and again, all these financial physician, finance bloggers, you have WCI, you've got passive income MD. Jimmy Turner was on here not too long ago talking about other avenues where they can
00:32:58
Speaker
leverage the education and their skills that they have. Again, social media has done that for us. We've been doing this on the podcast. Unfortunately, we're not making the money where any claim or medical examiner is going to say anything to us, but you do have lots of folks who are doing that and they do get worried. I guess the follow-up question I have that comes to mind is,
00:33:21
Speaker
that is it at the time of the claim, the occupations that you have? So if you're wearing multiple hats, podcasting, consulting stuff, or is it at the time of when you locked in the policy? Because it sounds like it's the former.
00:33:35
Speaker
It's actually gonna be at the time of your claim. So I'll give you a perfect example. And this time I'll use the enhanced medical specialty definition, but I'm gonna plug in a surgical specialty instead of a non-invasive, non-surgical specialty. So I remember I work with a lot of plastic surgeons and I was in a meeting with one of them and he was very proud to tell me that he did a microsurgery fellowship
00:34:00
Speaker
And he defined in his policy the fact that he was a microsurgeon. And he said, if I become disabled and I can't perform my job duties as a microsurgeon, even if I can do general plastic and reconstructive surgery, I would be deemed totally disabled. And I said, well, let me ask you something. I know you did the micro fellowship. I know you define that in your policy. How much microsurgery are you doing today?
00:34:28
Speaker
Oh, I don't do any of that. I'm in a private practice and I do aesthetic surgery. I said, well, the definition of total disability is always based upon the duties that you're performing immediately prior to your disability. So if you're not performing microsurgery and you're doing general plastic and reconstructive surgery, your definition of total disability is gonna be based upon that. Now, if we go one step further,
00:34:55
Speaker
There's a lot of surgeons out there that certainly are surgeons, but they're doing a lot more than just surgery. And you have hybrid occupations, right? You've got urology, ophthalmology, ENT, and yeah, they're surgeons, but they're also doing a lot of clinic. So the number one question that a surgeon will ask is, Larry, look, if I become disabled and I cannot operate,
00:35:24
Speaker
Am I going to get my full disability insurance benefit? How is this going to work? And the traditional answer really hasn't changed. Oh, gee, I don't know. Why don't you tell me a little bit more about how you were practicing and what are your day-to-day job duties? Tell me what percentage of your time you spend talking about doing surgery, looking for surgical candidates, doing surgery, and then tell me what percentage of your income is actually derived from that.
00:35:54
Speaker
Guardian went one step further. And what they did here is they said, you know, let's try to make this a little easier. If we think that this could be a potential partial disability claim, let's take a step back again, the same way we did for the clinician. But now we're gonna say is immediately prior to your disability was more than 50% of your income derived from performing invasive or surgical procedures. And if the answer is yes,
00:36:23
Speaker
full benefits are payable rather than a partial disability benefit.
00:36:27
Speaker
So if I'm a urologist and I say, hey, you know what? 60% of my income is derived from performing urologic surgery. And 40% of the time, I'm never talking to these people about surgery. It's all just medical management of urologic conditions. And this person is disabled and they could no longer operate. Let's say they have an essential tremor, medication's not gonna fix it, surgery is not going to fix it.
00:36:54
Speaker
As long as they've met the more than 50% test for their income coming from invasive or surgical procedures, they're going to be deemed totally disabled. They can actually stay in the practice to 100% general medical urology, receive their full benefit,
00:37:12
Speaker
plus what they earn doing their clinical duties. Now, we do go on one step further and we have to define what a surgery is, right? So generally, an incision is being made by you over the 12 months prior to your disability. It typically requires respiratory assistance or anesthesia.
00:37:35
Speaker
And using a hypodermic needle in and of itself is not deemed to be performing surgery. So some of those specials that say,
00:37:46
Speaker
I'm not a surgeon, but I do procedures. They're probably going to fall more on that clinical side of the definition if it's applicable than they are going to be on the surgical side. But remember, let us take a step back if it looks like you're going to be partially disabled and see if we can move your claim from partial to total using that enhanced medical specialty definition.
00:38:12
Speaker
But let's say you're legitimately partially disabled. Something happens to you. You're a plastic surgeon. And your doctor says, you don't look great, but you don't look terrible. Like you're telling me you have back issues. You can still work. You could still see patients clinically. You could still perform your job as a plastic and reconstructive surgeon. But you know, you really have to work fewer hours per day
00:38:37
Speaker
fewer days per week, you have to see fewer patients as a result, you have to do fewer procedures, or maybe there's certain types of procedures you can no longer do. And this causes a loss of income.
00:38:51
Speaker
Now we're going to pay benefits based on loss of income, and this is what's known as the partial disability or the residual disability rider. Now you won't find this in an individual policy as kind of a red flag, but you will find this in association type policies.
00:39:10
Speaker
Ideally, you do not want to purchase a policy that states that you must be totally disabled first before you ever get partial benefits. Most disabilities are not total. Most start out gradually. They progress to total.
