Why Group Disability Insurance May Not Be Enough for Physicians with Ethan Abramowitz - RR Ep 17

Do physicians really have enough disability insurance through their employer? 

What are the hidden limitations of group long-term disability (LTD) insurance, and how does it compare to individual true own-occupation disability insurance?

In this episode of The Responsible Resident, Amber Stitt sits down with disability insurance attorney Ethan Abramowitz to explore the gaps, limitations, and misconceptions surrounding employer-provided disability insurance. 

They discuss how group disability insurance policies often include pre-existing condition limitations, taxable benefits, income offsets, ERISA restrictions, and definitions of disability that may not align with how physicians actually practice medicine.

This episode covers:

• Group disability insurance vs individual disability insurance
• True own-occupation disability insurance explained
• ERISA disability claims and appeals
• Social Security disability offsets
• Taxable vs tax-free disability benefits
• Pre-existing condition exclusions in employer plans
• Why physician bonuses and production income may not be covered
• Common misunderstandings about group LTD benefits
• Income protection strategies for physicians, residents, and attendings

Amber and Ethan also share a real-world case study illustrating how a physician believed he had $120,000 per year in disability coverage but ultimately received far less due to policy limitations.

If you're a physician, resident, fellow, attending, dentist, or medical professional evaluating disability insurance, this episode provides practical guidance on building a policy that can grow with your career and adapt to future financial needs. 

🔗 To connect with Ethan Abramowitz: 

📲 LinkedIn: https://www.linkedin.com/in/ethanfabramowitz 

📲 Website: https://www.seltzerlegal.com/attorneys/ethan-abramowitz 

📲 Phone: (215) 735-4222 

📲 Email: ethan@seltzerlegal.com 

#theresponsibleresidentpodcast, #amberstitt, #ethanabramowitz, #disabilityinsurance, #disabilityinsurancelaw, #physiciandisabilityinsurance

📻 Thank you for tuning in to The Responsible Resident!

To Download the FREE Medical Professionals Blueprint:

StittStrategies.com/Blueprint

If you would like a free quote, please contact us at: 

mddisabilityquotes.com/responsible-resident

Amber Stitt is a disability insurance specialist with over 15 years of experience helping physicians protect their income and make informed financial decisions. 

As the host of The Responsible Resident, she brings a structured, education-first approach to topics like disability insurance, underwriting, and income protection, areas often overlooked during medical training. 

🔗 Connect with host, Amber Stitt, on Social Media:

• AMBER’S INSTAGRAM
• AMBER’S LINKEDIN
• AMBER’S FACEBOOK

📲 Be sure to visit the Stitt Strategies website:

www.StittStrategies.com

🎬 And remember, let's take action today!!!

Transcript

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Amber Stitt [00:00:00]:
Welcome to The Responsible Resident. I'm Amber Stitt. This podcast takes a common sense approach to financial decisions for physicians, breaking down complex topics into something clear, practical, and usable. Because you shouldn't have to have a finance degree to build financial freedom. I am your host, Amber Stitt, and today we are talking with Ethan again about some common issues that come along with these insurance contracts. And so I'll let you take it from there, Ethan, and share some things from your side.

Ethan Abramowitz [00:00:28]:
Thanks Amber. Always a pleasure. And I think we talked in the past about the importance of individual disability products. And one of the things that we've touched on in those past discussions is the issues with long-term disability plans, employer provided plans. And it's something that I know on your end you see on a daily basis with, "Why do I need individual disability coverage when my employer is providing this?" On my end I see these products come up where clients have this subjective belief that they have this product from their employer and it really provides a great benefit. But when you start whittling it down and looking at it, their subjective belief of their coverage is completely inconsistent with the objective coverage that's provided and it really puts them in some difficult situations financially. So I think when we talk about this, the first thing we talk about is, the coverage is an employer provided benefit plan, so it's tied to this individual being employed with a specific provider.

