Disability Insurance for Physicians: What to Look For

If you became too sick or hurt to practice, how would you replace the income your training was built to produce? For physicians, disability insurance is not a side topic. It is how you protect a career that takes many years to build and that often supports a household, student loans, and, later, a practice.

The Social Security Administration reports that a 20-year-old worker has about a 1-in-4 chance of developing a disability before reaching full retirement age. Disability insurance is not the same as workers’ compensation, and it is not the same as Social Security Disability Insurance, which uses a strict standard and can take months to process (NAIC; SSA).

This post walks through what usually matters most in an individual policy: the definition of disability, how coverage through work fits in, benefit amount and length, waiting periods, partial disability, student loans, timing during residency or fellowship, taxes, and a few extras worth comparing. Policy language varies, and the contract controls.

Why physicians look at this so closely

Becoming a physician takes a long time, and peak earnings usually come later. After a bachelor’s degree, medical school typically takes another four years. Residency usually lasts three to nine years, depending on the specialty, and a fellowship can add one to three more (U.S. Bureau of Labor Statistics).

During that stretch, many physicians carry substantial education debt. Among 2025 U.S. medical school graduates who had education debt, the median was $215,000, including premedical and medical school loans. Seventy percent of that class had education debt (Association of American Medical Colleges, Fact Card for the Class of 2025).

Training pay is also much lower than later practice income. The AAMC reports that the 2025 first post-M.D. year median stipend was $66,986 (preliminary). By comparison, the median annual wage for physicians and surgeons was $275,930 in May 2025, and it varies widely by specialty (BLS).

Your ability to earn that future income is the asset a disability policy is meant to protect. The American Medical Association tells physicians to pay close attention to the definition of disability, the cost of coverage, and the optional features (called riders) that can be added to a policy.

The definition that matters most: own-occupation

Two policies can both be called “disability insurance” and still pay very differently. The difference is usually the definition of disability (NAIC; AMA).

Specialty own-occupation. You may be eligible if you cannot perform the duties of your own medical specialty, not just some other job in medicine (AMA). Without that specialty language, you could be declined for benefits if you are able to work in another medical role you can physically perform (AMA).

True or pure own-occupation. Benefits may be paid if you cannot perform the material and substantial duties of your occupation, even if you decide to work in another occupation (AMA).

Modified own-occupation. This is a common definition. It typically pays if you cannot perform the substantial and material duties of your occupation and you are not working. It generally will not keep paying full benefits if you work in another occupation, though it may help replace lost income (AMA).

Any-occupation. You may qualify only if you cannot work in a profession you are educated, trained, or experienced for. The AMA notes that this definition is often found in employer group policies, and that well-educated professionals may find it very difficult to collect under it.

Here is a simple illustration, not a real claim: an orthopedic surgeon injures a hand and can no longer operate safely. That surgeon might still be able to teach, review records, or work in another medical role. Under an any-occupation definition, those other options could reduce or eliminate a benefit. Under a specialty own-occupation definition, the question is whether the surgeon can still do the work of that surgical specialty.

Group long-term disability plans often use a broader definition. Some start with own-occupation and later switch to any-occupation, often after the first year or two (North Carolina Department of Insurance).

If you compare policies, read this section first. Ask how “occupation” or “specialty” is defined, how long that definition lasts, and what happens if you work in another role.

Keep the coverage you have through work, and add a policy you own

If your hospital, practice, or training program offers disability coverage, keep it. That coverage is a good start.

A policy you own yourself does not replace your work coverage. It adds to it, and it is yours to keep.

Group coverage through an employer is often less expensive, but it typically uses a broader definition of disability and often provides less coverage (AMA). The NAIC notes that extra coverage bought through a group plan is not likely transferable if you change jobs. Individual coverage you own can stay with you when you leave a residency program, change employers, join a new group, or open a practice.

Two other limits are common with work coverage:

• The benefit is often based on current salary. During residency, that salary is much lower than later attending income (AMA; AAMC stipend figures above).
• If your employer pays the premiums, or you pay them with pre-tax dollars through a cafeteria plan, the benefits are generally taxable (IRS). An individual policy you pay for with after-tax dollars generally pays benefits that you do not include in income (IRS; NAIC; AMA).

The NAIC also notes that a typical disability benefit is about 60% of earned income from before the disability, based on your income when you bought the policy, and that other coverage, such as Social Security disability payments or employer long-term disability, can affect the amount. Group plans may also replace only a portion of base salary, leave out bonus or incentive pay, and cap the monthly benefit.

A simple approach is to layer the two. Use your work coverage, then add an individual policy sized to the gap, with a definition that fits the work you actually do.

How much coverage?

Start with the bills that would still arrive if you could not practice: housing, food, transportation, insurance, student loan payments, and the savings you would otherwise continue. Subtract any disability coverage you already have and any savings you could reasonably use (Life Happens; NAIC).

