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Understanding disability insurance for physicians

By:  Kendra Henderson
Physician Insurance Specialist

Because disability insurance is such an important component of a physician’s personal financial plan, it’s well worth taking the time to work through its complexities.

Around one of four of today’s 20-year-olds will be disabled for some period prior to retirement. The average length of a disability claim is three years. Disability insurance is a necessary defense against the financial impact caused by a disabling illness or injury.

Let’s take a closer look at some of the terms you are likely to find in a typical disability insurance policy.

What is a disability?

Of course, you know what this means in general terms. But your insurer has a specific definition. Let’s begin with Social Security’s strict definition of disability: “Your condition must significantly limit your ability to do basic work-related activities, such as lifting, standing, walking, sitting, or remembering—for at least 12 months.” (Social Security benefits could be available as early as six months, as long the disability is expected to last 12 months or more.) A private disability policy designed for physicians will likely contain a provision that you are eligible for benefits if you are unable to perform the normal activities of your own occupation or, more specifically, your own specialty.

Short-term vs. long-term disability

Disabilities of days or even several weeks are usually covered by employer’s sick leave or separate short-term disability plans or may be covered by your savings for emergencies. Long term disability insurance (LTD) is designed to cover you for the long term and takes effect only after a designated period of time (usually, thankfully, less than the SSA’s one year) called the waiting period or elimination period.

The waiting period or elimination period

You may see either term used to mean the period before disability benefits are payable. Typically, private disability insurance policies have waiting periods of 3 to 6 months (perhaps stated as 90 to 180 days). If you are purchasing the policy, you will have the ability to choose from a list of waiting periods. Generally speaking, a shorter waiting period will result in a higher premium.

“Any occupation” or “own specialty”

These two terms are NOT interchangeable, and it pays to know the difference between them. A policy with an “any-occupation” provision would pay only when you are unable to handle the normal and usual activities of any job for which you are qualified. “Own-specialty” insurance recognizes the difference between the requirements of various specialties and pays benefits when the physician is unable to handle those demands due to illness or injury (within, of course, the other parameters of the policy). FYI, AMA Insurance offers only “own-specialty” policies. (More about that here.)


This is the insurer’s equivalent of diagnosis. It is the process through which the insurance company determines your eligibility for their insurance, and, if offered, the pricing, limitations, and possible exclusions. Exclusions or limitations may exist for such things as pre-existing conditions or dangerous hobbies (mountain climbing, for example). As is common in the industry, underwriting for a policy offered by AMA Insurance will typically include an application, a phone screening, and a paramed health exam.

Monthly benefit

This is the maximum amount that will be paid in the event of your disability during the policy’s benefit period. It may be a defined amount (up to $15,000 per month for AMA-sponsored Disability Insurance) or a percentage of your base income.

Benefit period

This begins when benefits kick in and continues until you are able to return to work or until the benefit period ends as defined by the policy. Many disability policies end benefits by or near age 65.

Waiver-of-premium provision

In a nutshell, the waiver of premium provision means you will not need to pay premiums while you are disabled.


These are optional provisions that allow you to customize your disability policy to meet your particular needs. While riders often add cost, some are highly desirable. Here are some that are worth considering:

COLA Rider—This Cost-of-Living Adjustment (COLA) rider periodically realigns (i.e., “increases”) benefits to help offset future cost of living increases.

Residual Disability Rider—This rider provides for payment of benefits when you are only partially disabled. These are income-replacement benefits. Your monthly earnings will be subtracted from the full benefit amount. Some policies require a period of total disability before residual benefits begin while others do not.

Catastrophic Disability Rider—This rider adds to the monthly benefit if you suffer a devastating injury or illness and are unable to perform 2 or more Activities of Daily Living. In the event you become catastrophically disabled you would receive an additional disability benefit on top of your regular disability benefit.

Future Purchase Option Rider—This rider offers you the opportunity to purchase additional insurance at specified intervals (like annually) or if you lose employer-provided disability coverage. No additional medical underwriting will be required.

Student Loan Repayment Rider—Several disability plans now offer benefits that help pay off student loans in the event of a total and permanent disability. This benefit is in addition to the monthly benefit specified in the policy, and can be of particular importance to young physicians carrying large student loan debts.

Those are just some of the most common terms you will see when reviewing your disability insurance options. For further explanations, talk with a Physician Insurance Specialist. We are AMA Insurance staff members—salaried, not commissioned—charged with sharing the knowledge we’ve gained through day-to-day handling of physicians’ insurance protection needs. Use the online appointment setter or call 888-627-6685.

Kendra Henderson is a Physician Insurance Specialist at AMA Insurance. She specializes in disability and life insurance and works with physicians and their families at every career stage. Kendra is licensed to sell insurance in all 50 states and has helped hundreds of physicians nationally with their disability coverage.

© 2024 AMA Insurance Agency, Inc.

[1] Council for Disability Awareness, https://disabilitycanhappen.org/overview/

2 Insurance Information Institute, How to assess the financial strength of an insurance company. Retrieved June 12, 2024, from https://www.iii.org/article/how-to-assess-the-financial-strength-of-an-insurance-company

Link to https://disabilitycanhappen.org/overview/