Ethan Abramowitz [00:01:26]:
Some of these policies are portable, or convertible. It's a conversation for another day. But the reality is that in this day and age, it's a rarity for someone to start off with "Employer 1" at the beginning of their career and end their career there. And the physicians really need to understand that the policy they have will disappear when they go from Company A to Company B. And one of the reasons why that's important is while these policies do not contain medical underwriting, they do have preexisting condition exclusions. And what that means is if I start with Company A and have no medical issues, I have coverage under their group long-term plan. If I then switch to Company B, the policy always has language that says something analogous to: "If you had medical care or treatment within the 3 months prior to the effective date of this coverage that causes you to become disabled within 12 months or 24 months of your employment date, it is not covered for that medical condition."

Amber Stitt [00:02:25]:
Yeah, I think I'm used to seeing that 12 month provision. I haven't seen 24 months. But you're saying when you go through your open enrollment, you have that new group contract begin, if something happens between a certain period of time they might not have any coverage, right?

Ethan Abramowitz [00:02:38]:
So the pre-existing condition definition does vary. We've seen it as far as 24 months. But what is important to note is that if you are switching from one company to another, you potentially may have a medical condition that will be excluded until you meet a certain period of time, typically a year. But as far as 24 months of employment and I have had clients come in here and sit down with medical issue that is excluded, they're in essence unable to pursue a claim and they lost the ability to pursue a disability claim under their LTD policy because within six months of switching from company A to company B they didn't meet the enrollment qualifications or the pre-existing addition language for the new policy. This is a little different. We will see employers change coverage annually. Unlike the individual policy where the policy you have inception stays with you through the life. Every year, the employer has the ability to modify and change coverage. Now in those situations, pre-existing condition issues don't typically exist when the new policy has continuity of coverage.

Ethan Abramowitz [00:03:45]:
But what does happen is we've seen and we've experienced clients have a pretty good LTD policy. Year one, year two, maybe the practice isn't doing as well as it was and they're looking to save money one way or another and they cut back. And we've seen that happen. The other thing that's important to note is that the physician doesn't have a say in their coverage. This is negotiated and procured by the employer. So unlike an individual policy where you dictate your coverage, you're at the mercy of your employer. And a lot of employers will tier their coverage. So if you're in a large hospital group, they may have something for the partners that's the Cadillac coverage.

Ethan Abramowitz [00:04:28]:
But for non-partner, associate physicians, it's a weaker definition and then for nurses and everything else. So that's part of what people need to consider on the front end is control of their coverage. Other issues that we typically see is that the definition of own-occupation, as we talked about previously, own-occupation is an umbrella definition within the individual policies. The true own-occupation definition, "Unable to provide the material and substantial duties of your occupation" doesn't affect your benefit if you're working in some other occupation. I've yet to come across a group long-term disability policy that contains a true own-occupation definition. The policies normally have something along the lines of "unable to perform the material and substantial duties of your occupation and unable to earn more than a threshold." And if you are earning income, that income is deducted from your monthly benefit. Unlike a true own-occupation policy.

Amber Stitt [00:05:24]:
I mean I'll see the word, people will see own-occupation on the brochure, the flyer. They don't usually get that group certificate so they think they're okay. But when you're talking about "true", it's not the label of the title of the rider, per se. I mean it kind of is, but "true" in my world means there's no hidden provisions, ramifications behind-the-scenes. If this then that, "true" means it's nice and clean. There's no offsetting of income. There's provisions and sections I've seen in these group contracts. But I'm correct in thinking that way, would you agree?

Amber Stitt [00:05:58]:
That the "true" I think for the audience because Guardian calls the rider true own-occupation. But in general, these own-occupation riders do work similarly versus just seeing own-occ in a work plan that has no underwriting and it's for everybody. I think that throws people off like, "I'll be okay." Another thing, too, is how long do the group contracts last for if you go on claim traditionally?