00:39:27
Speaker
If your policy stipulates you have to have been totally disabled first and you were not, you literally are not going to see any money from your policy until you get to the point that you just cannot perform your job duties. And there's a lot of group insurance plans that state this. And it might say something like partial benefits may be payable,
00:39:51
Speaker
after total disability benefits have been paid or after you have received total disability benefits. That's something that you really do not want to see. Yeah, as a physiatrist who does everything possible and the whole training is predicated on people who have a disability to help improve their function and quality of life despite that and try to improve it, that is incredibly horrifying.
00:40:18
Speaker
So I hate hearing that. It sounds like after listening to you speak about the enhanced portion in the definition is very important to have. You mentioned Guardian as one. Are there other companies who also use that same exact term for that portion?
00:40:36
Speaker
No, that is it. Guardian is the one that created it about five years ago. Okay. And they just call that the enhanced medical specialty definition. So certain specialties, let's just say you're an orthopedic surgeon.
00:40:50
Speaker
You're not really entrepreneurial. You love being an orthopedic surgeon. You're not looking to lecture. You're not looking to podcast, no blogging. Being an orthopedic surgeon is great, and it's more than enough for you. And I say, well, you know, just tell me a little bit more about what you do on a daily
00:41:09
Speaker
If your answer is, I roll out of bed, I throw on my scrums, I see patients in clinic, I interpret data, I read x-rays, I promote referrals, I do orthopedic surgery, and then I follow up post-operatively. Now we can take a step back and say, okay, you're seeing patients in clinic really to determine whether surgery is indicated or not.
00:41:34
Speaker
If it is, you're going to discuss the pros and the cons and the risks and the rewards with the patient. If they say, I really think surgery is the answer, you're going to tell them that you have the Midas touch and you're going to be as good as you can to get them the result that they're looking for. They agree. Now you go to perform that procedure.
00:41:57
Speaker
You follow up with them post-operative to make sure that they got as close to the desired result as possible. If you now sustain a disability that you cannot operate,
00:42:07
Speaker
since the majority of your office-based or non-operative based practice was looking for surgery, performing surgery and following up, that's likely going to be a total disability claim regardless and the enhanced medical specialty in and of itself probably would not provide a significant amount of value. So I would say where it's most significant is going to be your entrepreneurial physicians,
00:42:35
Speaker
They have multiple jobs. They have multiple job duties. Their income comes from multiple places where it's active income. It's not investment income. It's not interest and things like that. Then you could certainly make a very strong argument for that. And when we're looking at policies, we have to look at what we know, because that's the one thing we do know, is price. And we want to compare what is it that we're getting
00:43:03
Speaker
if we pay more, if that's the case, what is it that we're giving up if we want to pay less? And then you go to that old saying, you get what you pay for, which a lot of times does not even hold true. And we'll talk about that a little bit with guaranteed standard issue policies or gender neutral or unisex rates. Some other things that you want to look for, and this is typically part of the residual or partial benefit,
00:43:32
Speaker
is if you are on the politically correct treat what you kill model. And you're like, hey, if I'm productive, all of my income or a good chunk of my income is resulting from this. And if I'm productive, it's going to be great. And if I'm not productive, it's not going to be so great. Well, that begs to, well, what if I was totally disabled? I was out of work for a year.
00:43:55
Speaker
I recover, I go back to my practice or my office or my hospital. I tell my staff that I gotta make up for lost time. I'm ready, willing and able to work like a PGY-1 all over again. But your patient base has left you. Your referral base has left you. And now you can do everything you used to do, same number of hours or more. You have no restrictions placed on you whatsoever.
00:44:25
Speaker
What's lacking? Physically, you look great. Financially, you're still sick. So typically built into this is called a recovery benefit. And it says, as long as you have that 15 or 20% loss, we will continue to pay benefits as long as there's a demonstrable relationship between your current loss of income and your prior disability. The worst thing that you can see here
00:44:51
Speaker
is you are getting paid based on productivity, but your recovery benefit is limited.
00:44:57
Speaker
and the most common limitation is 12 months. So let's say you're an aesthetic plastic surgeon, you're in a beautiful office, you've got a tremendous following, now you're disabled at your peak earnings. You recover, you go back to the practice, your VIPs that you used to fly in and take in the back door, they're not there anymore.
00:45:22
Speaker
You look great. You're probably as well rested as you've been in a decade, but you're not making anything close to what you're making. And now after 12 months, because the policy says once you're back at work on a full time basis with no limitations, even if you have a loss of income, we're not paying after 12 months when the recovery period ends. So I would urge people to look at that recovery benefit
00:45:50
Speaker
if they're on a treat what you kill model now for some or all of their income, or there's a potential that that might happen in the future with their careers. Is that recovery benefit almost like a rider that you can add onto the policy, or is that something that was built in, you just have to look for that, speak to your agent about?
