Did Disability Insurance Awareness Month slip by you? (It was May.) Physicians are among the most informed group in the country, and yet many physicians are unaware of their need for disability insurance. Perhaps a bit of history will explain how this is so.

Medical journals have long recognized disability insurance as a primary need product. During the late 1960s and early 1970s, it was not unusual to pick up a copy of Medical Economics and read an article suggesting the type of disability insurance a physician should purchase. Such articles always cited that “Non-cancelable and Guaranteed Renewable” policies should be the bedrock of physicians’ coverage. They typically added that the policy should provide “Regular Occupation” coverage. Many insurance carriers touted, wrote about, advertised, marketed, and offered disability insurance.

By the 1980s hundreds of insurance companies were offering disability insurance to the public. The competition got to a point of insanity, and something had to give. It did. The business written in the 1980s provided physicians with contracts that almost suggested that the physicians would be better off economically if they were disabled, rather than working. In the early 1990s, the economy took a turn for the worse and the result was the perfect storm … claims.

Back in 1993, I spoke at a Disability Income Training Council meeting and related a problem that was on the horizon. One of my physician clients had asked me to look at his coverage. As I reviewed the file, I saw that his gross income was $630,000, of which $130,000 was business expenses and $500,000 was personal income. When he purchased the personal disability policy in 1983, his monthly benefit was $25,000 per month. I asked what his current income was. He said the gross was the same—$630,000. But his overhead was $330,000 and his income was $300,000. I was silent for what seemed to be forever. He asked what the matter was, and I said, “No one ever saw this coming. You’d be better off disabled!”

The point echoed through the room. The inflationary factor was not the CPI as seen by the carriers; it was the cost of doing business and now turned up in the form of overhead.

After that meeting, it was obvious what would happen. The claims started and continued for all the carriers. Shortly thereafter, the re-insurers pulled the plug, which resulted in hundreds of disability carriers leaving the marketplace. Some sold off blocks of business. The medical market fell from grace.

Currently, fewer than 30 carriers market disability coverage. Most of these carriers direct their advertising toward producers, not consumers. The average disability producer sells two disability policies per year. How much of their time do they spend to inform the public? Most producers know little about disability insurance.

Also consider the change in our mindset in the last 30 years. “Asset Protection” and “Financial Planning” have become the focus. With the lack of articles and information being disbursed to physicians and the general public about disability insurance, it’s no wonder it no longer is perceived as a primary need. This has resulted in the majority of America’s 150 million workforce members being left with inadequate disability coverage.

Regardless of the dearth of financial magazine articles discussing the importance of disability insurance, the need remains. It is a product that should take center stage and deserves more than simply consideration. It warrants the use of the phrases “urgent need” and “primary need.” Without it, the buck stops here.

Physicians can purchase coverage that is just as good as it was in the “old days” and offers all the bells and whistles to protect their greatest asset, their income. Many physicians just don’t know that.

For more information, visit www.roncohenrhu.com