Ethan Abramowitz [00:06:23]:
So it's a great question and term of art varies. We're both in this industry on different sides of it. But the reality is that I use terms generally. When I say "true own-occ" it may be regular occ definition on another policy. But it's something that's, to your point, if you can't work in your occupation, you get your benefit regardless of your ability to work in some other occupation and pursue that. We've seen modified own-occupation definitions, but we'll avoid that topic right now. What happens with these policies is oftentimes if you're not at the highest tier that's offered, even if you have the own-occ, not the true own-occ, or regular occ definition, but the definition that we see in the long-term disability policy, there's a 24 month limitation on that coverage where it then shifts to any gainful occupation. So there are a lot of physicians out there that think they have a true own-occ, or true regular own-occ policy, but it's not.

Ethan Abramowitz [00:07:17]:
It's the watered down, what we refer to as a "relations-to-earning" policy, but also has this hidden 24 month limitation in the own-occupation coverage before it switches to any gainful occupation. And to your point, when people get these plans from their employer, they get the summary plan description, or just a coverage page, and they'll see the maximum benefit period to age 65 or Social Security retirement age, a lot of these plans have, especially the lower tier plans, have limitations on specific medical conditions, 24 month limitations on mental, nervous, or subjective claims, musculoskeletal claims, things like that. That again, the devil's in the detail. So while it may look as though you have a policy that'll pay out to age 67 for certain medical conditions, it may be excluded, or limited to 24 months. And that's where a deep dive into the plan language actually matters. I think the other thing that we've talked about that's really important is, the definition of covered earnings. In an individual disability policy, the monthly benefits specified on the front page of the spec page. X amount a month. With long-term disability clients, it's normally 60% of covered monthly earnings to a max of $10K a month.

Ethan Abramowitz [00:08:30]:
Nearly every physician that walks into my office thinks they have a $10K a month benefit, and we'll talk about that in the case study. But often, unless it's been negotiated by the employer, bonus comp, distributions, that's excluded so...

Amber Stitt [00:08:44]:
Yeah, so I know we'll talk about...we have a case that we'll discuss in this episode. But income, I mean you're touching on it a little bit here. It's not always bonus income that qualifies as income when they're looking at the percentages. So we could talk about that now, or maybe put a pause on that. But it's not always what people think.

Ethan Abramowitz [00:09:03]:
It's not. And it's really, I mean they bury this in the policy. It's normally, you've got your spec page that spells out the nice cover where you think you've got 60% max, $10K through age 67 or whatever the max benefit period is. But then it'll say, "Of your covered earnings," and covered earnings will often say your base salary excluding expert comp, bonus. And that as we'll discuss, a lot of doctors have a base salary, or a draw, if they're partners set at X and then a production base. Whether it's a distribution of profit or a production based bonus that kicks in and we'll talk about. But that has a significant effect on physicians and what they're eligible for for the monthly benefit.

Amber Stitt [00:09:49]:
I know that some of the underwriters have said in a individual plan that someone owns, they might go back two years, look at the tax returns for two years, or they're pulling the CPT codes and pulling our views and looking at the big picture, group contracts are not going to do that from what you're saying.

Ethan Abramowitz [00:10:06]:
This is a conversation that could probably take another hour. But to your point, it's going to be base earnings as defined in the policy and that's to calculate the benefit with individual disability plans, when they do that analysis of prior monthly earnings, that's really to set the litmus test for residual disability claim. So this is what they use to calculate the benefit. And the other thing that kind of tricks people up is their income may fluctuate, as well. So one year they may have had a good year, the next year I think with COVID certain practices...

Amber Stitt [00:10:39]:
Yeah, people are not working.

Ethan Abramowitz [00:10:41]:
So there was 3 months where they didn't get recorded income. And certain companies have played games with what the pre-disability earnings were, because it's looking at...some will look back in time and definitions...

Amber Stitt [00:10:51]:
Gosh, that could be a whole other episode, huh?

