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AMA Disability Insurance Versus Individual Disability Insurance

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The good news is that, as a group, physicians seem to take the real threat of incurring a disability to heart. According to a 2007 survey by the McGill Advisory, nearly 100 percent of the physicians surveyed said they were covered by some form of disability insurance. The bad news, also revealed in the survey, is that, long after residency and well into their careers, many physicians continue to rely heavily, if not solely on their group plans such as AMA disability insurance. There may be a number of reasons for not purchasing individual disability insurance – cost issues, too busy with other priorities, lack of knowledge, or simply dismissing the risk – however, the net effect is these physicians are leaving themselves dangerously exposed for a risk with a 20 percent probability.  .

This is, by no means, a slight against AMA disability insurance plans. They fill a very important role as a temporary means to obtain disability insurance coverage, or as a way to augment an individual disability policy.  However, an over reliance on group disability coverage for protecting their most valuable asset, is akin to relying on a homeowners policy to protect a valuable piece of art – the level of protection will fall way short. Of course, most people can do without a valuable piece of art, but very few can do without income.

A quick comparison of the coverage provided by the AMA and that which is typical of most individual disability insurance policies highlights the gaps in coverage:

American Medical Association Disability Coverage

Individually Owned Coverage (non-cancelable)

Policy can be changed or cancelled by the AMA or insurance company at anytime. Policy could cover you in your medical specialty today, but not at claim time. Rates can be increased at anytime. As long as premiums are paid, most policies can not be changed or canceled by the insurance company. Most policies have fixed premiums.
In order to receive a partial benefit, you must be totally disabled first. This is a problem with progressive diseases like MS or Parkinson’s. Your income could decrease year after year, but you would not receive a benefit from the plan. Most plans pay partial benefits without a period of total disability.
You are not the owner of the policy (owned by the AMA or trade organization), so you cannot select among policy provisions. Coverage is essentially the same quality for everyone. You are the owner of the policy which means you can select the policy provisions, and upgrade the quality of coverage.
Premiums increase every five years. Premiums are fixed at time of application with most plans.
Benefit period is reduced if disability is caused by a mental or nervous disorder. Many plans pay benefits for the full benefit period duration if disability is caused by a mental or nervous disorder.
Many group disability plans will offset for association disability plans. This means if you have both group from your employer and an association plan you may not be able to collect both benefits if disabled. Individual disability benefits do not offset group disability benefits.
All of this could change tomorrow when the AMA comes out with a new contract and then change again in 6 months when they come out with a new contract and then change again in a year when the contract changes again. You have NO IDEA what plan will be in force when/if you have a claim. If your disability plan is guaranteed renewable and non-cancelable, it can not change as long as you pay premiums.

To see how easy and affordable it is to protect you income with quality individual disability coverage, simply click here and request a free quote comparison today.

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