Women's Disability Insurance Dilemma

Physician's Money Digest, October 2006, Volume 13, Issue 10

Most female physicians who have investigatedpurchasing individual noncancelable disabilityinsurance will encounter the sameproblem—their rates are higher than their male counterparts.That's just the way it is. Or is it?

Despite the fact that more and more women areentering the medical profession each day, insurancecompanies are continually being accused of sex discriminationwhen it comes to disability insurance forthese doctors. Point of fact, in the 1970s and 1980s, thewomen's argument was heard, and this protest in factchanged the rate structure of many major carriers. Thischange to unisex rates, however, did not last long. Thecarriers claimed that "females had 1500 more physiologicalways of becoming disabled," thus justifying thedifferences in male and female rates.

The irony is, when it comes to life insurance premiums,women's rates are lower than men's rates. Onceagain, the insurance company's logic is that women livelonger than men. So the difference is morbidity (disabilityinsurance) tables vs mortality (life insurance) tables.Or, simply put, claims experience.

So what should a woman physician know in today'smarketplace? Women's rates are typically 40% to 60%higher. So, take advantage of the following:

•Unisex rates are still available, but you need toknow how to get at them. Several of the major qualitydisability carriers do offer what is known as a "multilifediscount" or a "employer-sponsored" plan.

•Multi-life discounts usually require a minimum ofthree lives with a common denominator. The denominatorcan be a common billing, such as three physiciansin a practice or hospital, or even an association.

•Employer-sponsored plans usually require onlytwo lives. A letter is written by the employer, statingthat a disability policy with XYZ company is availableto the employees.

•Some associations do, in fact, offer unisex ratesthrough endorsed association discounts. The issue herebecomes the quality of the coverage being offered. Bythe same token, some associations offer a flat discount(ie, 10%) but do not provide unisex rates. Thus, the10% seems attractive, but in reality you are better offpurchasing the policy using the multi-life or employersponsoredplan methods on your own. This is trickyand demands scrutiny and understanding.

The difference in annual premiums does warrantyour investigating these options. One point should bemade here: You consider the coverage before the discount.Make certain you have all the facts before youpurchase the policy. Do your homework and comparethe contracts.

Remember, many of the carriers that offer individualnoncancelable coverage to physicians do offerthese discounts. These discounts also come in handyfor those female physicians in need of business overheadexpense and pension completion disabilitypolicies as well. A bit of homework can save you agreat deal of money.

Ron Cohen, RHU, RR, has specialized in disability insurance forphysicians since 1969. He has authored many articles on thistopic, served as a guest speaker for insurance companies andprofessional organizations, and consulted with many companiesin the design of their disability products for physicians. Mr. Cohenwelcomes questions and comments at ron@roncohenrhu.com. For more information,visit www.roncohenrhu.com.