Disability and Life…Another Option!
I read with concern Dr. Borden’s article, “Disability and Life…Another Option!” in the July/August 2020 edition. Dr. Borden’s unfortunate experience, apparently with a company known for their aggressive sales techniques, should not be a generalization of the value, for many, of disability insurance / income protection. Since the likelihood of becoming disabled increases with increasing age, some policies may become more expensive and pay out less over time, although that is an uncommon structure. It is the buyer’s choice how they choose to structure their policy and any insurance professional should be able to assist in determining the relative value of an increasing or level cost. It is a simple breakeven calculation.
Dr. Borden’s difficulty in utilizing his policy when he became disabled is obviously concerning. A financial planner, some of whose clients will have experienced a disability, should have experience with various companies and recommend against inappropriately recalcitrant ones. Furthermore, companies can be researched in any number of ways, including looking up the company at the Better Business Bureau (www.bbb.org).
Dr. Borden is correct in that if you do not buy disability insurance but instead invest the money, assuming you are never disabled, you will have more money. But the same argument could be made of a car. If you do not buy a car, or instead by a cheaper car, and invest the money saved, you will have more money in the end. But disability insurance is not an investment account. It is protection of the asset…you!
Insurance is not, as Dr. Borden says, “gambling at a casino” but rather it is about spreading out low-probability, high-cost risk. It is not likely that a given emergency physician will become disabled at a specific time over a career, but some certainly will. For those that have, and are living on disability income, I suspect that they would have a very different perspective on the relative value of the premiums versus the benefits. If you are one of those unfortunate ones, who is going to maintain the household financial security while they are not working? Many EM physicians have non-working or much lower income spouses. How will they sustain the rent/mortgage, transportation, food, clothes, and all the daily expenses for the family? 25 years into a career, you may have well have enough savings to not require disability insurance and at that point, the value proposition may certainly be different than when you are a first year attending. But if you are injured one, five, or 10 years into your career, it is unlikely you will have already saved enough money to be financially secure for life. That is what disability insurance is for. I would be interested in hearing from someone who had to file a claim early in their career. From Dr. Borden’s purely financial analysis, surely, the amount they received would be greater than the amount paid in. More importantly, they had income (likely significant and tax-free income) when they otherwise would have had none.
There were many other points in the article to address: term life insurance, real estate investments, rental income, financial planners, investment fees, accountants, “own occupation” policies, and general financial planning. The basics are straightforward, but perhaps each should be addressed in their own column, or columns, rather than presenting them as alternatives to not obtaining disability insurance. Please, speak with your own team: financial planner, accountant, lawyer, or all of the above. If you do not have a team, start building one. How to build such a team is worth another column in and of itself. But talk to your team: if you cannot absorb the cost of having no income, then you have a need for disability insurance.
-Alex Flaxman, MD MSE
Fellow, Critical Care Medicine
Rowan SOM/Jefferson Health/Our Lady of Lourdes Health System
Note from the Editor
Common Sense appreciates thoughtful comments and ideas. Dr. Bordon's recent article concerning disability insurance has generated such a response from Dr. Flaxman. Sadly, medical education often produces young physicians who when completing residency are faced with much larger incomes and a new set of concerns for the financial security of their families. These same young physicians can be deluged with a plethora of advice of what to do to protect themselves and their families. This advice can be self-serving as many types of "financial experts" appear and make recommendations to sometimes unsuspecting physicians. This can lead to bad decisions, which can have serious long term financial implications. Dr. Bordon suggests a somewhat contrarian view in regards to insurance. His approach does require significant financial discipline and some would say an unacceptable risk to a young family. Common Sense hopes that you will consider both points of view and form your own informed opinion in this regard.
– Andy Mayer, MD FAAEM, Common Sense Editor-in-Chief
Dear Dr. Flaxman and Mr. Ruffing,
Thank you for your response to my article, “Disability and Life…Another Option!"
To answer the question as regards the quality of my policy, it was the best available at the time of my purchase. It was the number one ranked company.
During the midst of my struggle with the company (I can't risk stating their name since insurance companies are too huge and powerful to risk offending) I asked for a reference. I wanted to talk to an emergency physician that was receiving disability payments from them. I was desperate for hope, and concerned that there was really no way to get disability (short, possibly, of having no arms, no legs, combined with head injury). My response was; "No, I do not know of any emergency physician that is currently receiving payments." I asked three people with the company, and one (adjuster) stated that there was an EP that was applying after a serious motor vehicle accident, that would "likely begin to receive payments soon." Thousands of us paying for disability insurance, and NOT ONE OF US receiving payments. That was very disheartening.
Would I/you have any recourse against the second strongest political lobby in America? They could spend more than my (city's) entire net worth on lawyers against me and not even notice it.
Though I don't know the exact numbers, I am quite certain that over 99% of EPs would be better off using their money to create a liquid "rainy day account" than they would be after paying for disability insurance.
If you missed my article, please read it and comment!
- Mark Borden, MD FAAEM