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Factors to Consider on Disability Insurance
Don't be taken by surprise, learn what disability insurance you need
With a new year on the horizon, SVS members might want to do a wellness check – not of their health, but of their disability insurance coverage to see if they are significantly under-insured.
SVS offers individual disability plans with three companies – Principal Life Insurance Company, Standard Life and Lloyd’s – through its Affinity Program of expanded benefits.
Important considerations are taxes, annual premium rate increases, guaranteed renewability and, significantly, whether the plan recognizes and covers the subspecialty of vascular surgery, said Mark Blocker, of the SVS Affinity Program.
Group plans are taxable when the employer or group pays the premiums. The SVS plans are paid with after-tax dollars. “You may need 100 percent of the pre-tax benefit to live on,” explained Blocker. “This is the biggest issue members face, in deciding on a disability insurance plan.”
The impact can be substantial: A $300,000 annual benefit through a group or employer-paid plan will provide taxable benefits. At a 40 percent rate, the annual benefit becomes $180,000. “If the state income tax is 8 percent, or $24,000, that $300,000 benefit under a group plan reduces the benefit to just $156,000, or $13,050 a month,” Blocker said.
In contrast, the SVS plan with premiums paid after taxes provides a $300,000 annual tax-free benefit.
Subspecialty recognition is also important. “It’s vital to make sure that, in your policy, it is clear, and the policy defines and covers you as a vascular surgeon. No surgeon I know wants to be forced into a career as a GP,” Blocker said. Email him at the link below or call him at 855-533-1776.
(Purchasing a product through the expanded SVS affinity program benefits not only you and your practice, but also SVS itself.)
• SVS plans are portable so a move to another practice doesn’t affect coverage.
• SVS plans are guaranteed renewable, while group plans can be canceled by the insurer.
• SVS plan rates are locked at enrollment. Group plans can raise rates annually.
• SVS members receive a 10 percent rate discount and a possible additional 10 percent discount.
• Principal Life recognizes medical specialties and subspecialties “if the analysis would bear out that the main duties would show that a person was limited to those duties associated with a specialty or sub-specialty.”
Examples include specialties and sub-specialties recognized by such groups as the American Board of Medical Specialties.