00:46:11
Speaker
Yeah, it's typically built into the residual disability rider. In some cases, it's an add-on. So one of the companies says you can have no recovery benefit, you can have a limited recovery benefit, or you can have
00:46:26
Speaker
I'll call it unlimited, but let's just say a recovery benefit for the entire benefit period of the policy. Different companies have different residual disability riders, so just be aware if you see something like a basic residual disability rider, it's probably going to be just what it says. It's probably more in line for something like a W2 employee. One company I know of has three different
00:46:56
Speaker
residual or partial riders. So you really don't have to be an expert in it, but you want to understand the differences between, let's say, number one, number two, and number three, because ideally you want to do this once, you want to do it right, and other than tuning up the benefit,
00:47:14
Speaker
to be in line with your rising income and other disability insurance you might have, you really don't want to be repeating this process because you know this better than I do. As you get older, what didn't hurt suddenly hurts, right?
00:47:30
Speaker
a medical record that was unremarkable, and suddenly it now is becoming remarkable, that's when the insurance companies, short of an increase option, tend to put the brakes on. And at that point, they'll tell you, we can't assure you at all, or we can, but we're not going to cover this specific body part or these specific conditions. And people don't like to be told that they're not perfect, especially physicians.
00:47:57
Speaker
And the common reaction is, so let me get this straight, Larry. You want to give me an exclusion rider where my policy is not going to pay benefits if I'm disabled due to my hands, wrists, or forearms. You know I'm a surgeon, right? I'm like, yes, I understand that you're a surgeon, but you're coming to me after you've had bilateral carpal tunnel repair. It's only been a month or two months.
00:48:24
Speaker
It tends to come back. We might reconsider and be able to remove the exclusion rider in the future. But at this point, we can't do that. So you want to get as much as you can, as young as you can, with the amount of increase options available to you so you don't have to disclose any future conditions that you might develop. Yeah. And I can see that conversation going two ways, right? So you could have the person who's a procedureless surgeon who says, well, you know, if I'm
00:48:54
Speaker
can't operate and then what's the point of even paying this premium. This goes back to everything that you've already highlighted. As a physician, the most valuable asset that you have is your mind, your ability to interpret data and come up with a treatment plan. That might not mean that you are the person who is making the incision, doing the sutures yourself. You could be referring out.
00:49:20
Speaker
And that's just the tip of the iceberg. We talked about the entrepreneurial spirit. We highlighted, I think, a lot of the listeners of this show and the younger generation of physicians do like to spread their eggs in multiple baskets and try to leverage the opportunities where we can. With the advent of AI, we can incorporate that into our practice as well. How is that going to change? A lot of the procedures now with surgery are also robotic assisted.
00:49:49
Speaker
in terms of, you know, not just surgical planning, but also actual assistance of doing some of the superficial stuff. So, you know, I would encourage people not to get discouraged by that aspect of it if you did have something that required treatment earlier on. But again, to your point, you know, things as you age,
00:50:09
Speaker
I see this day in and day out, wear and tear is going to happen, right? Musculoskeletal ailments. I mean, that's like gray-haired wrinkles. You get that arthritis. If you got a scan MRI because you were in pain and some over enthusiastic doctor decided to order an image and now all of a sudden you have a meniscus tear, well, guess what? I'll say, well, listen, you're going to get, we know you're going to get arthritis.
00:50:27
Speaker
premature arthritis if you have a minuscule at a young age. Guess what? That's going to be an exclusion. Why would they not do that? Insurance company wants to take as much ... It's the game, as you mentioned. They want to take your premiums and never have to pay out. You want to pay as little amount of premiums and ideally not get the payout, but we see where this is going. What's funny is everybody tends to think that. It's not that the insurance companies don't want to pay out.
00:50:53
Speaker
But remember, I'm going to go on a fully underwritten or medically underwritten policy where we're asking you medical questions. We're doing a prescription drug check behind the scenes. We have you sign a HIPAA compliant authorization. We can get a copy of your medical records. We are in the risk business and we know if something is there, you are more likely to become disabled than the person where that is not there.
00:51:19
Speaker
So if you come to us later in the game and we find this, even if it was an incidental finding, like you mentioned on a scan, I get this all the time. It's an incidental finding. It's still a finding. It doesn't matter whether it's incidental or not. So I'm going to shift for a moment and then we'll go back to some of the other writers. But what if you're not healthy?
00:51:42
Speaker
What if you just got a bad set of cards dealt to you? You've got a congenital issue, you've got type one diabetes, you've got medical conditions that might prevent you from purchasing medically underwritten coverage. Well, if you're a resident or a fellow,
00:52:03
Speaker
The odds are very good that you have the availability of what's known as a guaranteed standard issue plan. Now we love acronyms and insurance. It's not just for medicine in the military, GSI. And a guaranteed standard issue plan is the very same individual policy that you would buy from any of the major companies, Berkshire Standard Insurance Company, Emeritus, to name a few.