Ethan Abramowitz [00:10:53]:
It could be, but typically it's your income immediately prior to your date of disability. Some will go and define it further and provide more clarification and a better tool for maximizing what it is. But in my humble opinion, these products are really set up to minimize liability for the company and find ways to squeeze the benefit down versus finding ways for you to maximize it. And we'll talk about it when I go through a couple other issues. But the other components that I think really resonate truly is: taxability. If you're not paying for it with post tax dollars and your employer hasn't set that up, it's subject to tax liability. If you live in a city that has an earnings tax, you could add your city wage tax, you could have your state income tax and then federal income tax attached to it. You mentioned production cover.

Amber Stitt [00:11:38]:
Let's pause there, Ethan. I don't think people think about the layers of the taxation that you're mentioning because I think most people assume ordinary income tax and that's it.

Ethan Abramowitz [00:11:46]:
It depends on where you live, you can be subject to additional taxation. Again, I'm not a CPA, so I'll defer to any CPA.

Amber Stitt [00:11:53]:
Right. We're not tax advisors here.

Ethan Abramowitz [00:11:54]:
Yeah, exactly. That disclaimer out there, there's a reason why I'm an attorney not a CPA, but I'm not qualified to give tax advice. But tax liability is a major issue that comes up with these products. And we'll talk about that as well. You mentioned a second ago about production records and CPT codes. And what's important is in a individual disability policy, the company, it's as the occupation is performed by you. So they really have to look at what Ethan Abramowitz is doing as a surgeon day-in, day-out and how that overlaps with my medical condition. With group products, there's a national economy definition, which means is they use antiquated and outdated definitions from the Dictionary of Occupational Titles, or eDOT, where it's just general definitions, where they'll look at the exertion level of a light or sedentary occupation and really not do a deep dive into whether or not I can do specific procedures that I was doing.

Ethan Abramowitz [00:12:51]:
And we've seen these companies rely on that to try and challenge liability. So the occupational definition...I'm sorry.

Amber Stitt [00:12:58]:
Like an old guidebook?

Ethan Abramowitz [00:13:00]:
It is a exertion level, how it's done on the national economy, not how you and I are generating our income day-in, day-out. So an example of that would be if I was a surgeon, an orthopedic surgeon performing a specific type of procedure that a handful of doctors perform in the country and I can no longer perform that procedure anymore, but I could still do orthopedic medicine, or orthopedic surgery.

Amber Stitt [00:13:22]:
Right.

Ethan Abramowitz [00:13:22]:
Just not that specific procedure that literally is the lifeblood of my income. They'll say I'm not disabled from practicing as an orthopedic surgeon. So it's a watered down definition.

Amber Stitt [00:13:32]:
Sure.

Ethan Abramowitz [00:13:33]:
Another problem that we see with these products is that because they're employee benefits, they get sucked into ERISA, which is a federal statute that covers benefit plans, employee provided benefit plans. ERISA changes the confines of this being something that is traditional contract law and places it into an administrative claims process. I mean we talk for hours on ERISA and the issues with ERISA, but the reality is this, is that the burden of proof is different than individual. It is more favorable to the insurance companies. You are more tied in on deadlines where in an individual disability claim it may take a couple months to get information. And we've seen LTD claims, if you don't add the information in within 45 days, they'll close the claim, they'll reopen it, but you can't re-submit. The other problem is when claims are denied with an individual disability claim, you've got options when your claim's denied.

Ethan Abramowitz [00:14:25]:
You can appeal it and submit additional information, explain why the company's wrong and we work with our clients on that, or jump into litigation. With ERISA government claims, you are required to file an administrative appeal within 180 days of the claim denial. And what that means is you have 180 days to tell the company why they're wrong. More often than not, the doctors that do this on their own will say, "Insurance company, you're evil, you're wrong and I'm appealing."

Amber Stitt [00:14:50]:
Oh, I can see that happening all day long. I think with someone helping like yourself, you're going to take the business approach, cross all the T's, dot all the I's and just get them what they need. And within the timeframes, I can't imagine people can read through all this and know all the pieces of the steps that are required of them. I can see that being a huge problem.