The Life Happens Disability Insurance Needs Calculator can help you estimate a starting number: https://lifehappens.org/disability-insurance-needs-calculator/. The actual amount you can buy depends on the insurer’s issue limits, your earned income at application, and other disability coverage you already have (NAIC).

A licensed member of our team can walk through the numbers with you, including how your work coverage fits.

The waiting period and how long benefits last

The waiting period, also called the elimination period, is how long you wait after a disability begins before benefits start. It can last from a few weeks to a few months (Life Happens). Longer waiting periods generally mean lower premiums (NAIC). Many people match this period to their savings or to any short-term coverage they have through work.

You can generally choose how long benefits last, from a set number of years up to around retirement age (NAIC). Choosing a shorter period likely lowers the premium, but benefits could end while you are still disabled (NAIC). Some individual policies offer benefit periods of a set number of years, or to age 65, 67, or 70.

What if you can still work some?

Not every disability is total. A policy may pay only if you are totally disabled, or it may also pay a partial amount if you can do only part of your job (NAIC).

A residual or partial disability feature fills the gap if you are still working but earning less because of a disability (NAIC). The AMA says that, in general, you must have an income loss of 20% or more compared with your earnings before the disability, and that if the loss is greater than 75% or 80%, depending on the policy, the full monthly benefit might be paid. The exact threshold varies, so read the policy.

This matters for physicians who return to a reduced schedule, drop certain procedures, or move into a less physical role while they recover.

Other features worth comparing

These are optional or built-in provisions. Not every policy includes them, and several cost extra.

• Future increase option. Lets you increase coverage later as your income rises, based on financial qualification, without new medical underwriting. The AMA calls this especially attractive to young physicians as they grow into their careers.
• Cost-of-living adjustment (COLA). Helps benefits keep pace with inflation after a disability has lasted for a period of time, often 12 months. The adjustment may be a set percentage or tied to a consumer price index (AMA; NAIC).
• Catastrophic disability. May pay an extra benefit if you cannot perform two or more activities of daily living without help, or if you have a severe cognitive impairment (AMA).
• Student loan feature. Some policies add a benefit that can help with educational loan payments during a total disability, on top of the monthly benefit. The AMA notes that this extra benefit can range from $150,000 to $250,000, depending on the policy.
• Retirement-contribution feature. Some policies can replace retirement-plan contributions you would have made while you are totally disabled.
• Renewability. A noncancelable policy continues at the same price and coverage as long as you pay the premiums on time. Guaranteed renewable means the policy stays in force, but the premium may increase (NAIC; AMA). Association plans often use an increasing rate structure that can start lower and rise with age; they are typically guaranteed renewable (AMA).

Waiver of premium. Lets you stop paying premiums after you have been disabled, until the disability ends. It is typically included in a policy (NAIC).

Limits on mental health and substance-use claims

Read the policy’s mental and nervous provision. The AMA says this provision can exclude or limit coverage if mental illness or a substance-use disorder causes a disability. Many insurers place a two-year limit on those benefits. Some will pay benefits to age 65, and that feature is likely to increase the premium (AMA).

This is not a small print item for physicians. Compare it the same way you compare the definition of disability.

When during training should you look at this?

Many physicians first review disability insurance during residency or fellowship. The AMA notes that, as a general rule, the younger a physician is, the lower the cost, and that a future increase option can be especially useful as income grows.

Buying during training does not mean you have to guess your attending salary. It can mean putting a portable policy in place while you are younger, then increasing it later as your income rises, if the policy allows that. Work coverage through a training program can still be part of the mix. It typically covers your salary as a resident, which may not be what you need on a longer-term basis (AMA).

If you wait until after a health change, new coverage can be more expensive, limited, or unavailable. That is a general underwriting point, not a promise that every resident will be approved.

How benefits are taxed

In general, if you pay the premiums with after-tax dollars, you do not include the disability benefits in your income. If your employer pays for the plan, you must report the benefits as income. If you and your employer both pay, only the portion that comes from your employer’s payments is taxable. If you pay through a cafeteria plan and did not include the premium in your taxable income, the IRS treats the premiums as paid by your employer, and the benefits are fully taxable (IRS).

The AMA cites the same basic rule under Internal Revenue Code section 104(a)(3). This is general information, not tax advice. Ask your CPA how it applies to you, especially if your hospital or practice pays part of the premium.

If you own a practice

Individual disability insurance replaces part of your income. It does not automatically pay the rent, staff salaries, or other bills that keep a practice open. Coverage a practice can buy for overhead, a temporary replacement, or a partner buy-out is a different design. We cover that in a companion post on disability coverage for medical practices.

A Florida note

Florida law exempts disability income benefits from attachment, garnishment, or legal process by the recipient’s creditors, with an exception if the policy was set up for a creditor’s benefit (Florida Statutes s. 222.18). Outcomes can change in bankruptcy or under other law. Talk with your attorney about your situation.

