More on Disability Insurance for Physicians

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Some Advice from a Doctor, Insurance Agent and Financial Advisor

Dr. David Edward Marcinko MBA CMP™

www.CertifiedMedicalPlanner.org

[Publisher-in-Chief]

Policies Are Harder to Get, More Expensive, and Offer Less Protection Than Before

Due principally to large claims from anesthesiologists, surgeons, emergency room physicians, and trial attorneys, disability insurance underwriting is becoming stricter. Among the effects on policyholders: revised definitions of disability; restriction of benefits to two years on so-called “soft tissue” disabilities and mental and nervous disorders; and downgrading of professionals to the general white-collar category. The result is higher premiums.

Buy a Good Individual Policy

Based upon the fact that disability is the only insurance product on the market that is non-cancelable (premiums and policy features are locked in until age 65), my advice is to buy a good quality individual policy as early as possible and hang on to it. Group benefits should be added later. Also, many group plans only include straight salary in compensation. Incentive compensation, which makes up a large portion of an executive’s compensation, is not considered. Under the Revenue Reconciliation Act of 1993, employee disability benefits can only cover up to $150,000 in compensation. Finally, don’t forget that if the employer pays the premiums, benefits are taxable. This can substantially reduce an executive’s disability income.

Pay More for Non-Cancelable Coverage

I also may recommend paying a 15–20% higher premium to obtain non-cancelable coverage, if available, as compared to guaranteed renewable coverage. In both cases, coverage cannot be canceled. However, in the latter case, premiums can be increased on a class basis. Also, investigate the partial-disability benefits as well as the residual benefits after returning to work.

Note: “Your Disability Is Your Opportunity,” by Jaberta C. Evans, Dow Jones Investment Advisor, December 1996, pp. 76–80, Dow Jones Financial Publishing Corp., [908] 389-8700.)

Conclusion

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On Standard & Poor’s Depository Receipts

Don’t be Afraid of ‘SPIDERS’

By Dr. David Edward Marcinko MBA CMP™

www.CertifiedMedicalPlanner.com

[Publisher-in-Chief]

What they are – How they work?

No, I’m not talking about creepy, crawly insects. I’m referring to Standard & Poor’s Depository Receipts (SPDRs, or spiders), a derivative product, which combines many of the advantages of index funds with the superior trading flexibility of common stocks.

Creation

SPDRs were created in January 1993 by the American Stock Exchange. SPDRs are units in a trust holding the S&P 500 securities in proportion to their index weighting and which are adjusted as necessary to track changes made to the index by S&P. They pay quarterly cash dividend distributions based on the accumulated dividends paid by the stocks held in the SPDR trust minus an annual fee of about .19% of principal to cover trust expenses. They trade at approximately one-tenth the value of the index.

Conclusion

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