Ethan Abramowitz [00:15:11]:
When you're dealing with an ERISA claim denial, you've got 180 days to appeal your claim. And if you don't get updated medical objective documentation to the extent that you get subjective medical, outlining why the company's review is wrong, the deficiencies in the review in a claims administration and outline that and submit that and just simply put a letter without supplementing. Then once you submit the appeal and the company then has a total...they have 45 days, but can extend it to 90 to come back with an appellate review. If they uphold the claim denial, the administrative record is closed. So picture a banker's box with information of everything you've submitted, everything the company has reviewed and the rationale for their position. That's closed. And then once that's closed, your only option is, and if they've upheld a denial, is to litigate in federal court under ERISA.

Amber Stitt [00:15:57]:
Well, let's pause there. Ethan, people are sick doing this. They're not, you and I in a busy day, grab our computer, let's go through, let's click the documents, call. These people are disabled so often they're probably either needing help from a spouse, or another person, not just an attorney. But this can't be easy if you're sick, injured, or, you know...

Ethan Abramowitz [00:16:19]:
It's a very stressful time period, you're trying to focus on your health and wellbeing. You've got a company telling you that you're not disabled. You can work. Now, you've also been out of work for whatever period of time it's up for them to reach the claim denial for you to appeal, then to wait for the additional claim determination could be months or even a year or more where you're not getting income. So the goal is, get the appeal worked up as quickly as possible with as much information as possible so they overturn the claim denial. But if not, then you have to litigate. And when you're litigating, it's what was submitted the courts only in rare circumstances, will they allow limited additional discovery. So the court's going to look at that box of information and the arguments presented in litigation on what's contained in there and you're not able to supplement it.

Ethan Abramowitz [00:17:03]:
In rare circumstances you can motion and argue with the court that you should be able to. But under limited circumstances, are you allowed to present additional information outside what's in that appeal, what we call the administrative claim file. The other problem with ERISA claims is there's no extra contractual damages or bad faith, which is really the big stick that lawyers have when insurance companies do egregious things to keep them in line. The worst thing that happens to insurance companies when they wrongly deny a claim that goes through litigation is they have to put you back on claim. Maybe they have to pay the attorney's fees. We have to pursue that, as well. They always say, "What's the worst that happens? We have to pay the claim." The other thing that can happen is the court can say we agree what the company did was wrong.

Ethan Abramowitz [00:17:41]:
There are deficiencies in the claims administration and we're going to give it back to them to readminister and review the information based on the issues that we've identified in court. Where their claims not approved yet. It's just the insurance company takes another look at it. I want to pause there because I think if we go down the true issues with litigating ERISA cases, it's an hour long conversation and it's just that's not a hurdle or barrier that exists with individual products. It's set up where again the plaintiff is really or the claimant is operating from a position of weakness. They're already set up in a disadvantaged state.

Amber Stitt [00:18:14]:
I'd like to take a second to tell you about a FREE Medical Professionals Blueprint that I created with you in mind. At some point in your career, you realize it's not just about making more money. It's about making decisions that actually support your life. That's exactly why I created "The Pathways Perspective for Physicians." It's a simple, non-technical framework to help you think through your career, your money, your risk, and how everything connects as your life evolves. You shouldn't have to have a finance degree to build financial freedom. You don't need to have everything figured out. You just need a place to start.

Amber Stitt [00:18:53]:
You can download the FREE Medical Professionals Blueprint at: StittStrategies.com/Blueprint

Ethan Abramowitz [00:19:03]:
We talked about, a second ago, misunderstanding the maximum benefit period and how a lot of these policies are set up with limitations.

Amber Stitt [00:19:12]:
Well, Scott and I were talking about one of his clients that making 1.2 million with a base salary of $75K. And upon a review, not disabled luckily, but upon a review this client was assuming he had so much more coverage than 60% of the $75K, or whatever the story was with his details of the group, on the group side, he thought he was all set with his group coverage.

