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Any-Occupation versus Own-Occupation Disability Insurance for Pharmacists

TOP - August 2016, Vol 9, No 3 - Practical Issues for Pharmacists
Richard Reich

Own-occupation disability insurance is often a pharmacist’s best line of defense when protecting his or her income from a disabling event. As some of the top earners in the country,1 those in the pharmaceutical community need to prepare themselves for the possibility that, because of a disability, they may not be able to earn a living at some point during their career.

Like so many other healthcare professionals, pharmacists often overlook their own financial security because of time restraints, lack of information, and overwhelming workloads. But it’s important for pharmacists to take a moment to plan for the future by considering the risks of going without disability insurance, and benefits of obtaining coverage.

The Price of Becoming a Pharmacist

Pharmacists work incredibly hard to get where they are today, by working around the clock to get a degree from a top university, and long hours to become a licensed professional. Pharmacy students often face some of the highest tuition costs in the country. According to a recent article from The Huffington Post, the average student loan debt in 2012 for those graduating from pharmacy school was a staggering $123,063.2 Despite being among the nation’s top earners, it can take years for working pharmacists to pay off that debt. Add those student loan payments to the rising cost of living, retirement savings, mortgage payments, and a myriad of other expenses, and it becomes clear that pharmacists need every penny they can get.

Risks of Going without Own-Occupation Disability Insurance

If an accident or illness prevents a pharmacist from earning a living, his or her bills could become unmanageable much quicker than many would like to admit. Many working professionals underestimate their chances of becoming disabled, despite glaring statistics that support contrary claims. According to a report, anyone aged <35 years has a 33% chance of becoming disabled for ≥6 months during their career.3 Men have a 43% chance of becoming disabled, whereas women have a 54% chance. Six months of no income could seriously impact a pharmacist’s ability to make ends meet, forcing them to go further into debt. An injury or illness could also prevent a pharmacist from reaching his or her goals, such as opening their own private practice, buying a home, or saving for retirement.

Benefits of Choosing Own-Occupation Disability Insurance

When it comes to protecting a pharmacist’s ability to earn a living, there is no better choice than with own-occupation disability insurance. A comprehensive insurance policy from a highly rated provider will help a pharmacist earn a living when an accident or injury prevents him or her from working at their normal capacity.4 The insurance company will pay the policyholder a monthly benefit—typically 50% to 60% of their predisability income—to help with bills, retirement savings, and rehabilitation programs.4 

Any-Occupation versus Own-Occupation Disability Insurance

When purchasing disability insurance, it’s important to understand the distinction between any- and own-occupation coverage. Any-occupation disability insurance requires that the policyholder be completely disabled and unable to work in any occupation before any benefits will be paid. Own-occupation disability insurance is tailor-made for those who work in a specific profession. Benefits will be paid if the policyholder is unable to work in his or her occupation, and payments are based on the policyholder’s current income.4 Because pharmacists are paid well for their time, it is imperative that they choose an own-occupation disability insurance policy, and make sure that the policy’s benefits are min line with their occupation.

Important Disability Insurance Policy Features

    • Noncancelable, guaranteed renewable: This feature guarantees that the policy will not be canceled, and that the policyholder’s premiums will not increase. Without this feature, the insurance company could change the terms of the policy at a later date.
    • Residual disability rider: This feature allows the policyholder to work in a limited capacity, including part-time, and still collect a percentage of benefits based on their percentage of lost income. If a pharmacist has partially recovered from his or her disability, they could still receive partial benefits.
    • Cost-of-living adjustment: When the policyholder is disabled and receiving benefits, this feature increases benefits annually to keep up with inflation.
    • Elimination period: This refers to the amount of time after the policyholder first becomes disabled, and when they receive their first benefits payment. Elimination periods can range from 30 to 365 days; longer elimination periods are less expensive than shorter ones.
    • Waiver of premium: The insurance company will waive premium payments during the period of disability.
    • Rehabilitation benefit: This feature will pay a certain amount of benefits to the policyholder if they enroll in a preapproved physical rehabilitation program. It should also stipulate that the policyholder will not lose their original benefits during their time in the program.

It is important that pharmacists understand the benefits of having own-occupation disability insurance, and find the right policy for their career. In today’s uncertain economic climate, everyone needs the financial security of disability insurance.

References

1. Smith J. The 30 highest-paying jobs in America. Business Insider. www.businessinsider.com/top-paying-jobs-in-america-2015-9. Published September 23, 2015. Accessed June 16, 2016.

2. Dash S. How pharmacy graduates can get rid of $100k of student loans. The Huffington Post. www.huffingtonpost.com/stephen-dash/how-pharmacy-graduates-ca_b_7035232.html. Published April 18, 2015. Accessed May 5, 2016.

3. Intramark Insurance Services. Disability facts and statistics. www.protectyourincome.com/education-center/disability-facts-and-statistics. Accessed July 13, 2016.

4. Richard DM. Why true “own occupation” disability insurance matters. 2014. http://trarp.com/why-true-own-occupation-disability-insurance-matters. Accessed July 13, 2016.

 

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Last modified: August 11, 2016