00:52:29
Speaker
And what we're doing here is either the institution or the agent or the insurance company and the institution have a relationship. And we say, you know, we would like to do more business at this particular institution. So what we will do is we will make available a policy with either no medical underwriting,
00:52:53
Speaker
for eligible applicants or very limited medical underwriting, where even if you have a preexisting condition, we are still generally going to be able to offer coverage. It's typically going to be the same, own occupation. Some people use the term own specialty coverage. It's going to be discounted. It's typically going to have the residual or partial benefit that I described, including the recovery benefit.
00:53:19
Speaker
It'll typically have a cost of living adjustment rider, which we'll talk about. It'll typically have an increase option.
00:53:26
Speaker
but you're either answering gatekeeper questions or you're answering no questions at all. Now, typically, the GSI plan does have a limitation for claims resulting from mental or nervous conditions. Now, you're PMNR, so once I say mental and nervous, I know that the nervous in your mind goes right to nervous system, not my mind. As an insurance guy, when I say mental nervous, I mean anxiety, depression, stress, chemical dependency, drug addiction, burnout.
00:53:57
Speaker
Well, that's typically gonna be covered for two years over your lifetime under these GSI plans. Now, some people might look at it and say, well, you know, two years really isn't a lot. Well, if you're on an SSRI and you're in therapy or you have ADD, ADHD, and you're taking Vyvanse, Adderall, Sertraline, take your pick, that's typically gonna be no coverage for those types of claims, and you're gonna get an exclusion rider.
00:54:25
Speaker
but under a GSI plan, you don't even get that. Now, the worst case that you're gonna find in a GSI plan is what's called a pre-existing condition limitation. And it's typically what's called a 312, so it's a three, a slash, and a 12. And it essentially says, from the day your policy is effective, if we go back three months prior, so that's the three,
00:54:54
Speaker
Did you take a prescription medication, see a physician? Were you experiencing symptoms that a reasonable human being would have seen a physician for? Did you have a diagnostic test done? If the answer is yes, and you become disabled as a result of these pre-existing conditions in the first 12 months, first year of policy ownership, that's not going to be paid. That's going to be called a pre-existing condition.
00:55:22
Speaker
But even if something is deemed a pre-existing condition and your disability takes place more than 12 months after you own that policy, believe it or not, even a claim for a pre-existing condition would be paid. So let's say I'm a type 1 diabetic. I'm using insulin. I'm going to be using insulin for the rest of my life. Right up to the day I buy my policy, I'm going to be using it.
00:55:48
Speaker
If I become disabled within the first year due to a diabetic complication, that's going to fall under that 12-month pre-existing condition. That's not going to get paid. But if I buy this policy and a year and a day later now my disability begins and I've got a diabetic complication, that claim is going to get paid.
00:56:10
Speaker
Now, Standard Insurance Company has the 312 pre-X. Emeritus has the 312 pre-X. Guardian, which has a significant amount of GSI plans out there right now, they don't even have currently a pre-existing condition limitation. So you can buy this. God forbid, you need to file a claim almost immediately.
00:56:34
Speaker
You can do that and as long as you meet the definition of disability, your claim would be paid. So the question begs is, well, why would the insurance company do this, right? Like it sounds too good to be true. So the answer is, it's all about the law of large numbers. We know we're gonna be taking in some people that are less than healthy. Maybe they're even uninsurable.
00:56:58
Speaker
But we know if we're getting the volume of people that we want at that particular institution, that's gonna make up for it. So we'll have some early claims. Typically what you'll find is maybe those will spike up pretty early and then it'll flatline. But if we're taking in both the healthy and the unhealthy, and a lot of conditions might warrant exclusions, but they're not declines, like seeing a chiropractor, that's going to be a spine exclusion.
00:57:26
Speaker
Right? Even if you say I'm just going for an adjustment, if I'm pregnant when I buy it, if I had fertility treatment, if I had gestational diabetes previously, all of these things are going to be excluded. But if I buy a guaranteed standard issue plan, like we said, the worst case scenario is going to be, think of it like a self-destructing exclusion rider. Right? After a year, if what I have is deemed a preexisting condition, even that's going to be covered.
00:57:56
Speaker
Now, the pricing for a GSI plan is no different than the cost of a fully underwritten plan. In fact, if I structured the plans the same way, the premium is going to be identical. Same features, same layout, same pricing. Now, for females that are listening, if you've never looked at disability insurance, I can tell you the rates for females is much higher than it is for your male counterparts.
00:58:24
Speaker
some that are to the two in a 50 to 60%.
00:58:27
Speaker
The workaround to this is what's known as a unisex or a gender neutral premium structure. Standard insurance company has this for the majority, the overwhelming majority of their GSI plans currently. And then Ameritas in eight states, they still have unisex rates available, but only with the guaranteed standard issue plan. So the take home message here is,
00:58:57
Speaker
If you have skeletons in the closet, if you don't know what your medical records say, if you've self-prescribed, if you had surgery where hardware was placed, these are all things that can be problematic for medical underwriting. So you really wanna look to see does your institution have a guaranteed standard issue plan available? The big caveat
00:59:25
Speaker
is if you apply to an insurance company and you are declined for disability insurance, or generally you're issued a modified policy. So let's say, you know, my plastic surgeon that's got the exclusion rider for hand, wrist, and forearm, and that person was a resident, and they subsequently find out, hey, there's a GSI plan at my institution. I want to buy that. Generally, they're going to be ineligible.