Ethan Abramowitz [00:19:37]:
No, and we'll hit on that in a second, but I said a minute ago ways they whittled the benefit down is what we were just talking about. What are the covered monthly earnings. And then the other thing is limitations on certain medical conditions, specifically mental, nervous. But we also see other watered down policies that have musculoskeletal. But then there's also in every one of these policies the long-term disability policies provided by the employer, it's other income or deductible sources of income. And within that you'll see the most commonest Social Security disability, workman's comp, disability pension, or pension benefits provided by the employer. And all of these in that specific provision are dollar-for-dollar offsets.

Amber Stitt [00:20:15]:
What about dependent income? I think I see that in California.

Ethan Abramowitz [00:20:19]:
So in states that have state disability, that's an offset as well. So they will require you to file for Social Security disability even if you're not totally disabled from working in another occupation. If you are totally disabled from working in your occupation and you're out of work and not gainfully employed, they require you to apply for Social Security and jump through not only the claims submission, but it'll say you have to appeal to the maximum degree that we see necessary. I've yet to have a company say while a client is totally disabled from working their occupation and not working another occupation, that they don't have to take it to the hearing stage. To your point, if you are on Social Security and you qualify, it's a dollar-for-dollar offset. And if you have dependents or spousal benefits that are attributed to you and your disability, that's a further reduction in the monthly benefit. So what that means is if you've got a disability benefit from your long-term finance $10K a month and a $2,500 a month Social Security disability benefit, the insurance company drops their liability $7,500 and supplements that the $2,500 you're getting from Social Security. We do have clients that have a long-term disability plan that is non-taxable.

Ethan Abramowitz [00:21:30]:
The employer set it up the right way, but the offsets still kick in. So their $10K a month benefit from the insurance company that was non-taxable is now $7,500. And the Social Security benefit is $2,500 is taxable. So not only are they losing the $2,500 that the disability company would be paying, they're getting $2,500 under Social Security, but they're not getting all of that. And they don't make up the tax liability on the long-term disability. It's just these ticky-tacky little things. And we have certain clients that are younger, they've got multiple kids, and those dependent benefits also will further knock down the disability benefit. We talked about...

Amber Stitt [00:22:09]:
That's interesting, unfortunately.

Ethan Abramowitz [00:22:10]:
I can give you a really good case study that kind of ties in how awful these products can be for clients, or physicians that don't truly understand what they had in front of them. I was working with a client a few years ago. His policy did not have a 24 month limitation in the own-occupation coverage.

Amber Stitt [00:22:30]:
It didn't.

Ethan Abramowitz [00:22:30]:
And the client was adamant that he had a $10K month benefit that provided him with $120K a year in disability comp. We discussed his earnings. He had a gross income of $250K. His base salary is $150K. He had a $100K annual production based bonus. The policy read that his coverage was 60% of his covered monthly earning, up to a maximum benefit of $10K. Well, his simple math was $250K divided by 12 provides an average monthly income of $20,833. 60% of that provides a monthly benefit of $12,500.

Ethan Abramowitz [00:23:08]:
$12,500 is greater than $10K. Great. He's got the $10K a month benefit. This individual was also planning that if he needed to, he would have Social Security on top of that. But this individual didn't understand the definition of covered monthly earnings. He didn't understand how other income benefits factored into the benefit calculation, nor did he understand the tax liability and how that factored into it. So with this client, only $150K of his income was covered.

Amber Stitt [00:23:40]:
What did he do for work?

Ethan Abramowitz [00:23:41]:
He was a internal medicine physician. So the $100K production based bonus wasn't factored in, which ended up reducing his benefit from $10K a month to $7,500 a month. Just by using simple math, the $150K divided by 12 is $12,500. 60% of that is $7,500 a month. So he thought it was $250K. It wasn't. It was only $150K. And that cut him down from his anticipated $10K a month benefit to a $7,500 a month benefit, which in essence results in a $30K a year miscalculation of what his policy provided.

Amber Stitt [00:24:21]:
Yeah.

