When Group Insurance Doesn’t Make Sense: The Pitfalls of Being Covered By Group Disability Income Insurance
There are a number of different types of group insurance, but one type of group insurance, disability income, generates a lot of questions for veterinarians and orthodontists.
For many veterinarians and orthodontists, group disability income insurance appears to be one of the best options if your primary concern is cost. It is offered by both associations and corporate clinics. Your ability to earn an income working as a veterinarian or orthodontist is one of your greatest assets. It is worth protecting with strong coverage. You want to make sure you have a clear understanding of how your disability income coverage works in the event that you get hurt or sick and can’t practice. Surprisingly, group coverage may or may not cover you the way you think it will. The contract language details in group disability coverage are best found in an actual specimen contract, and these contracts are often hard to track down. You may be given a flyer or print out from a website when you sign up for group disability insurance, but the details you need to know are found in specimen contracts.
Why Is Group Insurance Less Expensive?
Group insurance is a way to purchase coverage at a lower cost by purchasing it in bulk or spreading risk over a large number of lives. This can be done by associations or employers of large veterinarian and orthodontic/dental corporate clinics. Associations want to give benefits to their members and corporate veterinarian/orthodontic clinics want to provide competitive benefit packages to attract new veterinarians and orthodontists to work for them. With large animal veterinarians, in particular, premiums for disability income are significantly lower with associations due to higher incidents of claims spread over a larger group, i.e. the rest of the other veterinarians in the association. There is not much cost differential between small animal veterinarian’s premiums for individual owned disability income coverage (often superior coverage) in comparison to group association disability, and the claim experience is more favorable for small veterinarians.
Group association coverage is also less expensive because the association maintains control of policy language. One of the greatest pitfalls of group disability association is that you don’t have control over policy language; it can change at a minute’s notice, without your consent. If claims become too high or the number of claims with veterinarians rises, the association can change policy language on pay out of future benefits on new claims, ultimately making the policy less favorable to you. The association’s ability to change policy language helps keep costs low in the short term, but could also pose a risk to you in the long term.
Changes happen more often than you think with group disability association plans. In your already busy life, owning a group disability income policy will add one more item to keep a close eye on in the event the association changes the policy. You need to know what is happening with the most important coverage you will ever own, the coverage that protects your greatest asset: you.
One final potential consequence to owning group disability coverage is the lack of flexibility it offers in the event of health changes. If your health has changed since the day you signed up for the group disability policy, you may not be able to leave the group and try to secure a potentially better individual disability income policy, as you could be declined or have exclusions put on your new policy due to changes in your health.
How Group Disability Insurance Works in Corporate Clinics and Private Practices
Today more and more Veterinarian and Dental/Orthodontic corporate group clinics, similar in size, offer group disability income coverage along with other group benefits like health and term life insurance. When an insurance company has at least 10 persons or more to work with at a clinic, they can offer group disability plans that rival what larger corporations offer their employees. It is a relatively inexpensive benefit for a corporate clinic to offer their associates. Group disability insurance is not nearly as strong as an individually owned disability income policy, but it is better to be covered than not at all and is an ideal way to supplement existing individually owned disability coverage without a lot of additional expense.
There are some risks involved in group disability insurance. One downfall for a veterinarian or orthodontist who relies solely on group disability coverage provided by the practice is the tax liability. These disability benefits will be taxable to you if the corporation pays for premium. Secondly, the day you leave the practice you will lose these company disability income insurance benefits; most of the time, they are not portable. This lack of transferability poses a risk if your health has changed significantly since the day you started working. Don’t assume you will be able to get disability income insurance in your new place of employment, since your application will be subject to health underwriting.
On the other hand, group disability is ideal if a veterinarian or orthodontist is uninsurable. When they join a practice they can at least get some disability income coverage, as there is often no health underwriting with group benefits.
If you own a veterinary or orthodontic practice, you may want to consider offering a group disability income plan. After you max out your own individual disability income policies, adding group disability income for the practice is a great way to increase your coverage and provide disability income insurance for your staff.
Disability income insurance is an important (if not the most important) insurance coverage for a veterinarian or orthodontist. Details matter in these contracts, and the significant differences between group and individual disability plans can be difficult to discern. Have an insurance expert walk you through the details of the strengths and weaknesses of each type of group coverage, whether it be group disability, life insurance, or other group benefits. If you own your own practice, consider providing group disability income coverage as an inexpensive way to supplement your own coverage while at same time protecting your staff.
Working with veterinarians and orthodontists across the country we understand unique insurance challenges you will face. At Loyall Group, a modern insurance expert for veterinarians and orthodontists, we will navigate you through the best way to set up your insurance.