Updated: Sep 15, 2020
I received a call the other week from a 54 year-old physician whose disability insurance had been cancelled after 20 years simply because the disability insurer no longer wanted the business. Not only did this doctor loose the coverage he paid into for over 20 years, he was now in the unfortunate position of needing to re-qualify for coverage. As you can imagine, he was quite upset about it.
Even though he has a good income, this doctor has a family to support and two kids in college. He had signed up 20 years earlier when he was young and healthy. It seemed like a good idea at the time when it was offered through a physicians’ association. Even though these types of policies run the risk of being cancelled, he thought the risk in his case seemed remote. So he paid into the plan all these years, and now it isn’t there for him. It didn’t do what he bought it to do.
This physician has to start all over again in the search for how to protect his income. He wants his income covered as much as ever, but now he faces two challenges that would have been avoided if he had started out with the right kind of disability policy. First, premium rates at age 54 are significantly higher than what he could have locked in when he signed up for the wrong plan. Second, his health may have changed over the last 20 years, so it will be harder to qualify for the best insurance.
How could he have avoided this? What can we learn?
High-quality, non-cancelable, guaranteed renewable plans have locked in level premiums based on the physician’s age when he or she signs up. Premiums are guaranteed by contract not to increase until at least age 65. The physician in this story, if he is still healthy enough to qualify for good insurance, is looking at premium rates about 2 ½ times higher than he could have locked in at age 34. And since the right kind of policy could not have been canceled by the insurer, he could have slept better at night knowing the insurer would never be sending him a cancelation notice.
Do you have the right kind of policy? Even if you aren’t sure, contact us. We have over 20 years of experience that can help craft the right policy, so you can rest assured you’re covered.