Ethan Abramowitz [00:24:22]:
The next issue, as you were getting to, was other income benefits and Social Security. What we talked about a minute ago. He was eligible for Social Security, applied for Social Security, was eligible for $2,500 a month in Social Security benefits. So that then took his $10K a month benefit that he was going to receive. We lost $2,500 a month from the miscalculation of covered monthly earnings and further reduce it by $2,500 a month because of the Social Security offset. Just because of a misunderstanding. The other income benefit and the calculation of covered monthly earnings, his subjective belief of $120K a year coming from the insurance company is now down to $60K a year, or $5K a month. And as you were just getting to tax liability, it was a taxable benefit. This individual fell into...

Ethan Abramowitz [00:25:11]:
I believe it was a 33% tax bracket, which in essence brought his benefit down even further. So he ended up with tax liability. That hit the $5K. I'm sorry, it hit. Yeah, it hit the $5K. And it left him with a net monthly benefit of $3,250 a month, $39K a year. So by not understanding his definition of covered monthly earnings, the effects of other income benefits and tax liability, there was a 61% discrepancy in his understanding of what his coverage was and what his benefit would actually be.

Amber Stitt [00:25:52]:
And we have to fund retirement with these benefits, too.

Ethan Abramowitz [00:25:56]:
The air left the room with this client. Devastated. I mean, significant financial hardship resulted from this case and he had to sell his house. Again, you never want to have to rely on your disability coverage, but if you do...

Amber Stitt [00:26:10]:
Sometimes people...Sorry to interrupt you, Ethan. Some people only qualify for a 5 year benefit period. Sometimes their health will not allow them this full benefit on the private side, when I help people and they question, "Why do I still want this if it only pays for 60 months?" In the example you just provided, if there's only a 5 year benefit period, that is still giving someone an exit strategy if they do have to sell their home, whatever the story is, there's at least some game plan to help support...

Ethan Abramowitz [00:26:41]:
I've worked with the number of clients that have had those policies, and it's better than nothing. And they may have that policy on top of a long-term disability policy, as well. So it's not as though it's one or the other. It's do they have what I refer to as a limited period own-occupation policy that 60 months is better than nothing. Making sure you have that product even though it's not through age 65, but also if it's a doctor who becomes disabled at age 65, or 62, or 63, they still have the 5 year benefit window. The only situation where that policy is worse off than another policy would be if someone gets disabled when they're 40, or 45, or before age 60. But again, it's better than not having something.

Ethan Abramowitz [00:27:26]:
At least you have that 5 years of protection.

Amber Stitt [00:27:29]:
So if we go back to the internal medicine physician, we got $3,250 net. If they had even just a 5 year benefit period, if they could work in any other job, $3,250 would go away. But at least they'd have their 5 year benefit period. But if they couldn't do anything at all, they at least have the combination of the two. They could try to figure out that transition with the selling of the home and probably have a little bit more time to just make some solid decisions moving forward. You know, if you play that out in two different ways.

Ethan Abramowitz [00:27:55]:
I think if you're looking at strategizing for financial security, something's better than nothing with respect to individual disability coverage. So again, if it's someone who's only eligible for a 5 year plan, or is it maybe a 5 year own-occ and then it changes to any gainful-occ, and the definition modifies. But there are other policies that are 5 years only and then coverage ends. It depends. But having that for that 5 year period of time is crucial because it provides you additional time to have the income from the individual policy, the income from the group long-term disability policy, and to figure out how best to move forward in life. The client that I was dealing with was significantly impaired, wasn't able to work in some other occupation. In this hypothetical, if the person is totally disabled from their own-occupation with the 5 year plan, they may be able to go do some expert work, or academia, or some other thing that generates significant income that's not going to affect their individual plan. So they're building an additional revenue stream and financial planning for the future with their family.

Ethan Abramowitz [00:29:01]:
Yes, if they're on long-term, as well. Again, it's different than the pattern we're talking about because Social Security is not in play. But there would then be with the group plan, an offset to the earnings. But still they're getting 100% of the individual benefit, they're getting their income, the LTD is still paying something and they at least have air to breathe when trying to navigate their financial future and trying to make, especially if they're in their late 30s, early 40s, even if they're in their 50s, they have time, at least 5 years to try and find a way to manage the finances into the future.

