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Is it hard to get disability insurance?

So, you finally have time to review your disability insurance options before graduation. What happens next?

Assuming you are ready to move forward with a policy you feel comfortable with, you’ll begin something called the application process which typically results in you sharing your entire private health history with an insurance company via a phone interview with a stranger or an online health questionnaire.

Tip: it is imperative that you pre-screen this health history with your insurance broker before disclosing it to an insurance company because once one company finds out about it, they all do, and the toothpaste can’t go back in the tube.

Once an application is submitted to an insurance company, medical underwriting begins.

Something that 6 out of 101 physicians who get this far in the process come to learn is that disability insurance isn’t as easy to qualify for as most would hope.

After the insurance company has reviewed your application and health history, one of three things can happen next:

One – Good news; you are approved for a policy! But because of pre-existing health/Rx history, the insurance company has offered you a policy that is more expensive or less comprehensive than you were anticipating.

Two – Congratulations; you are part of the less than half1 of all physicians who apply for a policy and are approved without penalty!

Three – Unfortunately, you receive a letter from the insurance company that reads: Thank you for the recent application. After careful consideration, we must regretfully inform you that we cannot offer you a policy. This is called a decline, and it happens to nearly 1 out of 5 physicians who apply for a policy.1

What can you do to avoid this frustration?!

Special disability insurance options known as Guaranteed Standard Issue (GSI) programs are established for interns, residents, and fellows at many training institutions across the country.

GSI programs offer a safety-net that allows trainees to qualify for an individual, true own-occupation disability insurance policy, from a leading insurance company, that they can carry with them their entire career as attendings (assuming they pay their premiums) with no health/Rx history disclosure, no price penalty, no exam, and often no pre-existing exclusions.

If you apply for a policy but are either declined or approved but with penalty, (i.e., an exclusion, price increase, or other modification), then your eligibility for the GSI program is typically jeopardized and you have forfeited your right to the opportunity.

Is there a catch?

Often, GSI policies are comparable in benefit and cost to policies you can qualify for by disclosing your full health history, so many trainees frequently wonder if the programs are too good to be true.

Remember the tip to pre-screen your entire health history before disclosing it to an insurance company?

The reason is: if you apply for a policy but are either declined or approved but with penalty, (i.e., an exclusion, price increase, or other modification), then your eligibility for the GSI program is typically jeopardized and you have forfeited your right to the opportunity.

Caveat Emptor!

GSI programs seem to have grown in popularity recently2, but they don’t exist everywhere. Typically, they are exclusively managed by an experienced insurance broker who has demonstrated a successful relationship working with trainees at your institution for many years.

This means that you might need to search out who that broker is for your institution. And unfortunately, not ever insurance agent is likely to put your best interest first.

If you find yourself answering “yes” to anything more than a routine physical during your pre-screen conversation, ask whether your answers will impact your approval.

Or, better yet, ask your agent to send you a guarantee from the insurance company that you will not be penalized or declined.

Just make sure they are working in your best interest; and they are aware of your options and potential GSI eligibility, even if you must guide them on what to do.

In summary, to answer the question of “Is it difficult to get disability insurance?”, let’s just say it isn’t easy. Don’t forget to pre-screen the health questions up front before disclosing your private information to an insurance company. And think GSI if you find yourself answering “yes”.

Hurley Associates works with physicians who are concerned with starting their careers in balance: paying off yesterday, saving for tomorrow, while living a financially confident life today.

As the preferred disability insurance broker for some of the largest graduate medical education programs in America, Hurley Associates has been successful in helping physicians find peace-of-mind with protecting their income, in their medical specialty, and keeping within their budget.

Dan Sklenka is a CERTIFIED FINANCIAL PLANNER™ professional with Hurley Associates.

1 Beal and Khan, November 2021, 2021 Annual Survey of the U.S. Individual Disability Income Insurance Market, Milliman Report

2 https://www.whitecoatinvestor.com/guaranteed-standard-issue-disability-insurance/, https://www.disabilityquotes.com/articles/view/gsi

Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ: 244 Boulevard of the Allies; Pittsburgh, PA 15222. Phone: (412) 391-6700. Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America®(Guardian), New York, NY. PAS is a wholly owned subsidiary of Guardian. Hurley Associates is not an affiliate or subsidiary of PAS or Guardian and is not registered in any state or with the U.S. Securities and Exchange Commission as a Registered Investment Advisor.

By providing this content Park Avenue Securities, The Guardian Life Insurance Company of America®, and your financial representative are not undertaking to provide advice or make a recommendation for a specific individual or situation, or to otherwise act in a fiduciary capacity. CA Ins. License ID#: 0L77727 2023-156962 Exp 6/25