00:59:54
Speaker
There are some rules that might make a GSI plan available, but generally, once you're declined, it's game over. Guardian has some rules where even if you were declined, they'll still take you. If you applied to Guardian and were declined or modified, they always take their own modifications or declines. So you got to go there first.
01:00:18
Speaker
Guardian also says, hey, if you were a medical student and you were trying to buy at the end of your MS4 year before you started your residency and you got modified or declined and now you start your residency, that starts the clock again. So you're kind of coming in and in the Guardian world, you're still eligible. This is not gonna be the case for all of the companies. And then Guardian also says, if you're in your residency,
01:00:48
Speaker
And you applied to another insurance company and you were modified or declined. And it was within the first nine months of your higher date. So let's just say your higher date was July 1st. You basically could have applied and been declined or modified by the end of March.
01:01:05
Speaker
At any point, because that's when it took place, you still qualify for the GSI up to 90 days after you complete your training. So these are the rules that agents in the medical marketplace, that this is what we do, this is what we specialize in, we're going to know this. The same way if you're a physician and you're looking to get your employment contract reviewed and you're finishing up,
01:01:34
Speaker
your brother-in-law, your sister-in-law, they could be an attorney and they pass the bar. That's great. If they don't know what a WRVU is or an RVU is and yours is the first physician employment contract they're seeing, I would say get their opinion, but get with the specialists because you don't want them learning on you. It's funny when I had thought about how this conversation might go.
01:02:04
Speaker
had several different topics I wanted to touch on and we're almost an hour in and we've only talked about the basics and the fundamentals, I'll say, of what the disability policy should include and just the key components. And we haven't even talked about the different writers and COLA and FiO and stuff that are also important to understand. And so hopefully people are getting a sense if they're still here with us, because I'm following along and I'm actually
01:02:29
Speaker
I'm a very visual person, so I'm actually even seeing different lines of part of my contract. I'm like, OK, yeah, I get it. I get it. I don't think if I hadn't read that a couple of times that I'd be able to follow along with you. And so hopefully people are getting a sense of how important this is and how important is it to talk to somebody, as you mentioned, who really understands the ins and outs and not just somebody who superficially gets it and is trying to sell you this policy because they're going to make a lot of money off of you of the back end. You know, it's funny about being declined.
01:02:58
Speaker
we happened to be very lucky down at Hopkins where our mass mutual GSI policy was available to us. It happened to me where I worked with somebody in my intern year, I got rejected and then it was available later on working with Paul and it happened to my chief, my co-chief, excuse me, senior year where he got rejected because he had a single episode a long time ago and he was working with the company who didn't mention that and then he got rejected and it was still available. So that was good for us, but yeah, that's
01:03:27
Speaker
important for people to understand and talk to. That's another piece of it, Larry. There are so many people out there, right? There's no shortage of insurance agents that are going to try to sell you. There's a couple of companies out there who will try to get you a policy. And these agents, they don't really understand the ins and outs. This is not what they do day in and day out. So you might remember this at the time when one of the first questions I asked you was like, how much of your practice is a disability? How much are you doing this? And somebody says, I only do this 10%. The rest of it, I'm doing something else.
01:03:57
Speaker
Well, I would wager that you wouldn't necessarily go to a neurosurgeon who only does 10% spine in their practice. You don't want them operating on your back. I mean, maybe you do. Maybe they're the best at doing that, but the likelihood is low. You want somebody who's got a lot of reps, who's seen a lot of different cases, complicated cases, who's been at a stage where they've not only written policies, but they've also been on the side who have helped with claims because that's really what it's about. It's like, what's going to happen when shit hits the fan when I have to cash in?
01:04:27
Speaker
Oh, I don't know. I've never done a claim before, right? So yeah. So, you know, I think the challenge is, is people just have a difficult time. You know, the mortality piece is easy. Life insurance, you're dead or alive. It's binary, right? You're like, okay, great. If I hit, not great, but if I get hit by a car, you know that that's it. You get that. And people don't have difficulty with that. But the disability part, as you mentioned, far more likely to have some type of partial disability, females even more so, we understand,
01:04:57
Speaker
pregnancy, some of that. But I want to come back to the GSI policy for a second because it almost sounded like to me, you were saying that if you feel like that the pre-existing condition is not going to be a limitation for 12 months, that at that point it makes sense to just take a swing for the full policy or is it going to be that if you do take a swing for the regular policy, you'll get it with just potentially an exclusion for the pre-existing conditions and that's why the GSI is a better option.
01:05:25
Speaker
Yeah. I mean, you could get the exclusion rider and let's say it's something, you know, you had surgery on your right shoulder, you have hardware in there, you know, you've got pins, screws and anchors. That's going to be an exclusion rider forever. It's going to be a permanent exclusion rider. It's never coming off. Now, a lot of orthopedic surgeons, they went into orthopedic surgery because they had sports injuries.