Amber Stitt [00:29:35]:
Well, Ethan, I think this is super helpful to paint the picture. In my Pathways to Peak Performance series, I talk a lot about taking action early, focusing on setting goals based upon your personality type. And really, I've mentioned this to you before, taking proactive steps versus having to be reactive. It's not just about insurance, purchasing insurance, I think there's a lot we can do with our time as individuals, family members, and business owners to really audit some of the basics that we have, what policies do we have, and really going through the steps every year, talking with independent brokers that have a plethora of products to talk to you about to then confirm, or really audit that policy and see if there's anything else that needs to be enhanced or added on. Or maybe it's just there's new needs and new insurance that might need to be there. But how do you know unless you sit down and go through these? And open enrollment is a perfect time. If you're a business owner, you really don't have that.

Amber Stitt [00:30:31]:
If you're not that big of a business, you can still even sit down with a basic spreadsheet and go through, "Where's my account numbers? Who's the beneficiary?" All of that is so important. And when I talk with people about that, all ages, even the most successful people don't have this done, typically. And they'll admit to me, "Gosh, I'm 60 Amber. I actually need to put some of that together," and we're talking some of the basic stuff. So I always say that's the easiest way to sit down on the weekend, get everything laid out. What's missing? Because if you're missing something, you can start requesting and then meet with your advisors and the people that can help you review things. And then if they need an attorney to help them through a process, you'll know and you'll know what pieces are missing. And so I think it's really important to spend that time.

Amber Stitt [00:31:13]:
You got to take the time in advance.

Ethan Abramowitz [00:31:15]:
You have to look at what you have and understand it and whether it's homeowners, life...I feel like everyone thinks they understand life, "If I die, it pays," but they're complicated policies with respect that what can be worked out and why whole life is better than term, or term suits your needs. That's not for me. I'm not a life insurance person. But the reality is I always say you don't want to be in the middle of a hurricane while the floodwaters are approaching your doorstep and realize that your policy doesn't cover flood insurance.

Amber Stitt [00:31:43]:
Yeah, I'm super passionate about that and helping people. It's not just about, "Gosh, we need more insurance." It's really you might, maybe you don't, but how do you know unless you take the time to walk through everything And I think it's on an annual basis. You just have to, it's due diligence for yourself and I think it takes some stress off. We're always looking for ways to have less stress, more resilience. You never know, pandemic, family, you're out for maternity leave. Whatever the story is, if you really build in some of those basics, it can be so helpful.

Ethan Abramowitz [00:32:12]:
I think people are always focused on car insurance and homeowners average car is $30K to $50K and people are so focused on, "How do I have that," versus their occupation and their income stream which over the life, for physicians is millions of dollars. And being so focused on aid but not taking the time to sit back and understand there's a probability, 25% probability, if not more, that I may be partially or totally disabled even for a closed period of time. And understanding how these products work and what their coverage is and trying to work that into their financial security plan and making sure that they're not in a situation like my client was in the example I gave. That's why I try to do this. I'm really appreciative of your time because helping people on the front end and trying to spread the word on the front end of the importance of these products and understand, hopefully will mitigate and avoid issues when I see people walk in my door that need to go out on claim, they've got the right products. That they have what they subjectively thought they had lines up with what's documented on the 4 corners of the policy. So thank you for everything you do.

Amber Stitt [00:33:16]:
Thanks Ethan and I can't wait for the next episode together. So really appreciate the time today and diving deep into this and unfortunate stories. But I think the stories make it real and hopefully that'll help our audience be more proactive starting today. So thank you so much. Happy to have you, as always. If this episode helped you think a little more clearly about your next step, that's the goal. You don't need to have everything figured out, but you do need to take ownership and take a meaningful step forward today. Thanks for listening to The Responsible Resident.

Amber Stitt [00:34:01]:
As a reminder, this podcast is for general educational purposes only. It is not legal, tax, or individualized financial advice and coverage options will vary based on your personal situation.