Importance of Disability Insurance
Protecting your income is important because your income is important. The larger your income, the greater is its impact on your lifestyle and your ability to achieve financial success. An injury or illness that prevents a person from working has the potential to cause tremendous financial distress. Combine this fact with the high student loan debt and commonly low income of most young physicians, and the financial impact could be disastrous, even irreversible. Individual disability insurance provides physicians with a simple solution to exorbitant risk.
What Is Disability Insurance
Simply put, disability insurance is an insurance coverage that pays you a monthly benefit if an injury or illness prevents you from working in your selected occupation.
The risk of disability is significant. According to the Council for Disability Awareness (CDA 2011):
- Almost one-third of Americans entering the work force today will become disabled before they retire.
- More than one in five workers will be disabled for 5 years or more during their working careers.
- The average long-term disability absence lasts 2.5 years.
The Financial Impact of a Disability
Disability is a reality, and for the highly compensated, it can cost millions of dollars in lost income. The table below illustrates the cumulative income potential over a physician's career beginning at age 30.
| Physician's Income Projections Beginning At Age 30 | |||
| Age | Earning $150,000 | Earning $250,000 | Earning $350,000 |
| 35 | $750,000 | $1,250,000 | $1,750,000 |
| 40 | $1,500,000 | $2,500,000 | $3,500,000 |
| 45 | $2,250,000 | $3,750,000 | $5,250,000 |
| 50 | $3,000,000 | $5,000,000 | $7,000,000 |
| 55 | $3,750,000 | $6,250,000 | $8,750,000 |
| 60 | $4,500,000 | $7,500,000 | $10,500,000 |
| 65 | $5,250,000 | $8,750,000 | $12,250,000 |
- A physician earning $150,000 annually who becomes permanently disabled at age 45 could lose $3 million of earned income.
- A physician earning $250,000 annually who becomes permanently disabled at age 45 could lose $5 million of earned income.
- A physician earning $350,000 annually who becomes permanently disabled at age 45 could lose $7 million of earned income.
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