01:05:49
Speaker
They were fixed and they realized how great it is to get someone back to the day-to-day things that they love to do. So the best policy is the one that's in force when you're disabled. The next best policy is the one that pays the most money under the most circumstances with the fewest number of restrictions. And to me, a policy that has no exclusion rider or partial coverage for something that would normally not be covered at all
01:06:18
Speaker
is better than one that has a limitation. And if the cost is going to be the same, why would I not go with the GSI plan? Some people will buy the GSI plan just because it's easy. And I can tell you, typically, a clean disability insurance policy, you apply, it gets set up in the system.
01:06:39
Speaker
You're probably looking at somewhere between six and eight weeks from application to approval where policy is in hand. I've seen it go six months or longer where medical records are being requested. You're answering questions, records come in, you're answering more questions, and ultimately you either end up declined or you end up with a policy that's got a lot of exclusion riders associated with it.
01:07:05
Speaker
when the typical turnaround on a GSI plan is literally, I would say, a week to two weeks, sometimes shorter than that, sometimes a little longer when you're in the end of the academic year. So some people just say, you know what? I don't mind a mental nervous limitation. I got to tell you, if I haven't melted down yet, it's probably not going to happen. $15,000 a month for the majority of specialties
01:07:31
Speaker
That's going to be adequate. Normally with no other coverage, you'd have to have an income of about $350,000 to get there. So let's say unless I'm a surgeon or someone that's doing a significant amount of procedures, and this doesn't mean I can't buy the GSI plan and supplement it with fully underwritten coverage. That is something that's done all the time. Now one thing which never gets talked about, but I will bring this up,
01:07:57
Speaker
is you can make an argument among, I saw orthopedic surgeon A and I saw orthopedic surgeon B, and you know, A has a lot more experience. They've patented certain procedures. They teach residents. I'm willing to spend more money for that individual because I believe I'm going to get a better result. In the insurance world, we are heavily regulated.
01:08:21
Speaker
The contracts, the language, and the pricing is regulated by each state's insurance department. The only way that one agent can beat out another agent is to either know of or have access to something that the other one doesn't. And that's going to be somewhat rare. Now in the world of GSI,
01:08:45
Speaker
it's important to note that each GSI plan is owned by what's called an endorsed agent. So for example, I happen to have with Guardian Washington University in St. Louis, University of Iowa, and a couple of others. If someone wants to use my GSI plan, they have to come to me and ask permission. And I can either say yes or no. Well, because I set up the plan,
01:09:15
Speaker
I'm going to co-broker with them. And they know that they have to give me a percentage of what the sale is going to be. A lot of agents, even if it's the right thing for their client, they're not going to do that because they don't want to cut someone like me in. So right away, you have an inherent conflict where agents won't tell proposed insurers about these GSI plans because either A, they can't offer them.
01:09:45
Speaker
B, they might be able to offer them with reduced compensation and they don't want to do that. Or the worst is they just don't know that they're there. Then they put you into medical underwriting. You're declined, modified. In a lot of cases, even if you apply and you pull your application because you know things are not looking good, you might now be ineligible for the GSI plan. So just remember,
01:10:13
Speaker
GSI first. Before you do anything, if you self-prescribe, you've got skeletons in the closet, you don't know what's in your medical records, inquire about the availability of a GSI because if you don't and you apply medically, there might be no turning back. Yeah. So exactly what happened to Jimmy Turner.
01:10:36
Speaker
recent guest, as I mentioned earlier. I encourage you guys to go to the Physician Philosopher on his website, and he talks about this openly. He shared this when he was here as well. Again, I was very lucky that this happened, but we've heard many stories where that's not been the case, and somebody's gotten screwed over. Now, Jimmy's just a perfect example where he's trying to help people not have the same fate, quote, unquote.
01:11:04
Speaker
Larry, let's switch a little bit and talk about some of the other important riders. You mentioned the ability to increase your income in the future. Presumably, somebody is of sound mind. They get into residency. They immediately get a policy where there's a greater premium, level premium.
01:11:24
Speaker
maybe a GSI available to them, and then they graduate. They finish their training a couple of years later and then they see a 2x, 3x, 4x rise in their income. What can they do? What is this FIO and how can they enact it?
01:11:38
Speaker
Yeah, so you've got two different increase options. You've got the FIO, that just stands for Future Increase Option. This is the one that I grew up on. And this is the one where you're essentially paying a premium for the right to be able to buy a certain amount of additional coverage, regardless of your health, so you're not disclosing any medical conditions. And it's really just based on what is your income and what other disability insurance do you have.
01:12:03
Speaker
And you could call me up. I can run the numbers and I could say, hey, you're eligible for another $10,000 a month. And you say, that's great. I already spent too much money on insurance. I'm not buying anymore. How come every time I talk to you, I feel like, you know, you've got your hand in my scrub pocket. It was nice chatting, but I'm not doing anything. You can do that.