What to do next

When you compare options, bring:

• A benefits summary for any group short-term or long-term disability you have through work
• A recent pay stub or income records, including bonus or incentive pay if you receive it
• Your specialty and a plain-English description of your duties, including procedures
• Student loan balances, if a loan feature matters to you
• Any disability policies you already own

We will help you compare options from several insurance companies, including the definition of disability, how the policy works with coverage you already have, and which features fit your stage of training or practice.

Questions? Call McGriff-Williams Insurance at (352) 371-7977. A member of our team will follow up.

McGriff-Williams Insurance. Where confidence grows.

This post is general information, not legal, tax, or financial advice. Policy terms, definitions, riders, issue limits, and availability vary. Your policy contract controls. Disability policies have exclusions and limitations.

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Sources

1. Social Security Administration, Disability Benefits (Publication EN-05-10029): a 20-year-old worker has a 1-in-4 chance of developing a disability before reaching full retirement age. https://www.ssa.gov/pubs/EN-05-10029.pdf

2. NAIC, “Simplifying the Complications of Disability Insurance” (May 7, 2019; page updated Jan. 16, 2024): definition of disability; residual benefits; typical benefit about 60% of pre-disability earned income; waiting period; benefit length; inflation protection; waiver of premium; renewability; taxes; most common long-term disability causes (heart disease, back injury, and cancer, followed by anxiety and depression, citing U.S. Department of Education and NIDILRR); SSDI standard and processing time; group buy-up often not transferable; workers’ compensation is different. https://content.naic.org/article/consumer_insight_simplifying_complications_disability_insurance.htm

3. American Medical Association, “Evaluating a disability policy”: specialty own-occupation, true/pure own-occupation, modified own-occupation, and any-occupation; residual (generally 20% income loss; a loss over 75% or 80% may pay 100%); CAT, COLA, and future increase riders; taxes under IRC s. 104(a)(3); mental and nervous provision (many carriers use a two-year limit); student loan benefits ranging from $150,000 to $250,000 in addition to the monthly benefit. https://www.ama-assn.org/medical-residents/medical-residency-personal-finance/evaluating-disability-policy

4. American Medical Association, “3 key factors to assess physician disability insurance options” (Aug. 6, 2026): own-specialty language; group plans generally less expensive, with a broad definition of disability and often the least coverage; individual plans may lock premium and be noncancelable; association plans often have increasing rates and are typically guaranteed renewable; younger physicians generally pay less; residual, CAT, COLA, and future increase riders; mental/nervous limits; educational-loan features. https://www.ama-assn.org/medical-residents/medical-residency-personal-finance/physician-job-search-disability-coverage

5. U.S. Bureau of Labor Statistics, Occupational Outlook Handbook, “Physicians and Surgeons” (last modified Aug. 27, 2026): medical school typically 4 additional years; residency typically 3 to 9 years; fellowship 1 to 3 years; May 2025 median annual wage $275,930 (varies widely by specialty). https://www.bls.gov/ooh/healthcare/physicians-and-surgeons.htm

6. Association of American Medical Colleges, Medical Student Education: Debt, Costs, and Loan Repayment Fact Card for the Class of 2025 (October 2025), FIRST analysis of AAMC 2025 Graduation Questionnaire: 70% of graduates had education debt; median education debt among those with debt, $215,000 (including premedical); 2025 first post-M.D. year median stipend $66,986 (preliminary). https://store.aamc.org/ (Class of 2025 Fact Card; also summarized at aamc.org/FIRST)

7. Internal Revenue Service, “Life insurance & disability insurance proceeds” FAQ: employer-paid disability benefits are taxable; after-tax employee-paid benefits are not; mixed premiums are partly taxable; cafeteria-plan (pre-tax) premiums are treated as employer-paid and benefits are fully taxable. https://www.irs.gov/faqs/interest-dividends-other-types-of-income/life-insurance-disability-insurance-proceeds/life-insurance-disability-insurance-proceeds-1

8. Life Happens, “Disability Insurance 101”: paycheck as most important asset; 1-in-4 (citing SSA); short-term vs. long-term; how to estimate need; elimination period of a few weeks to a few months; government benefits usually not enough to replace lost income. https://lifehappens.org/disability-insurance-101/. Calculator: https://lifehappens.org/disability-insurance-needs-calculator/

9. North Carolina Department of Insurance, consumer guide to disability insurance: own-occupation vs. any-occupation; long-term disability policies often switch to any-occupation after the first year or two. https://www.ncdoi.gov/consumers-guide-disability-insurance/open

10. Florida Statutes s. 222.18, disability income benefits exempt from attachment, garnishment, or legal process by the recipient’s creditors (exception if effected for the creditor’s benefit). http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0200-0299/0222/Sections/0222.18.html