Posts Tagged ‘income protection’
Being a Locum Physician Has Its Benefits; Life, Long Term Care and Disability Insurance Benefits that is.
Monday, March 8th, 2010
Being a locum professional has its benefits. You have ultimate flexibility in your schedule. You have the ability to shape your lifestyle and to try new practice areas in different areas of the country. Perhaps you are in a career transition looking at your options before you are ready to commit. Or maybe you decided you weren’t ready to retire. As a locum, you have the opportunity to reap a lot of benefits from your work.
Along with the benefits with being a locum professional comes an opportunity to have the flexibility of your own benefits-insurance benefits that is. As a locum professional, you may not be eligible for the employer sponsored insurance benefits such as health insurance, life insurance, disability insurance and in some instances long term care insurance. The good news is that obtaining your own insurance has benefits to you as well. Having individual insurance benefits provides you with more control, more flexibility, more comprehensive coverage and more options available to modify your benefits in the future.
Life Insurance: Life insurance pays a sum of money to your beneficiaries at your death. It is intended to replace your human life value, the economic value your survivors were counting on while you are alive. If you were previously working full time, you may have had group life insurance, typically a multiple of your salary. Most group life insurance plans are not portable and cannot come with you if you leave your full time employer.
Individual life insurance can be purchased regardless if you are working full time, part time or are a locum professional. The advantage of carrying your own life insurance is the portability and control you have over your policy throughout your life, without relying on your employment status.
Life insurance rates have come down substantially in the last 3-5 years. Depending on your age, gender and health status, your individual life insurance rates may in fact be less expensive than a group insurance policy.
The risk relying on your employer plan and not carrying your own life insurance is if you experience a change in health or lifestyle. Applying for life insurance entails medical underwriting asking about your medical history and lifestyle. If during your locum career you experience an adverse change in health or decide to take up a risky avocation such as skydiving, you may find yourself paying a lot more in premiums for life insurance when it comes time to apply.
Having your own individual life insurance policy provides you with a peace of mind and allows you the portability to take your policy with you no matter where you work. It is recommended that you would need at least 12-14 times your annual income in death benefit to replace your economic value.
Disability Insurance. Disability insurance is intended to replace your monthly earned income if you become too sick or injured to work. Statistically, you have approximately a 33% chance of becoming disabled between ages 30 and 65. If you rely on your income to pay your bills and support your lifestyle, it is imperative your income is properly protected.
The solution to avoid these risks is carrying your own individual disability insurance. The cost varies based on your medical specialty, gender, age and geographic location. The benefit of carrying your own policy is the portability to take the policy with you and the ability to adjust it as your situation changes.
When purchasing individual disability insurance, make sure your policy has a definition of disability that covers you if you can’t work in your medical specialty. For instance, if you work in a surgical specialty, the policy would pay you a monthly benefit if you couldn’t work in that specialty even if you retrained and worked in another medical specialty or occupation. If you are in the early stages of your career, it is important that your policy has the ability to increase in the future as your income increases. Disability insurance premiums vary based on age, gender, medical specialty and geographical area.
Long Term Care Insurance. Long term care insurance is designed to pay a daily benefit if you are unable to satisfy a certain number of activities of daily living such as dressing, transferring, and cognitive impairment. These services are often not covered by Medicare and can wipe out retirement savings if not properly insured. Some employers offer long term care as an employee benefit.
Similar to disability insurance and life insurance, the group policy may not travel with you when/if you leave your job or retire. The ideal time to purchase a long term care policy is while you are relatively young and healthy. Policies become more expensive as you age. Applying for a policy requires medical underwriting looking at past medical history. Rates can be locked in for life or paid up after a set period of time. Discounts may be available if you and your wife both purchase a policy simultaneously.
Being a locum professional certainly has its benefits. It provides you new career opportunities and a lot of flexibility. Taking control over your own benefits can provide you with the peace of mind that your hard work and dreams will be fulfilled and protected.
But I Can’t Afford Disability Insurance!
Friday, January 15th, 2010
2009 was a very stressful year in our country. The unemployment rate is in the double digits, housing foreclosures are everywhere and the economy in the tank.
Most people are doing what they can to trim costs. Reducing luxury items and vacations and going back to their roots. What do we really need? What could we live without?
I talk to people on a regular basis about covering their income with disability insurance. Most people realize that they need to protect their income. The biggest obstacle is usually the cost.
What most people don’t realize is that part of the reason that the economy tanked was that people didn’t have enough money in savings. When they were laid off from their jobs, they had no reserves to pay their mortgage and bills. And the cycle continued.
However, even if the economy was in great shape and you have a stable career, you, too, are at risk of losing your income to a sickness or injury. The same ramifications would occur if you didn’t properly insure your income.
So the conundrum is that you can’t afford to insure your income, but you can’t afford not to. If you can’t afford the premiums, you certainly couldn’t afford to lose your income.
There are many ways you can try to reduce your premiums so you can still insure yourself:
Ask yourself how much income you would need (after taxes) to pay for your necessities. Is there anything you would be willing to cut out? Reducing your monthly benefit would significantly reduce your cost.
- Consider a transitional occupation or reasonable occupation definition of disability. These policies may reduce the premiums and, depending on your circumstances, may be sufficient for your needs. With a transitional occupation definition, you are still covering 100% of your pre tax income.
- Shorten your benefit period. The average disability lasts approximately 3.2 years. Consider a 5 year benefit period. Especially if you are over age 45 and have other assets available.
- Remove riders. The cost of living rider tends to be expensive and is intended for long term disabilities as it doesn’t start until after the first year of claim.
- Shop around. Rates vary from company to company and it is important to look at all of your options.
The most important lesson is to prioritize your budget. Ask yourself what is most important to you? Could you live without your income? If you can’t afford to live without your income, it is worth insuring.