01:12:23
Speaker
When you hear FIO or future increase option, in my mind, I think the F stands for freedom. You're paying for the right to be able to have the ability to do this, but you can choose to do it or not and to what extent you want to do it or not. A newer type of increase option was created by principle.
01:12:43
Speaker
Other companies have now borrowed this from principle as either a standalone increase option, that's all they have, or maybe they offer both the FIO and this. So this is called the benefit increase rider or benefit purchase rider. Maximize your benefit rider, benefit update rider. Anytime you see a B, just know it stands for you better do something. So you're not paying for the rider,
01:13:11
Speaker
But we know, statistically, the healthy guy is probably not going to do much. The person that's got some medical condition that's kind of terrified, they're probably going to want as much coverage as they can. Let's say a surgeon that's got a disc herniation at L5, S1. And they're like, my career could be over tomorrow, or it could be six months, or it could be five years. I don't know, but I better get as much as I possibly can.
01:13:34
Speaker
So if we know that the healthy guy isn't going to do anything, and the person that's got some medical condition is probably going to want to max out, we have to come up with a set of rules to make sure that the healthy and the unhealthy use it to a similar extent, especially since we're not charging the insured, the policyholder, for the right to be able to do this regardless of their health.
01:13:59
Speaker
So typically, every three years, you have to check in with the insurance company. And it's easy. There's a one-page application that basically says, who are you? Where do you work? What do you do? What have you earned so far this year? What did you earn last year? Do you have any other disability insurance besides this policy?
01:14:17
Speaker
They're going to look at it from an underwriting standpoint, only financially. Let's say you bought it as a PGY1, you're an orthopedic surgeon, now you're a PGY4. You're in the same situation. You're not making any more money than you were, maybe a couple thousand dollars more in the stipend. You still have the same group insurance that you had because you're in the same program.
01:14:40
Speaker
They're typically going to come back and say, you know, thanks for checking in. You needed to check in, but we're not going to give you any more because we don't want to make you into a walking moral hazard where you're going to benefit becoming disabled and make more money than if you actually continued your medical training. So at that point, you're basically checking in to be declined to keep the increase option on your policy. If you do not check in.
01:15:07
Speaker
The insurance company removes the increase option, right? They giveth, they taketh away. But let's say you're not a resident. You bought it later in residency. It's exactly what you said. Your income just went up substantially. You went to a small practice. There's no group insurance. You bought your typical $5,000 a month. Now you're eligible for $15,000 a month.
01:15:31
Speaker
They offer you the difference, 10,000. At that point, you must purchase at least 50% or half of that additional 10 they're offering you. If you don't, they take your increase option away. So that's why I say when you see the B in there, it stands for you better do something.
01:15:50
Speaker
So the person that says, I'm not letting the insurance company dictate my future. I'll pay for the increase option. I'll pay for the FIO. I'll pay for my freedom. Every year I have the ability to use it or not. I can choose to what extent. If I don't check in with the insurance company, there's no harm. There's no fail. I don't have to. I'm not required to.
01:16:12
Speaker
on the benefit increase rider, benefit purchase rider, benefit update rider, maximize your benefit. A, if you don't check in after multiple attempts, you're gonna lose your increase option. B, if you do check in and they offer you more coverage, you know you have to buy at least half, or again, you're gonna lose your increase option. So a lot of times I find people that have the B type increase option, but they're not aware of how it works.
01:16:41
Speaker
And that's crucial to understanding. I gotta keep the increased option of my policy. I gotta check in, and I gotta buy at least half of what I'm eligible for, or I'm gonna forfeit one of the main reasons why I bought the policy. Now, good rule of thumb is the younger someone is in terms of PGY, I can make a very strong argument. If I'm a PGY one or two, and I'm gonna be in a long training program, do I really wanna spend
01:17:09
Speaker
I don't know, 40, 50, 60, 70 bucks a month for an increase option that I'm not going to be able to use for years at the time I have the least amount of money. I probably don't want to do that. I might not even be able to afford to do that. In that case, the B increase option might work really well.
01:17:28
Speaker
If I'm already in attending and I'm looking at these policies, I'm probably more about the freedom. I'd rather pay a little bit more and not have anybody telling me I need to check in or buy a minimal amount of coverage in order to keep it on my policy. They're both good. I might know everything that there is to know about my potential client.
01:17:50
Speaker
But at the end of the day, it's not my plan, it's their plan. So if they use my education training experience to determine what is best for them, the same way a patient can determine how they want their treatment plan to go with your education training experience, it's no different working with me or someone like me. If we know the questions to ask and we take your answers, we can lead you down a path of, these are your best options.
01:18:20
Speaker
You tell me what you think works best for you. You know yourself better than I'm ever going to know you. And I'll kind of end the disability insurance discussion with your health is what buys the insurance, aside from a GSI. Your money is what keeps the policy in force.
