Many young professionals place their financial futures in jeopardy because they underestimate their true risk of becoming disabled.
Dr. Douglas Snider, 28, discovered just how great the risk of disability can be when his life was turned upside down in a split second.
Dr. Snider had been a partner in Tule River Veterinary Services, a large animal practice in Tulare, Calif., for just five months when a dairy cow he was examining "let loose and kicked me in my left lower thigh with full leg extension and maximum strength," he said.
The kick landed above the protective padding Dr. Snider regularly wears, separating his quadriceps, causing a meniscus tear, and fracturing his patella. After surgery, he faced weeks of physical therapy before he could resume even part-time, light duty at the practice.
As bad as the injury was, things could have been much worse financially. According to the Social Security Administration, 70 percent of the private-sector workforce has no long-term disability insurance. Dr. Snider, however, had purchased long-term disability insurance from the AVMA Group Health and Life Insurance Trust immediately on graduation. As such, his income was protected as he recovered.
"I could have been out for as long as six months," he said. "Without insurance, I guarantee I would have lost my house. Your world can change in a moment."
Purchasing disability insurance was a smart move. For veterinarians, the likelihood of disability is exacerbated by the nature of their work.
The authors of "Work-related accidents and occupational diseases in veterinarians and their staff," which appeared in the International Archives of Occupational and Environmental Health in April 2005, found that the incidence rate for accidents in German workplaces was 2.9 times higher for veterinarians and their staff than for general practitioners of human medicine, and occupational disease claims were 2.7 times higher. The relative risk was 9.2 times higher for severe accidents resulting in a loss of work time of more than three days.
Among the top causes of long-term disability claims in the United States—regardless of occupation—are cancer, complications of pregnancy, and back injuries.
"The biggest need for disability insurance is at the time of graduation, because new veterinarians have 35 years until their retirement. The time to get coverage is early and when they're healthy."
—WES HENTGES, AN AGENT FOR THE AVMA GROUP HEALTH AND LIFE INSURANCE TRUST
"It was easy for me to wrap my mind around the fact I would need (disability insurance)," Dr. Snider said. "You have to protect your way of life for yourself and your family and also your investments."
A financial safety net
When an accident or illness results in the inability to practice for an extended period of time, two types of insurance can protect a veterinarian's financial future:
- Long-term disability, which provides income protection.
- Professional overhead expense, which helps practice owners pay business overhead expenses.
"These plans protect the future earning potential of the veterinarian. Nothing else guarantees that," said Wes Hentges, Dr. Snider's Missouri-based GHLIT agent.
Disability plans provide monthly benefits of up to 60 percent of average earnings. With GHLIT disability insurance, benefits could be paid for the rest of the insured's life, if a covered disability occurs prior to age 50. A future purchase option is also available, which makes it possible to increase future coverage as income grows without medical evaluation at the time of increase.
"The biggest need for disability insurance is at the time of graduation, because new veterinarians have 35 years until their retirement," Hentges said. "The time to get coverage is early and when they're healthy."
While disability insurance helps with a veterinarian's personal financial situation, plans that cover professional overhead expenses can pay up to $30,000 in monthly benefits during a covered disability period to help practice owners pay eligible business expenses. These include rent, principle and interest on outstanding debts, utilities, employee salaries, postage, equipment maintenance, and the monthly average of taxes on the practice premises.
A POE plan helps keep the doors open and the business viable until the veterinarian's return. If the disability is career-ending, POE insurance provides a safety net to keep the practice viable so that the disabled veterinarian can sell it without undue financial pressure. This protection is especially valuable at a time when medical problems are blamed for nearly two-thirds of personal bankruptcies, according to "Medical Bankruptcy in the United States, 2007: Results of a National Study," which appeared online in June in the American Journal of Medicine.
Hentges notes that it is important to review insurance at least every two years to ensure coverage is appropriate for current needs. Ideally, disability insurance should cover 60 percent of income, and POE insurance should cover 100 percent of practice expenses.
"Disability and POE are both hedges against an injury or illness," said Hentges, adding that in the event of a covered disability "they can guarantee future income, no matter what a person's health is like."
Additional information about GHLIT insurance programs, including new plan enhancements effective Aug. 1, is available by calling (800) 621-6360.