Which Disability Insurance Riders Should Doctors Buy?

Disability insurance is typically sold with a handful of riders, each of which comes with an additional cost. The residual disability rider should be purchased by everyone. It covers not only a partial disability, but also provides a partial benefit as you recover from your disability. The inflation Protection rider indexes your benefit to inflation, usually starting one year after you become disabled. This is a particularly important rider if you were disabled at a young age and recommended for anyone buying a policy in their 20s to their 40s. If you're already 55 and the policy is only going to pay until you're 65, you can probably save money and skip this rider. The Future Purchase Option rider allows you to buy a larger benefit at a later date without any pesky questions about your health or hobbies. If you're in a position where you cannot afford as much as you need, such as when you're a resident, purchase this rider. The catastrophic disability rider pays out an even larger benefit if you are really disabled, which is usually defined as not being able to do two or more activities of daily living unless you're already up against the maximum amount you can purchase. You're probably better off just buying a larger primary benefit instead of this rider. The retirement benefit rider in the event of disability causes the insurance company to put some money into a type of retirement vehicle for you in addition to paying your monthly benefit. Unfortunately, that vehicle is generally a high expense insurance based investing product and not the best way to save for retirement. You're better off purchasing a larger primary benefit with the money that would have gone toward this rider. Just don't forget you need to continue to save for retirement using your disability benefit money since the policy will only pay to age 65. If you don't, you're going to be living only on your Social Security benefits.

The hosts of the White Coat Investor are not licensed accountants, attorneys, or financial advisors. This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.