01:18:39
Speaker
So if you know you're healthy, even if you don't have a lot of money, you can buy a policy from say, principle, $1,000 a month of benefits. So what you would receive, not what you pay. Standard, $1,000 a month, emeritus, $1,000 a month with the B-type rider, have the ability to get to 20,000 or even 30,000 a month. And if you're a male, depending upon your specialty, it'll probably cost you somewhere between
01:19:09
Speaker
$20 and $50 a month. If you're a female without unisex rates, it's probably gonna cost you about $50 a month. I call this the lease with the option to buy plan. So this is either like, you're just a non-believer and you're like, you know what? He sounded like he knew what he was doing. He was convincing enough that I probably should do this, but I'm not willing to put all my chips down. For that amount of money, I'll take a leap of faith.
01:19:38
Speaker
The other person is the one that says, I really need this. I'm a neurosurgery resident, but I've got three kids at home and a spouse that doesn't work. And I know I need this. I just can't really afford it. The lease with the option to buy plan is probably the policy to purchase because it ensures the number one thing, your ability to earn an income and buy more and short of becoming disabled.
01:20:07
Speaker
You're good and you can make your increase after you complete your residency or fellowship. Yeah. I've seen that happen at least two times where also the person that I've been speaking to, they're working with an agent who hasn't informed them that they can buy for something less than 5,000. You mentioned that number 5,000 seems to be the standard for residency because I think they take the number of 60,000 is like what the standard income is. So that's as much as they'll give you sometimes a little bit more.
01:20:36
Speaker
But yeah, I've had a conversation and I think Darsh initially ended up getting for a lot less too, where we're like, hey, dude, you could get 2,500, you could get 2,000 if it doesn't make sense. And so yeah, I ultimately ended up having them go talk to Paul about it and was like, yeah, I don't know why that agent didn't offer you or something. I mean, I can take a guess, you could take a guess. But yeah, that's another reason.
01:21:01
Speaker
Yeah. Again, I can't emphasize the importance of this. Some of this is a bias. It's a bias of the patients that I see. I'm a physiatrist, sports medicine, and see a lot of musculoskeletal ailments. We see people on all ends of the spectrum in terms of debilitating spinal cord injury for an 18-year-old who had a Division I College scholarship, maybe was going to go to the pros, and now is learning how to brush his teeth after he took a dive in the pool, after his graduation party. True story.
01:21:28
Speaker
Somebody who got hit by a car outside of Philadelphia, riding his bicycle, training for a triathlon, and now has a severe traumatic brain injury and can't do that. As you highlighted at the outset, the most important thing that we have to offer in terms of generating revenue income is the next 20, 30 years that you're going to practice. Whether or not you choose to do that or do some other entrepreneurial thing,
01:21:55
Speaker
you have to ensure that. So I'll leave people with that with the disability insurance. There are other ways we can go down, but I think for the purposes of getting this point across, I think that's a good point. Thanks for listening to another episode of Medicine Redefined. If you enjoyed this episode, please be sure to check out some of the additional resources in the show notes. Please also check out our social media platforms where you can find more content like this. You can follow us on Instagram, Twitter, and TikTok at MedRedefined.
01:22:24
Speaker
We also want to thank our team for the production of this podcast, specifically Ethan Ju on video, Haritha Yepori on social media, Zainab Lugmani on research, and Sarah Han for newsletter. Oh, and if you want to get similar bite-sized information delivered to your inbox every Sunday, please be sure to sign up for our newsletter. Also, if you enjoyed the show, please be sure to subscribe, review, and share with anyone who you think will gain value from this as well. Now, time for the ever so important disclaimers.
01:22:51
Speaker
This podcast is intended for general public use and is for educational purposes only. It does not constitute the practice of medicine, nor should be construed as medical advice. No physician patient relationship is formed and anything discussed in this podcast does not represent the views of our employers. We recommend that you seek the guidance of your personal physician regarding any specific health related issues.
01:23:12
Speaker
Altamash Raja, that's me, Darshan Shah and Medicine Redefined are not affiliated with or endorsed by Park Avenue Securities, Guardian or Physician Financial Services, and opinions stated are our own. By preventing this content, Park Avenue Securities LLC and your financial representative are not undertaking to provide investment advice or make a recommendation for a specific individual or situation, or to otherwise act in a fiduciary capacity. Optional riders are available for an additional premium,
01:23:40
Speaker
Some policy benefits and features are not available to all occupations. Lawrence B. Keller is a registered representative and financial advisor of Park Avenue Securities LLC PAS.OSG at 355 Lexington Ave, 9th Floor, New York, NY 10017, 212-261-1850.
01:24:02
Speaker
Securities products and advisory services offered through PAS, Member FINRA, SIPC, financial representative of the Guardian Life Insurance Company of America, Guardian, New York, New York.
01:24:14
Speaker
P.A.S. is a wholly owned subsidiary of Guardian. Physician Financial Services is not an affiliate or subsidiary of P.A.S. or Guardian. California Insurance License 0-C373-40. Arkansas Insurance License 105-7229-2024-17-5351, expiration date of 5-26.